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.

On 27 May 2021 for the 13th consecutive year the award ceremony “Insurer of the Year”, “Pension Insurance Company of the Year” and “Insurance Broker of the Year” for 2020 was held. The organizers of the ceremony are the Higher School of Insurance and Finance (VUZF), Association of Bulgarian Insurers (ABI), Bulgarian Association of Supplementary Pension Insurance Companies (BASPSC), Prof. Rd. Veleslav Gavriyski Foundation and the Bulgarian Association of Insurance Brokers (BAIB).

Special guests at the ceremony were Mr. Boyko Atanasov, Chairman of the Financial Supervision Commission, Mr. Vladimir Savov, Deputy Chairperson of the Financial Supervision Commission, Head of the Insurance Supervision Department, Ms. Diana Yordanova, Deputy Chairperson of the Financial Supervision Commission, Head of the Pension Insurance Supervision Department and Mr. Lazar Lazarov, Deputy Minister of Labour and Social Policy.

In his address to the organizers and participants, Mr. Boyko Atanasov shared:

“When the crisis unfolded, the insurance and pension sector had the choice, on the one hand, to continue to act on momentum and on well-trodden but sustainable models, trying to prevent possible losses. On the other hand, however, we are faced with the choice to create new ways of operating in the market and in relation to customers. Today we clearly see that the participants in the insurance and pension insurance market are successfully adapting to the challenges of the environment by implementing more and more digital services and mobile fintech applications, by building an organizational work culture in which to maintain good and working practices and to introduce new ones, adequate for the market and the conditions. I believe that the driver of change in the sector is focus, thought, emphasis on specific products designed specifically for target groups, because it is the attitude of thinking about people’s needs that is crucial for the stability of the sector. Today, more than ever, we are moving from a crisis response phase to a recovery phase and an innovation phase to provide what consumers need most – security and peace of mind!”

The Chairman of the FSC – Mr. Boyko Atanasov, presented the Grand Prize “Insurer of the Year” in the category “Non-Life Insurance” to DZI Non-Life Insurance EAD. Boyko Atanasov, Chairman of the FSC

Ms. Diana Yordanova, Deputy Chairperson of the FSC, Head of the Pension Insurance Supervision Department, presented the Pension Insurance Company of the Year 2020 award in the category “Supplementary Mandatory Pension Insurance”. The winner was Pension insurance company Doverie AD.

The Insurance Intermediary of the Year award in the Non-Life Insurance category was presented to Amarant Bulgaria OOD by Mr. Vladimir Savov, Deputy Chairperson of the FSC, Head of the Insurance Supervision Department.

Three awards were presented by the Prof. Dr. Veleslav Gavriyski Foundation for Overall Contribution to the development of Bulgarian insurance ”,“ Overall Contribution to the development of Bulgarian Social Insurance” and Overall contribution to the development of insurance intermediation”.

The Chairman of the FSC, Mr. Boyko Atanasov presented the special award for “Overall contribution to the development of Bulgarian insurance” for 2021 to Nedyalko Chandarov, Chairperson of the Board and Chief Executive Officer of Bulstrad VIG.

For 2020 the winners of the prize in the category are Prof. Dr. Stoyan Prodanov, Executive Director of Bull Ins Insurance Company AD and Head of the Finance Department at the Academy of Economics – Svishtov and Petar Avramov – Deputy Chairperson of the Board of The directors of Euroins Insurance Company and Chairperson of the Supervisory Board of IC EIG Re AD. The special award for “Overall contribution to the development of Bulgarian insurance” for 2021 was awarded to Assoc. Prof. Dr. Biser Petkov, former Deputy Chairperson of the FSC, former NSSI Governor and former Minister of Social Affairs, and for 2020 the prize went to Miroslav Marinov, Executive Director of PIC Doverie AD. The award for “Overall contribution to the development of insurance intermediation” for 2021 was given to Monika Minkova, managing partner of IB Renomia, and for 2020 the winner was Mihail Antonov, manager of Insurance Broker AVVI OOD.

The awards presented at the ceremony were divided into 9 categories, and the winners were determined by an expert jury according to pre-determined criteria.

The best companies for 2020 received prizes in the following categories:

• Insurer of the Year – Non-Life Insurance – DZI – Non-life Insurance EAD
• Insurer of the Year – Life Insurance – IC UNICA LIFE AD
• Insurer of the Year – The most dynamically developing company – IC EIG RE EAD
• Pension Insurance Company of the Year – Supplementary Mandatory Pension Insurance – PIC Doverie AD
• Pension Insurance Company of the Year – Supplementary Voluntary Pension Insurance – Allianz Bulgaria AD
• Pension Insurance Company of the Year – The most dynamically developing company – PIC – Future AD
• Insurance broker of the year – Non-Life Insurance – Amarant Bulgaria OOD
• Insurance Broker of the Year – Life Insurance – IGN INSURANCE BROKERS OOD
• Insurance Broker of the Year – The most dynamically developing company – ‘GENERAL BROKER OOD.

For the second year in a row, the ceremony was held online and was broadcast live on Facebook, with only the distinguished companies, organizers and guests presenting the awards in attendance in the hall of VUZF.

The Social Insurance Supervision Department of the FSC announced the results of the supplementary pension insurance activity for the first quarter of 2021. The information was summarized on the basis of the reports and references submitted by the pension insurance companies to the Financial Supervision Commission. The data on distribution of insured persons by sex and age as of 31.03.2021 have also been published.

The total number of insured persons in the four types of pension funds as of 31.03.2021 is 4,829,782 people, increasing compared to 31.03.2020 by 0.91 per cent.

In the system of the supplementary pension insurance as of 31.12.2021, BGN 17,844,456 thousand of net assets have been accumulated. Compared to the end of the first quarter of 2021, the net assets of pension funds increased by 18.95 percent.

The total revenues of pension insurance companies for the first quarter of 2021 amount to BGN 58,023 thousand and increase by 13.49 per cent compared to the reported revenues for the respective period of the previous year. The net financial result of the companies as of 31.03.2021 amounts to BGN 18,098 thousand.

Detailed information on the results of the supplementary pension insurance activity for the first quarter of 2021 and on the insured persons and the accumulated funds as of 31.03.2021 by sex and age are available in the section: Social Insurance activity / Statistics / Statistics and analysis / 2021.