The Bulgarian government is preparing a law to introduce a ‘Silver Fund’ to bolster first-pillar pensions.
“In accordance with a provision of the 2006 budget law, we are preparing a draft law on a Silver Fund to strengthen the financial stability of the first pension pillar in the context of an ageing population which will be submitted to parliament by 30 June 2006,” officials wrote to the International Monetary Fund.
“The first (public) pension pillar is losing resources because of the reduction of contribution rates and the increase in contributions directed to the second (private) pillar to 4% in 2006 and 5% in 2007.
“Nonetheless, with a dependency ratio of now below 1, continued implementation of the 1999 pension reform (notably the gradual increase in the retirement age), and future application of the legally enshrined indexation formula, we expect the public pension finances to remain under control.”
The comments are in a letter of intent to IMF managing director Rodrigo de Rato, dated March 14. It was signed by finance and economics ministers Plamen Oresharski and Rumen Ovcharov and central bank governor Ivan Iskrov.