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Mincho Koralski PHOTO: Rumyana Toneva
Profits from the private Businesses can also be the envy of a drug trafficker, says the former social minister and current director of the Agency for People with Disabilities.
9 social ministers – the current Denitsa Sacheva and eight of her predecessors in office, met for the first discussion of its kind in the Club “24 Hours” Visionaries “.
The nine discussed how the current state of the pension system came about, which provides only half of the well-deserved income of the elderly. Are there options to get out of this situation and a rapid growth of pensions so that the income really provides a decent life? Is a quick and painless decision for the payment of the second pensions possible? – These were also issues of social ministers. The main issue was whether the government’s proposed pension increase scheme, in which those of the poorest will increase more than those of the highest-income pensioners, is fair. Each of the nine social ministers also presented their concept of the problems and their solutions in their speeches.
We start with Emilia Maslarova, and today we present the opinion of Mincho Koralski. He He held the post of Minister of Social Affairs in the government of Jean Videnov from January 1995 to February 1997. During his time, the state social security funds were separated into an independent fund and the National Institute of Social Security was established as successor to the General Directorate of Social Security. Before that, pensions were paid from the state budget. In 1996, a key change was made to the Pension Law in the way the pension was calculated and the individual pensioner coefficient was introduced. It marked the beginning of professional retirement plans with the established Teachers’ Pension Fund, which to this day is considered the most successful separate early retirement fund. The Law on Protection against Unemployment and Employment Promotion has been passed.
1. The National Social Security Institute had a surplus of BGN 300 million when politicians did not interfere
I started my career in the pension system as an expert and had the opportunity to learn from the best in this system. Before 1989, my friend Nikolay Nikolov, who later became the director of the National Social Security Institute (NSSI), and I wrote an article on Rabotnichesko Delo about what the future of the pension system in Bulgaria should look like. In 1991, as a deputy minister in Filip Dimitrov’s government, I proposed the creation of the National Institute of Social Security, but then Ivan Kostov said that this was complete nonsense. In 1996, I was recruited into the Jean Videnov government as an expert on civil quotas. My condition was that the NSSI be established. We created it in the first year of government. In Bulgaria no such reform has been carried out in any area. This also happened thanks to political support and a ready team. The problem with the old system was that all the money was poured into a single container, without the individual contribution to social security being clear. From there, the pension was calculated on a 3-year basis. This reform was considered the best pension reform in Europe. We have separated the social security budget separately, we have introduced the individual coefficient, which takes into account the contribution of each one for each year. In addition, we present the individual contribution. The most important thing was that we built the only tripartite body so far, where unions, employers and the State participate. As soon as we made this model, we were invited to Germany, where we were told that we had achieved something that no one had yet achieved: the assurance that everyone was in an institution. We managed to create a registry of people with disabilities, and with the help of the World Bank, to buy the most powerful machine, which in 24 hours calculates how much each pension proposal would cost.
Despite the difficult years of inflation at the time the fund was created, surpluses amounted to between BGN 100 and 300 million annually. In 2000 they reached 100 million BGN, then they continued to decrease so that we could reach the current situation: the National Institute of Social Security will be financed from the state budget.
2. Insurance is low, there can be no money for pensions
Bulgaria has some of the lowest social security contributions and this money is not enough. Naturally, in order not to embarrass the pension system, money was added from the budget. Until now, it has been guided by actuarial calculations and has gradually become a system governed by the political accounts that we see in all governments. The social system is based on actuarial calculations, which give the real appearance of the system when it becomes a political appendage, becomes a spending agency or an accountant to receive pensions.
3. Now is the time to be recalculated pensions
The Teachers’ Pension Fund has shown that there can be an effective system without a second pillar. The individual coefficient was introduced so that pensions could be recalculated at any time, and that is the moment. Twelve years have passed since the last pension recalculation.
4. The savings for a second pension can be lost of funds
We created what we set out to do: an insurance institute and a three-pillar system. The truth is that the then World Bank consultant, who was also an expert on Social Security in the United States for 2 terms, Louis Sinov, advised us not to introduce capital pension funds. “If you want to throw your money in golden trash cans, go for it!” In the United States, the capital system is voluntary and there you fight for the trust of the people. The difference here is that suddenly someone decided that they had to take out some money, and these funds were created, with which the state forced people to go to private companies.
There is a point in the Social Security Code that the funds do not guarantee a positive return and do not keep the full amount of the contribution. Someone deals with our money, but without taking responsibility for it. It should be clear that 90% of the population does not know what low profitability means. Low profitability means a loss of money directly on real money. Although they are supposed to be low risk instruments, growing financial, health or other crises raise the question of how well this system can serve this purpose … You have to tell people that their money is not going to somewhere where it accumulates in a bank that they constantly work with, which can be lost. After all, pension companies have a benefit that a drug dealer can envy. A pension company X has a profit of BGN 41 million, distributes a dividend of BGN 13 million in 2019, which represents 32% of the profit. Tell me, who in Bulgaria can afford something like this when we talk about a social system? If things are said more clearly and people make informed decisions, I advise Minister Denitsa Sacheva, after Vladi Goranov did the same, and everyone jumped that he wanted to nationalize the funds. No, an informed decision must be made, because neither Chrysler, nor AEG, nor the other pension funds have a decision from the Bundestag or the Senate, who have said: Put your money in these pension funds. Once the state has told you to run them, 37% of the profits are immoral and unethical.
Look for the views of Ivan Neykov, Lydia Shuleva, Hassan Ademov, Ivaylo Kalfin, Zornitsa Rusinova, Biser Petkov and current Minister Denitsa Sacheva in the next “24 hours” and www.24chasa.bg issues.
More than 1,000 questions were asked of the ministers by the readers of $ 24 Hours. “Some of them are answered directly, and for each case” 24 Horas “will seek answers from the Ministry of Social Affairs and the National Institute of Social Security and will publish the solution to the problems.
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