Pension insurance challenges – Bulgaria in the context of the forthcoming EU accession Apostol Apostolov – Chairman of the Financial Supervision Commission Sofia, February

Unification of the supervisory bodies - March 1, 2003 Three supervisory bodies (securities and capital market, insurance and pension insurance) united into the Financial Supervision Commission (FSC) Three supervisory bodies (securities and capital market, insurance and pension insurance) united into the Financial Supervision Commission (FSC) The new government body exercises supervision over the following non-banking financial institutions: The new government body exercises supervision over the following non-banking financial institutions: - issuers, broker dealers and investment companies - insurers, insurance brokers and agents - pension insurance companies and the pension funds under their administration.

Advantages of the unified supervision Institutional independence of the supervisory body Institutional independence of the supervisory body Integrated information regarding the financial entities’ activity Integrated information regarding the financial entities’ activity Simplified exchange of information, more efficient solutions to the specific tasks facing each division Simplified exchange of information, more efficient solutions to the specific tasks facing each division Unified efforts and coordinated actions and measures Unified efforts and coordinated actions and measures

Objectives of the FSC Protection of the interests of investors, insurers and the members Protection of the interests of investors, insurers and the members Securing stability, transparency, trust and normal operation of the financial markets Securing stability, transparency, trust and normal operation of the financial markets Maintaining of a loyal and regulated market competition Maintaining of a loyal and regulated market competition On-going supervision over the functioning of financial institutions in compliance with the law On-going supervision over the functioning of financial institutions in compliance with the law

Financial Stability Consultative Council Consultative body with the participation of the Minister of Finance, the FSC and the Bulgarian National Bank Consultative body with the participation of the Minister of Finance, the FSC and the Bulgarian National Bank Cooperates for the creation of a unified policy, cooperation and coordination between the Council members’ actions Cooperates for the creation of a unified policy, cooperation and coordination between the Council members’ actions Provides exchange of information between the Council members Provides exchange of information between the Council members Provides assistance for the security, stability and development of the financial markets Provides assistance for the security, stability and development of the financial markets Cooperates for the perfection and improved efficiency of supervision over the participants on the financial markets Cooperates for the perfection and improved efficiency of supervision over the participants on the financial markets

2004 annual progress report for Bulgaria by the European Commission Positive assessment for: the implementation of the country’s commitments in the field of the non-banking financial sector the implementation of the country’s commitments in the field of the non-banking financial sector the creation and operation of the Financial Supervision Commission the creation and operation of the Financial Supervision Commission the creation and operation of the Financial Stability Consultative Council the creation and operation of the Financial Stability Consultative Council

Challenges facing the FSC Introduction of EU practices, standards and legislation Introduction of EU practices, standards and legislation Cooperation and exchange of information between the supervisory bodies and the member states Cooperation and exchange of information between the supervisory bodies and the member states Participation in the work of the future Commission of the supervisory bodies of the EU member states for the purpose of stimulating the cooperation, coordination and exchange of information between the competent bodies Participation in the work of the future Commission of the supervisory bodies of the EU member states for the purpose of stimulating the cooperation, coordination and exchange of information between the competent bodies Studying and analysis of the regulatory requirements regarding pension insurance in the member states Studying and analysis of the regulatory requirements regarding pension insurance in the member states

Pension insurance in Bulgaria The pension funds (PF) – big institutional investors with significant contribution for the development of the national economy The pension funds (PF) – big institutional investors with significant contribution for the development of the national economy Stability and growth in the sector: Stability and growth in the sector: Growing relative share of the PFs’ net assets/GDP 2,46 % (September 30, 2004) Growing relative share of the PFs’ net assets/GDP 2,46 % (September 30, 2004) Growing number of participants persons (September 30, 2004) Growing number of participants persons (September 30, 2004)

EU accession and challenges for the Bulgarian pension model Improvement of the legislation Analysis and transposition of the EU legislation into the national one Analysis and transposition of the EU legislation into the national one

Forthcoming amendments to the legislation Harmonization of the Bulgarian social insurance legislation with the provisions of: Directive 2003/41/EC regarding the activity and supervision of the professional pension insurance institutions Directive 2003/41/EC regarding the activity and supervision of the professional pension insurance institutions Directive 98/49/EC regarding the securing of additional pension rights for the employed and self-employed persons during their movement within the borders of the European Community Directive 98/49/EC regarding the securing of additional pension rights for the employed and self-employed persons during their movement within the borders of the European Community Directive 86/378/EC regarding the introduction of the principle for equal treatment of men and women in the pension insurance schemes Directive 86/378/EC regarding the introduction of the principle for equal treatment of men and women in the pension insurance schemes

Directions for amendments to the legislation Diversification of the pension schemes with the introduction of occupational pension insurance schemes Diversification of the pension schemes with the introduction of occupational pension insurance schemes Creation of opportunities for cross-border cooperation of the institutions – mutual acknowledgement of licenses, issued by the competent body in the respective member state Creation of opportunities for cross-border cooperation of the institutions – mutual acknowledgement of licenses, issued by the competent body in the respective member state

Directions for amendments to the legislation (2) Mutual acknowledgement of the regulatory principles implemented in the member states Mutual acknowledgement of the regulatory principles implemented in the member states Solving of the problems regarding the payment of life-long, survivor and disability pensions Solving of the problems regarding the payment of life-long, survivor and disability pensions Opportunities for participation of other financial institutions in supplementary pension insurance – insurance, annuity and other financial companies Opportunities for participation of other financial institutions in supplementary pension insurance – insurance, annuity and other financial companies

Challenges facing the business Successful actions in a competitive environment Successful actions in a competitive environment Introduction of EU customer-service standards Introduction of EU customer-service standards Understanding of the pension legislation that is effective in the member states Understanding of the pension legislation that is effective in the member states Coordination in the implementation of pension insurance schemes for employed persons and the members of their families, who move within the borders of the Community under Council Regulation № 1408/71. Coordination in the implementation of pension insurance schemes for employed persons and the members of their families, who move within the borders of the Community under Council Regulation № 1408/71.

Challenges facing the insured persons and pensioners Building of skills for orientation and choice within a competitive environment Building of skills for orientation and choice within a competitive environment Acquiring knowledge regarding pension insurance – necessity for broad-scope educational initiatives for the insured persons and pensioners Acquiring knowledge regarding pension insurance – necessity for broad-scope educational initiatives for the insured persons and pensioners

Thank You for Your attention!