site.btaSet of Long-Term Solutions for Pension System to Be Completed by March 31 - Finance Minister

Set of Long-Term Solutions for Pension System to Be Completed by March 31 - Finance Minister


Sofia, January 8 (BTA) - A set of long-term solutions for the
pension system will be completed by March 31, Bulgarian Finance
Minister Vladislav Goranov told reporters here on Thursday.

As early as next week, the debate on the pension reform will
continue, moderated by Deputy Prime Minister Ivailo Kalfin,
Goranov said, asked whether the pension model in this country
would not be adversely affected by the changes introducing
competition between the National Social Security Institute
(NSSI) and the private pension funds. "With competition in
place, the individual self-interest generates the common good,
this is the invisible hand of the market, famously referred to
by Adam Smith," Goranov said.

He noted that the amendments to the Social Insurance Code are
already a fact and the only rational criticism they have
incurred so far is that they do not allow a flow of funds in
both directions.

He was referring to recently adopted legislative amendments,
according to which 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 NSSI in a first pillar pay-as-you-go system or by a
private universal pension fund in a second pillar fully-funded
system.

"Considering that we have no guarantees and certainty which of
the two models works better, I continue to believe that people
should be given a right of choice and if it turns out that one
of the two models has failed, this responsibility will rest with
 people's personal choice," the Finance Minister commented.

He explained that most countries in Europe have a two-pillar
model: a compulsory pay-as-you-go component and a voluntary
fully-funded component. "Our model is more interesting,
providing for a compulsory fully-funded component as well,"
Goranov said, adding that he proposes that people should be able
 to choose whether to participate in a two-pillar or a
three-pillar model. "Each of the stakeholders may prove its
advantages to the insured, the period of insurance is as long as
 40-45 years and during all that time people should be certain
that their old-age income will be guaranteed," the Minister
said.