Year of Challenges for Social Security Branch.

(From PARI Daily)

Byline: Gergana IVANOVA

IF we have to describe the year 2004 for the pension insurance branch in Bulgaria in just one word, it will be 'challenge'. The year started with the process of account transfer, provisions in the Social Security Code were challenged in court, and companies launched daily appraisal of pension funds' assets and introduced unit value of accounts.

Following the coming into effect of the ordinance on transfer on January 1, 2004, insured persons can now change their participation and switch their individual accounts to another voluntary pension insurance fund. To do this, they have to present an application to change their participation to the offices of the pension company to whose fund they want to switch.

In February, 78 MPs approached the Constitutional Court over the ban provided for in the Social Security Code on pension companies' and connected persons' renting property that is owned by funds managed by the companies. Supplementary mandatory pension insurance funds can invest up to 5% of their assets in investment property in the country; voluntary funds can invest up to 10% of their assets. In both cases the law rules out the use of the property by pension companies and persons connected with them. In April the court rejected the claim.

In addition to calculating the accumulated funds by individual accounts of the people insured in supplementary pension insurance funds, from July 1 the savings began to be measured in units as well. The unit is a proportionate part of the net assets of a fund. The value is obtained by dividing the assets of the fund by the total number of units at the end of each working day.

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