In Bulgaria pension companies agree on private pension reimbursements

The Ministry of Labor and Social Affairs, trade unions and pension insurance companies have agreed on the rules, which will be applied to the reimbursements of pensions from the second private pension pillar, local media reported. Pensioners will receive lifelong pensions from the private pension funds only if the accumulated funding in their personal accounts is sufficiently high. If this is not the case, they could receive supplementary pensions either as a one-off instalment or as deferred payments. The agreement envisages that even if the respective private pension company has posted negative profit due to bad investments or unfavorable economic environment, its customers are entitled to receiving at least the amount of all of their contributions paid throughout the years. The pension companies will therefore need to maintain a reserve for guaranteeing pension payments.

The guaranteed amount of the additional pension from the private funds will be set to at least 20% of the minimum pension of the state National Social Security Institute, which means BGN 47.52 per month for next year. The second pension from the private fund will be added to the due National Social Security Institute pension but it will be reduced by 20%, which is the share of the contributions paid to the private funds. Citizens could decide to transfer their entire accounts from the private pension insurance funds to the National Social Security Institute until five years before their retirement, if they decide the transfer will guarantee them higher pensions.

The agreement on the second pillar pensions was necessary as the private pension companies should start reimbursing pensioners as of autumn 2021 when the first women born after 1959 will have to receive their additional pensions. Retired men will be entitled to receiving pensions from the private pension funds as of 2024.

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