In connection with the frequent inquiries regarding the determination of the amount of pensions from universal pension funds (the so-called “second pension”) and given the high public interest in the adoption and alignment of regulations with amendments to the Social Insurance Code governing the payment of pensions from the universal pension funds, promulgated in the State Gazette, 19 / 5 March 2021, the Financial Supervision Commission (FSC) provides the following clarifications:
The Social Insurance Code (SIC) specifies the types of pension products and the obligations of pension insurance companies in relation to their payment and guarantees. The determination of the amount of the supplementary lifelong old-age pension from the universal pension funds is regulated at the legal level and is determined on the basis of the following 3 components:
- the funds under the individual account of the insured person
The information on the accumulations on the individual accounts of the persons insured in the universal pension funds is kept by the pension insurance companies. The insured person has the right to receive at any time information about the current state of the accumulated funds in their individual account. Regardless of the chosen type of payment – one-off, deferred or lifelong, for determining the initial amount of the pension, all funds on the individual account of the person at the time of concluding the pension contract are taken into account.
- the table of mortality and average life expectancy, published by the National Statistical Institute
The table for mortality and life expectancy of the National Statistical Institute is publicly available information available on the Institute’s website and is updated according to the statistical information calendar. Using a single table of mortality and calculating the pensions from universal pension funds by single formulas ensures the same way of calculating the pensions of all persons, regardless of the fund in which they are insured.
- technical interest rate
When calculating the amount of pensions, a technical interest rate is used, which reflects the expectations for the return on investment of pensioners’ funds. Its specific amount is determined by each pension insurance company in compliance with the regulatory requirements.
In this regard, the FSC adopted the Ordinance on Technical Interest Rates and Formulas for Calculating Supplementary Lifetime Pensions for Old Age and the Ordinance on Reserves of Pension Insurance Companies for Guaranteeing the Gross Amount of Contributions to Universal Pension Funds Related to Calculating the Supplementary Lifetime Pension for Old Age. As a result, pension insurance companies have the necessary information and can perform forecast calculations and consult their clients.
With regard to the deadlines for exercising the right of persons to choose social insurance:
Persons who, up to and including 30 June 2021, have less than 5 years until the retirement age and who have not been granted a pension for length of service and age, may, once, until 30 June 2021, exercise the right to choose to change their insurance from a universal pension fund to the state social insurance.
From 01 January 2022, other deadlines for exercising this right apply:
– from 1 January 2022 to 31 December 2025 – not later than 1 year before the age under Art. 68, para. 1;
– from 1 January 2026 to 31 December 2030 – not later than 2 years before the age under Art. 68, para. 1;
– from 1 January 2031 to 31 December 2035 – not later than 3 years before the age under Art. 68, para. 1;
– from 1 January 2036 to 31 December 2037 – not later than 4 years before the age under Art. 68, para. 1;
– after 1 January 2038 – not later than 5 years before the age under Art. 68, para. 1
