Finance Ministry Reverses Controversial Changes to Pension Insurance

Bulgaria's Finance Ministry reversed its decision regarding the social insurance contributions of newly insured persons.

According to amendments that were hastily adopted at the end of 2014, those entering the labour market for the first time were provided with a period of one year to decide whether to contribute to a private pension fund or the solidarity fund of the National Social Security Institute (NOI).

The controversial changes were resisted by representatives of the private pension funds, the employers' organisations and the junior coalition partners from the Reformist Bloc (RB).

Hundreds of citizens submitted complaints to the Ombudsman, electronic daily Dnevnik reports.

The Finance Ministry published on its website on Friday proposals for new amendments to the Social Insurance Code, which foresee the reversal of its earlier decision.

According to the proposed changes, those entering the labour market for the first time will have a period of three months during which to choose a private pension fund.

In case the person fails to choose one, the allocation will happen automatically, which was the case before 31 December 2014.

This proposal coincides with the ideas suggested by MPs from the RB.

The draft texts also foresee that people insured in universal pension funds will have the right to transfer their contributions back and forth between NOI and the private funds, but no more than once a year.

The last such switch can be made five years before retirement.

These provisions are much more acceptable than the changes adopted in December, which established that the Council of Ministers is to define the rules for the transfer between funds.

The contributions for a second pension, which are transferred from a private fund to NOI, will go to the Silver Fund.

The contributions are to be stored in the Silver Fund until the retirement of the individual or until the person decides to transfer them back to a private fund.

This will guarantee that individual contributions will be preserved intact in the Silver Fund.

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