FOUR PENSION FUNDS ARE SUFFICIENT FOR THE BULGARIAN MARKET
Sofia Hristova, Executive Director of Allianz Bulgaria Pension Insurance Fund, to the BANKER WeeklyMs. Hristova, are eight pension funds too many or too little for a country like Bulgaria?- I think there will be a restructuring of the market and consolidation of companies in the next years. The optimum number of pension funds for a market like ours is four or five. Some could apostrophize: Well, there is space for everyone under the sun. But a company should possess the necessary financial and human resources, a well-developed branch network, a perfect info system, etc., in order to be able to operate normally and professionally. Presently, we are evaluating the assets of pension funds every day, which needs serious investments and info technologies. A certain number of clients is necessary for enabling the fund to develop its activities in order to fulfil these terms. The Commission for Financial Supervision is the body entitled to control pension funds - if they satisfy the necessary standards from the point of view of financial results, servicing of clients, informational and personnel security. Otherwise, companies operating at a loss for a long time or not satisfying even minimum standards, would threaten the trust in the branch. Does banks' credit expansion influence the operation of pension insurance funds?- As a part of one and the same financial system processes and phenomena in it are felt by all participants. On one hand, the increase of mortgage credits brought to the market a good investment instrument as the mortgage bonds. On the other hand, I believe that some banks' eased criteria for allocating loans could play a trick on the entire financial system. From that point of view the measures for restricting credit expansion are justified. But under the effective legislative requirements for investing pension assets in government securities, these measures influence pension funds as well through the effect they have on the quotations of that paper.Is additional tax relief for pension funds necessary?- What is needed in the first place is gradual improvement and smoothing over of the tax regime. There are still lapses and inaccuracies regarding taxation of instalments and yields from pension insurance. In the end of last year pension insurance companies unified around the proposal for increasing tax relief for voluntary personal pension insurance. Currently, the tax relief is 10% of the taxable income. Such an amount is acceptable for young people, but is not sufficient for those who have less years left before retiring. Differentiated tax relief, depending on the age, could be discussed as a compromise.