THE FIRST PILLAR PENSION REDUCTION RATIO IS UNFAIR AND RESTRICTIVE TO THE ECONOMY
The coefficient of reduction of the pension from the first pillar in our country born after 01-01-1960 is unfair and restrictive for our economy. In his current calculation he damages the pensioners by 10% and impedes the development of the capital market in Bulgaria. All the participants in the international conference “Multi-pillar pension systems in Europe – benefits and future”, organized by Bulgarian Association of Supplementary Pension Security Companies, came together.
“Poor demographic conditions – an aging population and emigration in recent years are among the prerequisites for a serious deficit in the first pillar of our pension system. According to the NSSI and the Ministry of Finance, currently in Bulgaria the ratio of the employed in the private sector to that of the employed in the budget sector and pensioners is 1.9 people to 2.6 people. By this indicator our country is at the bottom of the ranking not only in the EU. A solution to the problem that creates this disadvantage for the pension system can be sought in the development of the capital pillar. We need to work for better regulation of the second pillar (capital) pension payment phase and develop measures to encourage and attract more social security contributions to it”, said Vasil Velev, a Chairman of Bulgarian Industrial Capital Association.
He added that in the countries with the best pension systems, pension funds own and manage assets worth over 60% of the GDP of the respective country, while in our country this percentage is only 12 percent. In addition, the ratio between the financing of capital market projects and bank lending is twice as unfavorable in the EU than in the US, with Bulgaria at the bottom of the EU ranking.
Former Governor of the National Social Security Institute, Prof. Jordan Hristoskov, urgently needs to take steps to change the Bulgarian pension system. These include the immediate cancellation of the possibility of transferring funds from the second to the first pillar, increasing the contributions in the second pillar from 5% to 10%, even with the cost of reducing the contributions in the first pillar or income tax.
Hristina Mitreva cited the frequently changing labor and pension legislation and the lack of public awareness of pension schemes as obstacles to the development and achievement of the necessary confidence in the pension system in Bulgaria.
According to the participants in the international forum, the three-pillar model is extremely successful and enables various forms of interaction to provide decent and secure pensions. However, they were adamant that the three pillars should not be opposed, but considered as complementary parts of a whole.
The conference also discussed the development of pension policy at national and European level, the benefits of the multi-pillar pension system, which was identified as an alternative at the moment, and the need to significantly increase savings in supplementary pension insurance. The Minister of Labor and Social Policy Biser Petkov, the chairman of the Labor, Social and Demographic Policy Commission Hasan Ademov, the chairman of the National Social Security Institute Ivaylo Ivanov, the chairman of the FSC Boyko Atanasov, the chairman of Pensions Europe Yanvil Bouma, representatives of pension insurance companies took part in the event and the EU, employers’ organizations, trade unions and non-governmental organizations.