The gross contributions of insured persons to their personal accounts are 100% guaranteed, our goal is to increase profitability with the introduction of a multi-fund model. This was explained by Evelina Miltenova, Chairperson of the Board of Directors of the Bulgarian Association of Supplementary Pension Insurance Companies (BADDPO) in an interview for the BNT podcast “The Truth about…“ with presenter Nadya Obretenova. According to the mathematical calculations of our experts, it is possible to achieve a doubling of the second pension after several years of accumulation, Miltenova added.
The reform with the introduction of a multi-fund model, following the life cycle of insured persons, has long been proposed by pension companies. Now it was also recommended in the OECD review, which found the stability and reliable supervision carried out by the FSC on a daily basis. Multifunds are also one of the proposals in the serious analysis of the pension system published at the end of December, carried out by the Economic and Social Council (ESS), Miltenova also said.
The multifund model consists of three subfunds that follow the life cycle of the insured persons. The dynamic one, which will have the highest profitability, will be suitable for young people because they have time, which is the greatest asset of a young person. The balanced subfund will be for people between 50 and 2-3 years before retirement, and then the transition will be made to the third subfund - the conservative one, explained the Chairman of the Board of Directors of the BADDPO.
Despite the severe global crises over the past 20 years - and economic, and Greek, Covid and geopolitical tensions, pension funds in Bulgaria managed to provide positive returns to insured persons. For the more than 20 years since capital pension funds have been operating, the average annual return is 4%, and this year, for example, it is expected to be over 8%, said Miltenova.
When asked whether it is good to increase insurance contributions, she noted that this is a matter of political decision. But the gap of 11 billion leva. in the State Social Security will increase and according to actuarial reports, the deficits will increase in the years to come.
Any decision for the pension system must be balanced and take into account that none of the three pillars is intended as a substitute for any of the other two, there should be no competition between them, but synergy, said the Chairman of the Board of Directors of the Bulgarian Pension Fund.
The pension system is reliably controlled and highly regulated, Miltenova reminded. On a daily basis, the custodian bank and the Financial Supervision Authority are reported on what happened with the investment during the day. And this is how the price of one share is determined, which shows how the value of pension savings is moving. Unlike banks, which report to the Bulgarian National Bank once a month - pension companies are more regulated, Miltenova added.