PensionsEurope and fellow Brussels-based Better Finance are at odds over a profile on Bulgaria included in the latter’s latest report about real returns from long-term and pension savings.

For several years now Better Finance has published such a report, aiming to show how much pension savers in different countries have earned on average after charges and inflation are deducted from benefits; the period covered is 2002-2019. PensionsEurope has previously challenged Better Finance about its analysis.  

According to Better Finance, “pension savings money-weighted real returns are neither calculated nor published in Bulgaria” and its report is the only source of such information.

It said the “defined contribution pillars” in Bulgaria were growing in importance for securing adequate pensions for future retirees, but that its analysis showed very low real returns in universal pension funds (UPFs) and no real returns in voluntary pension funds for the period.

This, it said, showed “the task of providing Bulgarians with adequate pensions and old age security is proving beyond reach”.

In a statement published yesterday, PensionsEurope said that, together with its Bulgarian member association, it had analysed the chapter on Bulgaria in the newest edition of BetterFinance’s report “and concluded that it is incorrect”.

“Based on incorrect information, Better Finance’s recommendation to reverse private pension contributions and transfer savings to the government is dangerous,” said Matti Leppälä, secretary general of PensionsEurope.

An annex to PensionsEurope’s press release comprises comments on details of the Better Finance report from the Bulgarian Association of Supplementary Pension Security Companies (BASPSC), with the latter for example saying that disclosed real rates of return were incorrect, and suggesting alternative figures.

It said the author “manipulatively created his thesis”.

PenisonsEurope said it had not yet had time to analyse other country profiles in depth, “but we are aware that at least some of them contain mistakes and are incorrect as well”.

Approached by IPE, Better Finance disputed points raised by PensionsEurope and BASPSC.

One of these was Leppälä’s claim that Better Finance was being inconsistent in its messages. He referred to a recent press release from the group in which it called for a reversal of the decision paving the way for a dismantling of the second pillar in Estonia.

Christoff Lubomir, author of the Bulgaria chapter, and a spokesperson for Better Finance both rejected this depiction, saying there was no inconsistency between the position taken on the Estonian reform and that on pension savings in Bulgaria.

“The crux of the issue,” they said, “is that the largest pension fund type (UPF) in Bulgaria is not supplementary, but rather financed at the expense of the state pension fund.”

The claim that funded supplementary pensions were increasingly necessary in Bulgaria in order to achieve adequate and sustainable pensions was “manipulative and misleading”, they said.

Christoff said: ”The main point remains intact, whether the real return is 0.3% or 0.85%. Both are less, much less, than the 4% real wages growth, which means that the UPF pension will not compensate for the reduction of the state pension.”

Better Finance’s report can be found here, and PensionsEurope’s statement here.

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