A new Social Insurance Code was adopted in Bulgaria in August 2003, bringing together and reforming previous separate items of legislation on pensions and other areas of social security. Trade unions have a number of concerns about the Code's provisions on occupational pensions.
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A new Social Insurance Code was adopted in Bulgaria in August 2003, bringing together and reforming previous separate items of legislation on pensions and other areas of social security. Trade unions have a number of concerns about the Code's provisions on occupational pensions.
The Bulgarian social security system has been undergoing a process of reform in recent years, starting with the Code on Mandatory Public Insurance, which came into force on 1 January 2000. The 2000 Code regulated the organisation, financing and functioning of the system, and the rights and obligations of the institutions, employers and insured people, and covered all the contingencies listed in International Labour Organisation (ILO) Convention No. 102 on social security (minimum standards), except healthcare (which is regulated by another law). This Code has now been reformed by a new Social Insurance Code, adopted in August 2003 after six months of parliamentary debate (BG0308101F). It makes significant changes aimed at stabilising the social security system and improving the quality of the protection it provides, notably in the area of pensions where a 'three-pillar' system (ie the state pension, supplementary occupational pensions and individual pensions) is now regulated.
The new Social Insurance Code results from a legislative initiative by the government, which stated two main aims:
to codify existing social insurance law by combining the various separate laws and part of laws in one new code, and to structure and reorganise the laws regulating state public insurance, supplementary obligatory pension insurance, supplementary voluntary pension insurance and additional voluntary insurance for unemployment and other areas; and
on the basis of the outcomes of previous laws and the recommendations of some international experts, to improve the regulations on pension schemes of a 'capital', fund-based type (ie the second and third pillars of the pension system).
During the work on preparing the new Code there were broad consultations with all institutions concerned - such as the National Social Security Institute, the social partners and pension insurance companies. However, support for the changes is not total. The pension insurance companies have expressed dissatisfaction while, immediately after parliament completed its work on the law, the Confederation of Independent Trade Unions in Bulgaria (CITUB) - the country's largest trade union confederation - called on the President of the Republic to veto the new law. According to the unions, some of the provisions of the new law change principles previously negotiated between the social partners with regard to the second pillar of the pension system (ie supplementary occupational pensions). The changes abolish existing voluntary occupational pension schemes which were operational and chosen by the insured people concerned because of the pensions they offered. The unions see the elimination of these schemes as contradicting the choices made by workers and as an administrative intervention in the free and voluntary pensions market. The President took into consideration the unions' arguments and, after discussion with the government and representatives of parliament, placed a veto on the new Code. However, parliament did not agree with his arguments and adopted the law, overturning the veto. The new code is now in force but there are still concerns about it in some quarters.
Eurofound recommends citing this publication in the following way.
Eurofound (2003), New Social Insurance Code adopted, article.
