PENSION MARKET IS STABLE FOR THE TIME BEING
Bulgarians are obviously not inclined to gamble when their pension instalments are concerned. That conclusion can be drawn from the data about the additional pension insurance for the first three months of 2003, released by the Insurance Supervision Department of the Commission for Financial Supervision. There were no substantial changes in the market share of the different pension insurance companies, although some of them distributed very high yields on the individual accounts of their clients for 2002. As the BANKER weekly wrote, the yield of Doverie's universal pension funds was 17.38%, that of the pension insurance company ING was 16.43%, and that of LUKoil Garant - was 17.95 per cent. These companies' yield exceeded the inflation for the same period, the base interest rate, and the average interest rate on one-year bank deposits.Counter to the traditional opinion that the yield is a key factor for attracting clients, the market share of two of the above-mentioned companies has decreased. Thus, ING holds 7.92% of the market, while in end-2002 its market share was 8.04 percent. The leader LUKoil holds 2.98% of the market, down from 3.04% in the end of last year. Doverie registered a symbolic growth of almost 1%, reaching a maximum share on the domestic market - 39.11 per cent.Of course, things cannot be different at present. The stability of the pension companies' market shares is also guaranteed due to the lack of a confirmed procedure for transferring ensured people from one fund into another. Its passing has been postponed since 2002 and will become a fact only after the new Social Insurance Code is approved. The managers of some pension companies forecast that transferrence of citizens from one fund to another will be possible in end-2003 at the earliest. Thus, only then it will be known for certain how many of the ensured people choose a certain insurance fund according to the yield of their instalments. On the other hand, the managers of pension companeis are not much worried about the possible withdrawal of insured people - the yield should not be evaluated on the basis of 3-month or 6-month results. The expenses for managing the money, the fees for transferring and drawing it, are important too. Moreover, Bulgarians are not particularly inclined to act hastily.For the time being the high yields remain at their 2002 levels. LUKoil again offers the best opportunity for investment, with a 17.57% yield. ING has climbed up to the second position with the 16.45% yield it has achieved, and Doverie has remained third with a 16.06% yield on the managed assets of the people, insured in its universal fund.Concerning the Insurance Supervision Department's report for the yield in 2002, the Executive Director of LUKoil Garant Kiril Chervenkov said that no violations of the requirements for investing the citizens' money had been established. The company's results are due to the purchased government eurobonds, issued when Bulgaria's USD-denominated foreign debt was swapped for euro, Mr. Chervenkov specified. Thus, LUKoil Garant and its clients profited from the foreign debt restructuring deal and the decline of the US dollar depreciation against the euro. Almost 20% of LUKoil's assets are invested in stocks. The respective percentage of ING's investment in shares is 11 per cent. Government securities (such as the above-mentioned eurobonds) account for the bulk of the investment portfolio of companies, the leaders included. These are 90.05% of Doverie's assets, 74.02% of ING's assets, and 69.52% of LUKoil's assets.Bank deposits (mainly in foreign currencies, which means lower interests) amount to 5.05% in Doverie, 8.75% of a total of 14.71% in ING, and 10.57% in LUKoil. The minimum interest on deposits in LUKoil is 7%, Mr. Chervenkov explained. Anyway, there are sceptics among the managers of insurance companies, who are not inclined to exaggerate the significance of high yields. For example, at a press conference on May 8, 2003, the Executive Director of the pension insurance company Saglasie Grigor Dimitrov hinted that the levels of yield were not in compliance with the security requirements and doubted their credibility and lawfulness. However, his suspicions were not confirmed by the recent inspection of the insurance supervision. Mr. Dimitrov projects that the overrated yield levels would involve the pension funds in a dangeous struggle, analogical to that of the banks prior the collapse of the Bulgarian banking system in 1996. However, it is still too early to speak about a battle, at least while the transferrence of insured people has not begun yet.