Bulgarian Pension Funds Hold Breath for 'Nationalization' Decision

Business » FINANCE | October 26, 2010, Tuesday // 20:05
Bulgaria: Bulgarian Pension Funds Hold Breath for 'Nationalization' Decision The Bulgarian government is deciding Wednesday whether to nationalize personal early retirement accounts. Photo by BGNES

Private pension funds in Bulgaria are holding their breath in expectation of a final decision of the Bulgarian government on whether to go ahead with a controversial plan for the nationalization of employee's early retirement personal accounts.

Representatives on the nine private professional retirement funds in Bulgaria met Tuesday with Prime Minister Borisov to present their position on why they have been protesting the plans so vigorously.

The planned measure, which is included in draft amendments of the Social Security Code, provide for seizing all early retirement accounts of people with jobs with hard working conditions (categorized as jobs in "first" and "second category". Those are supposed to be consolidated in a new solidarity fund, which should be a subdivision of the National Social Security Institute (NOI).

According to Labor Minister Mladenov and NOI head Mitreva, the move will help provide higher and more just pensions for those person who have the right of early retirement.

The private funds, however, have refuted these allegations, saying that they provided the Prime Minister with data about their profitability, and that all of their transactions are constantly monitored by the Financial Supervision Commission.

"We feel confident because after the information that we provided to the government today, there is no way for the government to take a decision based on misleading data," said Daniela Petkova, head of the Doverie retirement funds.

Nikola Abadzhiev, head of the Association of Pension Funds in Bulgaria, also expressed optimism that Borisov will not decision in favor of nationalizing the early retirement accounts.

The representatives of the private funds disagreed with the statement of the Labor Minister that all monthly pensions they provide to early retirees are BGN 50.

The funds have points out that Monday's report of the IMF on Bulgaria's pension system in fact backed their position, and will probably also influence the decision of the Prime Minister.

Abadzhiev said the funds have alerted the IMF and the US Agency for International Development, who are among the initiators of the retirement reform in Bulgaria, for the intentions of the government.

In the meantime, the Supervisory Council of NOI adopted the proposed amendments to the Social Security Code.

The draft changes will be discussed on Wednesday by the National Council for Tripartite Cooperation – including the government, the business sector, and the syndicates, and will then be taken to the weekly Cabinet meeting, where it will be adopted. This is when it will become clear if Borisov has decided in favor of nationalizing the early retirement accounts.

A few over 100 000 people in Bulgaria have jobs categorized as first or second category.

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Tags: retirement funds, pension fund, retirement reform, Prime Minister Boyko Borisov, NOI, National Social Security Institute, Social Security Code

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