site.bta"Social Policy Failed in 2014," Ex-Labour Minister Says

"Social Policy Failed in 2014," Ex-Labour Minister Says

Sofia, December 26 (BTA) - "Social policy did not make much
progress during the outgoing year," Balkan Institute for Labour
and Social Policy Steering Committee Chairman Ivan Neykov
commented to BTA.

"All three governments that were in office in 2014 made bids for
 changes and reforms, were in a reformist mood, but the year is
ending without any reforms in the social sphere," said Neykov,
who was minister of labour and social policy between 1997 and
2001.

In his opinion, radical steps with regard to the pension model,
an entirely new professional qualification system, especially
for elderly workers, and a new labour legislation
differentiating between micro-enterprises and other employers,
are urgently needed in 2015.

Under recently adopted legislative amendments, persons born
after December 31, 1959 will be able to choose irreversibly, on
a single occasion, whether to have their supplementary
compulsory retirement insurance handled by the National Social
Security Institute (NSSI) in a first pillar pay-as-you-go system
 or by a private universal pension fund in a second pillar
fully-funded system.

If this change becomes a fact, private pension funds face a
bleak future, according to Neykov. He argued that because the
8,000 million leva collected by the private funds from
retirement insurance contributions have been invested in
Bulgarian enterprises and in Bulgarian securities, the change
will ultimately rock the stock market and will most probably
trigger new unemployment. "If this unreasonable step is
implemented, the funds will have to sell the securities and the
assets they hold so as to monetize them and be able to transfer
them to the NSSI. This means that the Bulgarian economy will be
starved of investments," he pointed out.

Neykov noted that it may come to a repeat of the situation of
three years ago "when more than 100 million leva of the people's
 fully-funded insurance funds were nationalized to plug a hole
in the NHIF [National Health Insurance Fund] budget. Then the
Constitutional Court pronounced this approach inadmissible and
it was stopped, but the 100 million that had been taken were
never returned to the people," the expert said.

"If we want to retire earlier, we must realize that this is tied
 up with low pensions," Neykov commented. "If we want to get
high pensions, we must realize that the freeze [of the
retirement age rise] is bad because pensions cannot possibly be
high when the retirement age is low."