Банкеръ Weekly

Briefs

THE SILVER FUND TO GILD PENSIONERS

The Bulgarian state has saved a total amount of BGN211MN that will help it support pensioners in the future. The money has accumulated in the Guarantee Fund for Stability of the State Pension System which is part of the country's fiscal reserve. It includes 25% of the revenues from privatisation of state-owned companies in 2007 and 10% of the budget surplus. In the future, the money will still accumulate on a special account with the Bulgarian National Bank. It will serve for establishment of a demographic reserve fund which is called Silver Fund in other countries. It will guarantee the income of about 2.25 million pensioners in years that appear difficult for the social system when unemployed people become more numerous than those who work and social instalments will not be sufficient for the payment of pensions. If the fund is established in October, the money collected will be transferred to it in January 2009, Emilia Maslarova, Minister of Labour and Social Policy, forecast.
According to the plans of the social ministry, the money will not be touched for ten years, while more will be added to it - 50% of the privatisation revenues, 10% of the budget economies, and revenues from the concession of sites of national significance. Part of the money is planned to be put in low-risk financial instruments that will bring additional income. For this purpose, the fund will have its own investment program to which investment plans will be added every year, the social deputy minister, Lazar Lazarov, said. The entire scheme for the fund's operations is to be described in a special bill that the social ministry intends to propose for discussion by year-end. Earlier, the document will be coordinated with representatives of the trade unions, the employers, and the society.
Meanwhile, a National Consultative Council for Development and Improvement of the Pension System will be established. It will not involve political figures but scientists, employers, trade unions, and interested institutions. The council will discuss the opportunities for intensification of the second and third pillar of pension insurance and for popularisation of the professional pension schemes. Currently, the state subsidizes the pension system with BGN2BN and a hundred employed people maintain 83 pensioners on the average. The European Union plans to make that proportion in the community 100 to 40 by 2013, but the trend in Bulgaria is quite different.

Income
Following the 9.5% increase of pensions planned to become valid from July 1, 2008, the pensions minimum amount will grow to BGN112.6, the average one - to BGN196.4, and the maximum one - to BGN490. This is what the social ministry's annual program stipulates. The social pension will grow by 20% compared to 2007 and will reach BGN83.35. According to minister Maslarova, at the end of 2008 old people will be paid BGN100 as Christmas bonuses again, but until then the ministry will search for mechanisms for another pensions increase.
According to figures provided by the ministry, last year pensioners' incomes have grown by 21.4% on the average compared to 2006, as well as by 33.3% compared to the time the Government's mandate began. However, because of the 12.6% inflation reported in late 2007, their purchasing power has only grown by 13% compared to 2006 and by 28% compared to the beginning of the mandate.

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