For the period 01.05.2021 – 31.05.2021 no notifications were received from the competent authorities of EU Member States regarding the intention of insurance companies based in EU Member States to operate on the territory of the Republic of Bulgaria under the terms of freedom to provide services or the right of establishment or notifications regarding the withdrawal of the intention to carry out insurance activity on the territory of the Republic of Bulgaria.

As of the end of May 2021, the number of insurance companies based in other EU and EEA Member States which have notified the FSC of their intention to operate on the territory of the Republic of Bulgaria under the principle of freedom to provide services, remains 427 (six hundred and twenty-seven).

During the same period, the FSC received notifications regarding the intention of 16 (sixteen) insurance intermediaries based in EU Member States to carry out insurance intermediation activities on the territory of the Republic of Bulgaria under the terms of freedom to provide services, as well as 5 (five) notification for termination of the activity of insurance mediation on the territory of the Republic of Bulgaria under the terms of the freedom to provide services.

As of 31.05.2020, the insurance intermediaries based in Member States that have stated their intention to carry out insurance intermediation activities on the territory of the Republic of Bulgaria under the terms of freedom to provide services or the right of establishment (through a branch) are 2,282 (two thousand two hundred and seventy-one).

During the period 01.05.2021 – 31.05.2021, the FSC has not sent any notifications to the competent supervisory authorities of EU Member States regarding the intention of insurers based in the Republic of Bulgaria to operate on their territory under the terms of freedom to provide services or notifications of withdrawal of the intention of an insurer based in the Republic of Bulgaria to carry out insurance activity on the territory of another Member State.

As of the end of May 2021, the total number of insurance companies based in the Republic of Bulgaria which have stated their intention to carry out insurance activities on the territory of other EU Member States under the terms of freedom to provide services, remains 18.

For the period 01.05.2021 – 31.05.2021 the FSC has not sent notifications to the competent supervisory authorities of the EU Member States about the intention of insurance intermediaries to operate on the territory of another Member State under the terms of freedom to provide services or the right of establishment.

At the end of the period, the total number of insurance intermediaries based in the Republic of Bulgaria which declared their intention to carry out insurance intermediation activities in the territory of EU Member States under the terms of freedom to provide services or the right of establishment, remains 52 (fifty two) intermediaries.

The updated lists of notifications are available on the FSC website in the section “Supervised entities” – “Notifications”.

The official ceremony of awarding the winners in the 10th edition of the National Audit Competition for Students “Young Auditor” 2021 took place on 9 June 2021 in the hall of the Higher School of Insurance and Finance (VUZF).

The aim of the competition is to promote the audit profession among young people in Bulgaria, as well as to emphasize the role of audit in the business community and society as a whole.

The ceremony was opened by the Rector of VUZF Assoc. Prof. Dr. Grigory Vazov, who thanked the organizers and partners of the competition for the perseverance and energy with which they have been holding this event for 10 years. “Without auditors, public and corporate life in Bulgaria and in the world is impossible. These are some of the most important and qualified people, and to become an auditor is a difficult endeavour that requires a lot of courage and effort, so I congratulate all students who have set out on this path,” said in his address the rector of VUZF Assoc. Prof. Vazov.

On behalf of the Chairman of the Financial Supervision Commission, Mr. Boyko Atanasov, a greeting was given by Ms. Diana Yordanova, Deputy Chairperson of the FSC, Head of the Social Insurance Supervision Department. They congratulated the entire organizing committee of the competition on the occasion of the 10th anniversary. In addition, they wished the organizing committee to continue to create traditions in education, “because this is one of the highest missions, thanks to which students open the door to themselves and others in intellectual and spiritual terms in the process of becoming full-fledged people and individuals. Education is more than learning, education is the attitude, the relationship with the world. It is gained through the acquisition of knowledge and values, with the help of which we interpret the world.”

Welcoming speeches for the jubilee edition of the competition included Mrs. Veronika Revalska, Manager of HLB Bulgaria, Mr. Tsvetan Tsvetkov, Chairperson of the National Audit Office of the Republic of Bulgaria, His Excellency Archimandrite Pahomiy, Rector of Sofia Theological Seminary “St. Ivan Rilski”.

The first place in the Young Auditor competition in 2021 was awarded to Artur Torosyan, a student at VUZF. He received a cash prize of BGN 2,000, provided by the auditing companies HLB Bulgaria and Zaharinova Nexia, for financing higher education in Bulgaria and the opportunity for a one-month internship in one of the audit companies organizing the competition. . The award was presented by Ms. Menda Stoyanova, Member of Parliament and Chairperson of the Committee on Budget and Finance in the 44th National Assembly.

The second place in the competition went to Gabriela Ivanova, a student at VUZF. She received a scholarship of BGN 1,000, provided by the Commission for Public Oversight of Registered Auditors, for higher education in the country and the opportunity for a one-month internship in the audit companies HLB Bulgaria or Zaharinova Nexia. The award was presented by Prof. Dr. Ognyan Simeonov, Chairperson of CPORA.

The third place went to Aleksandar Shargov from Moldova, a student at UNWE. He won a scholarship of BGN 500, provided by the Institute of Certified Public Accountants, for higher education in Bulgaria and also the opportunity for a one-month internship in one of the two audit companies. His award was presented by Mr. Boyko Kostov, Chairperson of ICPA.

The three winners also received special plaques.

At the ceremony 2 special prizes were awarded for participants with the most original ideas in solving cases. Elena Tarakova from UNWE won an annual scholarship in the amount of 15% of the tuition fee for the specialties in the master’s degree at VUZF. Her award was presented by the Rector of VUZF Assoc. Prof. Dr. Grigory Vazov. The second special award was presented to Damyana Yaneva, University of Economics – Varna by Mr. Tsvetan Tsvetkov, Chairperson of the National Audit Office.

A special greeting to the participants in the competition was given by the finalist and winner of the first edition of the Young Auditor Competition 2012 – Dr. Kiril Bashikarov, a graduate of VUZF, who 10 years later is a member of the faculty of the university. He congratulated the winners and participants in this year’s edition of the competition, emphasizing that his participation in this competition has boosted his professional development and career in one of the largest audit companies.

The organizers of the competition are VUZF and the auditing companies HLB Bulgaria and Zaharinova Nexia. The main partners of the competition are the National Audit Office of the Republic of Bulgaria, the Commission for Public Oversight of Registered Auditors (CPORA) and the Institute of Certified Public Accountants in Bulgaria (ICPA).

This year more than 80 students from 9 universities in the country took part in the competition, including the Higher School of Insurance and Finance (VUZF), Sofia University “St. Kliment Ohridski”, University of National and World Economy (UNWE), Academy of Economics “D. A. Tsenov ”- Svishtov, University of Economics – Varna, Southwestern University “Neofit Rilski”, University of Plovdiv “Paisii Hilendarski”, VFU “Chernorizets Hrabar ”, Academy of Economic Research – Bucharest.

Forty competitors managed to reach the second stage, taking a test. Those who passed the test with more than 50% correct answers were admitted to the third stage – solving a case.

The Financial Supervision Commission adopted at the second vote an Ordinance on the reserves of pension insurance companies to guarantee the gross amount of contributions to universal pension funds.

The Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021), which introduces the regulation on the payment of pensions from universal pension funds, provides a mechanism for guaranteeing the gross insurance contributions of the persons insured in these funds. In particular, before the payment of a pension or a one-off or deferred payment in case of acquired pension rights from a universal pension fund, the individual account of the insured person is supplemented by the gross amount of insurance contributions reported by the National Revenue Agency and the National Social Security Institute. In order to implement the guarantee mechanism provided by law, the legislator delegated to the Financial Supervision Commission to determine by ordinance the requirements for the formation, calculation and maintenance of reserves of pension insurance companies to guarantee gross contributions, replenishment of reserves to the required amount and release of funds from them.

In this regard, the ordinance regulates the procedure for each pension insurance company establishing a reserve for guaranteeing gross contributions, requiring this to be done by the end of the month in which the first contribution to the universal pension fund was received, according to the latest information at that time (the fund’s net asset value on the last business day of the specified month). The allocation of funds to cover the reserve is made on the day of its creation. Similarly, the current recalculation of the reserve, its replenishment and release of funds from it are carried out at the end of the month for which the recalculation is made, based on the net asset value of the universal pension fund on the last working day of this month. The procedure for formation and recalculation of the reserve for guaranteeing the gross contributions regulated in the draft ensures its current adjustment in accordance with the legal requirements and parameters.

The Ordinance also amends Ordinance No. 12 of 10 December 2003 on the manner and procedure for determining the minimum return on asset management of supplementary mandatory pension insurance funds, to cover the difference to the minimum return and for the formation and use of the reserves for guaranteeing the minimum return, which are aimed at harmonizing and synchronizing with the regulation of the reserve for guaranteeing gross contributions and the amendments to the Social Insurance Code.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance amending Ordinance No. 9 of 19 November 2003 on the manner and procedure for assessing the assets and liabilities of the supplementary pension funds and the pension insurance company, the net asset value of the fund, for calculating and declaring the value of one unit, for calculating and comparing the return on investment property and for the requirements for keeping individual accounts in order to comply with the changes made by the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021).

The draft ordinance regulates the methods for valuation of financial instruments in which the funds of the payment funds may be invested, and provides for the valuation to be carried out in accordance with the principles adopted for valuation of the same types of instruments in which the supplementary pension insurance funds can invest.

The draft ordinance regulates how the net asset value of a payment fund is determined and introduces the requirements for keeping the analytical accounts of the persons in a deferred payment fund. The scope and structure of the information to be contained in these accounts, including the transactions to be reflected in it, have been determined.

Other changes to the ordinance have been proposed in order to bring it into line with the amendments to the Social Insurance Code.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 24.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance No. 10 on the requirements for the solvency margin and own funds of the pension insurance company, its recovery program and the minimum liquid assets of the company and the funds managed by it.

With the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021) significant changes have been made in the regulation of the payment of pensions from the universal pension funds and the related requirements to the capital of the pension insurance companies, according to the law, a number of these requirements should be developed or fully regulated by an ordinance of the Financial Supervision Commission.

The draft ordinance regulates the structure and the elements of the own funds of the pension insurance companies according to their purpose for covering the solvency margin. The fact that these funds serve as an additional guarantee for the fulfilment of the obligations for the payment of additional lifelong old-age pensions and deferred payments implies that the elements that make them up include only the funds that are reflected in the financial statements and are fully available to the respective company for use without restrictions to cover operating losses. In view of the purpose of own funds covering the solvency margin, they are offset by intangible assets that cannot be used to meet liabilities, accumulated losses, expected costs, etc.

The technical requirements in connection with the calculation of the solvency margin, which according to the Social Insurance Code is determined on the basis of the capitalized value of pensions and deferred payments with assumed guarantees, are regulated in detail. According to actuarial science, this value is determined on the basis of the present value of the commitments for these payments. In order to take into account the most recent mortality data and investment performance expectations, the mortality table published by the National Statistical Institute and the technical interest rate set by the pension insurance company as of the date of the pension or deferred payment calculation are used to determine this value.

Given the purpose of own funds covering the solvency margin of the pension insurance company, the ordinance requires them to be invested by it with the care of a good trader in compliance with the principles of quality, reliability, liquidity, profitability and diversification. The diversification of investments is also ensured through specific quantitative restrictions on the respective categories of instruments and investments in one issuer, explicitly specified in the Social Insurance Code.

The ordinance develops the requirements for the liquid assets of the pension insurance company and the funds managed by it, so as to ensure its ability to meet its current and expected obligations. The changes in the payment of the funds from the universal pension funds have been taken into account where after concluding a pension contract or a deferred payment contract the payment is not made by the pension fund, and the funds in the individual account of the person are transferred to the payment fund. In view of this, with regard to universal pension funds, it is required to maintain liquid assets, which, in addition to current liabilities, also take into account the funds transferred to the payment funds in the previous month.

The ordinance also regulates the requirements to the recovery programs of the pension insurance companies on the basis of the current regulation, adapted in accordance with the changes at the legal level. In connection with the amendments to the Social Insurance Code, the ordinance also updates the provisions of Ordinance No. 17 of 7.07.2004 on the documents required for issuing a permit for transformation of a pension insurance company and a supplementary pension insurance fund and on the requirements to the plans under Art. 327, para. 1, item 3 and Art. 336, para. 1 of the Social Insurance Code.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 24.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance on the requirements for payment funds.

The Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021) stipulates that the payment of pensions and deferred payments in case of acquired pension rights from universal pension funds is carried out by the funds for payment of lifelong pensions, respectively the funds for deferred payments (payment funds). The requirements for the formation and maintenance of the funds for payment of lifelong pensions and the funds for deferred payments, the calculation of the required amount in them and its excess, the supplementation of the funds and the release of funds from them are determined by an ordinance of the Financial Supervision Commission.

According to the Social Insurance Code, the main source for the formation of funds for payments are the funds in the individual accounts of the persons insured in a universal pension fund, with whom pension contracts, respectively contracts for deferred payment have been concluded. In view of the daily calculation of the value of one unit in the universal pension fund and in order to avoid a difference between the receipts in the payment funds and the obligations arising from the concluded pension contracts and deferred payment contracts, the ordinance stipulates that as a rule the accounts of the persons concluding such contracts shall be transferred to the payment funds on the day of concluding the respective contract. In order to provide sufficient time for the transfer of funds, it is possible to perform this action on the first working day after the conclusion of the contract by accruing the obligation on the day of the contract.

The law also gives the right to pensioners and persons with deferred payments to request recalculation of the received pension or deferred payment with contributions received after the conclusion of the respective contract, e.g. if the person has continued to work or as a result of the late transfer of contributions for previous months. In these cases, the transfer of funds from the accounts is made on the date provided by the legislator – the first day of the month following the month of submission of the request for recalculation, respectively on the first working day when it is a non-working day.

The ordinance regulates the required amount of the payment funds, amounting to the obligations to pensioners, the persons with deferred payments and their heirs, including the respective analytical account for the undistributed investment income of the funds received in the funds from individual accounts, intended for storage of the amount of payments in case of failure to achieve the expected return. According to the financial and economic nature and property nature of an analytical account provided for in the Social Insurance Code, the ordinance stipulates that a resource (funds) will be available for the amount / value reflected in the account, which should not be used for purposes other than updating of payments and which does not materialize financial legal relations with the pension insurance company. In other words, this account should be used to set aside funds that can be used specifically for the purpose of updating payments, and these funds do not have a functional link with the pension insurance company.

The ordinance also stipulates the deadlines for supplementing the funds for making payments, which is done from the reserves provided by law and, if necessary, with additional own funds of the pension insurance company, and the release of the excess from them. The procedure for release of funds regulated by the draft is in line with the procedure for the reserves for minimum profitability in the funds for supplementary mandatory pension insurance and the reserves for guaranteeing the gross amount of contributions to the universal pension funds.

The ordinance envisages changes in other current ordinances of the Financial Supervision Commission, which aim to harmonize and synchronize the regulations with the Social Insurance Code.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 24.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote amendments to Ordinance No. 52 of 21.10.2016 on the procedure and manner of deducting the investment fee collected by pension insurance companies in the management of supplementary mandatory pension insurance funds They are dictated by adopted amendments to Art. 201, para. 1, item 3 and para. 2 of the Social Insurance Code (promulgated, SG, 19 /05.03.2021), which introduced a fee collected by the pension insurance companies in the management of the payment funds. The amendments to the ordinance are intended to regulate the procedure for deducting the fee calculated on the net asset value of the payment funds collected by the pension insurance companies in the management of these funds.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 22.06.2021 inclusive.

The Financial Supervision Commission reviewed and adopted at first vote amendments to Ordinance No. 61 of 27.09.2018 on the requirements for advertising and written information materials and Internet pages of pension insurance companies. The aim is to comply with the changes made by the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021), by unifying the information provided by pension insurance companies upon request by the persons insured in the supplementary pension insurance funds

The proposed amendments:

– approve templates of the statements from the analytical accounts of the persons receiving deferred payments from the deferred payment funds and of the information on the achieved real profitability on the analytical accounts;

– regulate the method used by pension insurance companies to calculate the real return on the analytical account of a person receiving payments from a deferred payment fund, i.e. the use of the money-weighted method is envisaged, which is also used to calculate the real return on the individual account in a supplementary pension insurance fund;

– the requirements to the form and content of the information on the volume and structure of investments by types of assets and issuers of financial instruments of the payment funds, the achieved profitability and the level of investment risk in the management of payment funds and their public disclosure by pension insurance companies.

The draft ordinance updates Ordinance No. 47 of 11.07.2012 on the requirements for the information systems of pension insurance companies, and it is also developed in relation to the payment activities of the funds.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 22.06.2021 inclusive.

In pursuance of the objectives set before the Financial Supervision Commission, Mr. Boyko Atanasov presented a communication on the successfully completed process of integrating new communication software in the Commission.

“The changes are part of the Commission’s strategy to improve online services and channels for its communication with supervisors, consumers of non-banking financial services and society at large. Our ultimate goal is timely communication and information,” said Boyko Atanasov.

Today, 27.05.2021, at its meeting the Financial Supervision Commission, with Decision No. 338-ПОД/ 27.05.2021 issued a pension license, pursuant to Art. 122 of the Social Insurance Code, of the Pension Insurance Company DallBogg: Life and Health EAD (in the process of establishment).

The pension license entitles the company to carry out supplementary pension insurance activities after obtaining permission from the Financial Supervision Commission to manage a supplementary pension insurance fund. The permit is issued for each fund separately.