Dynamics of Key Indicators and Assessment of the Development and Potential of Voluntary Pension Funds in Bulgaria

Authors:

Pages: 112-122

Abstract:

The multi-pillar model of pension insurance in Bulgaria aims to guarantee an adequate income replacement rate after retirement, amounting to approximately 75–80% of the individual’s final remuneration. This objective must be achieved against the backdrop of a rapidly aging popu lation and growing economic constraints related to chronic deficits in public resources for financing pension payments. Within this model, supplementary voluntary pension insurance (the third pillar of the pension system), implemented through participation in voluntary pension funds financed on a fully-funded basis, is intended to provide approximately 10–15% of post-retirement income. Re gardless of its intended role and the commitment it entails, voluntary pension insurance in Bulgaria remains relatively underdeveloped and not widely adopted as a tool for generating supplemental pension income within the multi-pillar pension system. Nevertheless, it has significant potential to establish itself as a key element in enhancing the sustainability and adequacy of the pension system. The purpose of this study is to analyze the development and current state of pension coverage in voluntary pension funds by tracking the trends in key pension indicators. Based on this analysis, the report presents conclusions and generalizations aimed at identifying existing problems and outlining opportunities for improving voluntary pension coverage, in the context of enhancing personal social responsibility and security within the framework of the multi-pillar pension model in Bulgaria.

Keywords:

pension system; voluntary pension fund; pension indicators; pension.

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