Legislative chaos with deposits held in private professional funds

lili_hris@abv.bg

The decision of the Constitutional Court (CC) that the transfer of funds from individual accounts of those insured in private pension funds into the National Social Security Institute, constitutes an infringement on private property rights, threw institutions into a legislative chaos and presented a curious precedent for jurists.

Only 4 out of the total of 12 CC judges signed with "dissenting opinion" on the repeal of paragraph 4 (a) of the Code of Social Security under which last year some BGN 108 mln kept in private pension funds (PPFs) were nationalised. The majority, however, was explicit that this was an anti-market measure. The CC decision is due to be published in the Bulgarian State Gazette.

The funds intended for the so-called early retirement pensions of employees working under harsh conditions were transferred from the PPFs into the NSSI after long negotiations held between the GERB (Citizens for European Development of Bulgaria) government, trade unions, employers and insurers. By March 31, the latter transferred to the Pension Fund of the State Social Security System a total of BGN 108 mln from the personal contributions deposited with the professional funds of nearly 45,000 people, who would become eligible to retire by 31 December 2014. At that point, the major motive of the legislator was that the companies' accounts contained insufficient funds preventing the payment of the early pensions as of the beginning of 2011. To that end, the Parliament passed a special transitional provision in the Code of Social Security, which was now repealed recently by the Constitutional Court.

Actually, the case is a judicial one. The amount of BGN 108 mln was not spent by NSSI, which knows best the essence of the taken decision, commented for Klassa, the Vice-Chairman of the Parliamentary Committee on Budget and Finance, Dimitar Glavchev.

The Minsitry of Labor and Social Policy headed by Totyu Mladenov, in turn, believes that it is still too early to think about the fate of those BGN 108 mln. "We are yet to start negotiations. We will meet at least several times with the Bulgarian Association of Supplementary Pension Security Companies (BASPSC) in order to decide as to whether the funds would be returned to them. For now, we cannot specify the exact refunding scheme which would be applied," said for Klassa, Neda Taneva, Head of MLSP press-centre.

 

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