Final Decision on Bulgaria Pension System Delayed

Final Decision on Bulgaria Pension System Delayed

Bulgaria's government is expected to announce on Friday whether it will proceed with plans to transfer the pension accounts in nine private funds with total assets of about BGN 500 M to the state in a bid to solve its fiscal woes.

The decision was was delayed due to the additional information that employers had to provide.

The proposal has proved highly controversial in Bulgaria and critics, including analysts and business groups, fear that if the bill passes, the mandatory general pension funds, whose assets are worth BGN 2.5 B, will be next in line. They say the move will undermine fledgling financial markets and hit investor confidence in the recession-hit country.

The International Monetary Fund (IMF) has also warned the government against changing the pension system, saying that redirecting private funds to the state will not close the gap in the social security system.

Representatives on the nine private professional retirement funds in Bulgaria met Tuesday with Prime Minister Boyko Borisov to present their position on why they have been protesting so vigorously the controversial plan for the nationalization of employee's early retirement personal accounts.

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).

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