Банкеръ Weekly

Briefs

PENSION FUNDS REQUIRE NEW REGULATIONS

The Bulgarian Association of Companies for Additional Pension Insurance (BACAPI) will insist that when drafting legislative amendments the Insurance Code should include regulations, setting the amount of the installments to the universal pension funds, so that they would be known for at least the next 3-5 years. This was one of the decisions made at the organisation's general meeting, its Chairman Nikola Abadjiev told the BANKER weekly. Representatives of the association have been included in the teams preparing amendments to the social laws together with experts from the National Insurance Institute (NII) and the State Agency for Insurance Supervision. Work will begin this month and the drafts should be ready by end-April or early May, the Government's legislative programme projects.Under the effective legislative framework, the installment for a second pension is set every year together with NII's annual budget. It is 2% for 2002 and the rate for 2003 will be known in the end of the year.This is not suitable either to the firms or to the eight pension funds. We want to set things clear much earlier. This will be advantageous for all concerned parties. Business cannot wait till the last moment in order to make plans for expenses throughout the following year, Mr. Abadjiev justified the requirement. People will not know how much money they will have on their individual accounts. If the size of the installment is known earlier, the pension insurance companies will be able to work out better strategies and manage more efficiently the collected funds, which is also to the interest of the insured people, Mr. Abadjiev explained.The initial idea when the legislative framework for the universal pension fund was worked out was that the installment should be increasing by 1% each year until reaching 5 per cent. According to the agreement, reached in end-February with the World Bank mission (lead by its Country Director for Bulgaria, Romania and Croatia Andrew Vorkink), the 5% should be a fact in 2007.According to the decisions of its general meeting, the BACAPI will insist for creating more advantageous conditions for investing the money, collected in the funds. The idea is to motivate them to invest in big infrastructural projects in Bulgaria. Thus, the pensions companies themselves will be opening working positions, which means that they will attract new insurances, Mr. Abadjiev added.Speeding up the money transfers from the firms and the NII to the pension funds is one of the purely technological perfections in the laws, demanded by the association. The legislatively set term for this is one month, but as the BANKER has already written, the NII guarantees that the remittances will be effected within 10 days.The amendments are urgent because the pension companeis are already beginning their proper operation, the BACAPI justified its demands. Having made huge expenses last year in order to attract clients to the professional an universal pension funds, some of the companies are now expected to wind up the fiscal 2001 in the red. This, however, will by no means affect the yields they are going to distribute, Mr. Abadjiev said. The funds distributed average yields of 6.7% for 2000 and it will be probably higher for 2001. The final annual balance will be clear by end-March or early April, when the companies' general meetings will be held.

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