They burned 20 percent of the money for a second pension

Private funds have negative returns

Record-high inflation eats away at stashed cash for antiques

One of the volunteers has grown for a year

More than 20% of the money saved for a second pension burned through in the first eight months of the year due to negative returns on pension funds and record high inflation.

For the period from January to September 1, 2022, all universal pension funds in the country have a negative yield, and for different companies the yield varies from -3.04% to -11.73%, according to “Labor” calculations based on the Commission’s database for Financial Supervision (FSC). The average return for the period of universal funds is about -9.3%.

In addition, inflation for the first seven months of the year alone is 11.3%, according to the latest data of the National Statistical Institute. If we add inflation for August, the total increase in prices for the first eight months of the year will exceed 12%. As a result, the accumulated money for a second pension actually decreased by more than 20 percent for the period from January to the end of August.

The negative yield of pension funds is due to the decline of shares on stock exchanges around the world. The Dow Jones index on the New York Stock Exchange for the first eight months of the year has fallen by 12.88%. The U.S. S&P 500 fell 16.77 percent, Germany’s DAX fell more than 20 percent, and Madrid’s IBEX 35 index fell more than 10 percent. A significant portion of the money managed by pension funds is invested in shares of companies traded on stock exchanges around the world. The decrease in the prices of these shares leads to the realization of a negative yield from the funds.

The situation is not much different with voluntary pension funds, in which people voluntarily provide themselves in order to receive another, third pension. All discretionary funds have negative YTD returns ranging from -0.27% to -11.17%.

If we look at the performance of private pension funds over a period of one year, the results are not good either. Again, all universal pension funds have negative returns, which range from -1.94% to -11.96%, with the average drop around 9.2%. Inflation for a period of one year, however, is a record 17.3 percent. It turns out that money for antiques actually warmed up by more than 25% within a year. That is, the money that is set aside for paying pensions, instead of growing, loses its value.

For voluntary pension funds, there is not much difference in their performance over a period of one year. Almost all voluntary pension funds have a negative return for the year, which ranges from -0.07% to -11.27%, but one of them has a minimal positive return.

Data for a period of 10 years

For most, inflation is greater than yield

For 18 years, the yield is over 50%

Over an 18-year period, only one universal pension fund has achieved a higher return than inflation.

In order to properly evaluate the activity of pension funds, it is good to look at what the results of their activity are for a long period of time, for example, for 10 years or for the last little more than 18 years, since the pension funds have announced detailed data on the profitability achieved by them. The reason for this is that often in times of crises, shares on the stock exchanges fall in price, but then when economies recover, they rise in price again.

Over a period of 10 years, the yield achieved by universal pension funds is between 20.55% and 38.76%. This is an extremely good yield, but the problem is that inflation in the country for the same period is 30.7%. It turns out that the return of most of the universal funds that worked throughout the 10-year period was lower than inflation. And only two of the funds have higher returns than inflation.

For a period of just over 18 years, the situation is not much different. The yield of universal pension funds ranges from nearly 50% to around 105%. And the inflation for 18 years is 103%, according to the official data of NSI. It turns out that only one pension fund has achieved a higher return than inflation over such a long period of time.

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The money is enough for 12 minimum pensions

We have BGN 4,040 accumulated in private funds

Men have more

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Men have slightly more money in universal pension funds than women.

The accumulated money of those insured in private universal pension funds is on average BGN 4,040 per person, according to the latest data of the Financial Supervision Commission at the end of June. The amount is quite small – less than an average monthly salary of those working in IT companies.

The accumulated money of each insured person depends on the insurance income and the years during which a person has been insured.

Therefore, the sums of people who are now entering the labor market are less than the funds of those who have been working for 10-20 years. In addition, the private funds are used for insured people who have long since left the country, do not work here and, accordingly, do not rely on a pension from the private funds. In order for the data to be more correct, it is good to remove the people who emigrated. The average amount of accumulated funds of an insured person, for whom at least one insurance contribution has been received in the last 12 months, is BGN 5,443, according to the latest data of the Financial Supervisory Service at the end of June.

The amount is slightly below what is needed to pay 12 minimum pensions of BGN 467 each. This means that if a person wants to receive at least the minimum pension for the country per month from his private pension fund, the money will be enough for one year.
If a person wants to use his second pension to simply support the family budget and the basic state pension he receives, he can decide to take, for example, BGN 50 per month. Even in this case, however, the accumulated money for a second pension will only be enough for nine years and one month. At the same time, according to official data of the National Institute of Social Sciences, after a person retires, he receives his pension for an average of more than 22 years. It turns out that even if a person receives small amounts per month from private funds, the money will be enough for a few years, and then in old age he will have to rely only on the state pension.

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Nearly 646,000 people are insured in the voluntary pension funds. But not all of them have voluntary contributions every month.

Men have slightly more money accumulated in private pension funds than women, data from the Financial Supervisory Service show. With an average amount of money saved of BGN 4,040, men have BGN 4,220 and women – BGN 3,848. The reason for this is that women’s average salaries are lower than men’s, and women have more often not working to raise children or care for a family member. However, the difference in the accumulated sums of men and women is not large – it is less than one minimum pension.

The situation is not much different with voluntary funds, where people provide for a third pension at will.

The average amount of accumulated money per person insured in these funds is BGN 1,970. The amount is not large, because many people are insured in these funds by their employers. But when changing jobs, the new employer often does not pay insurance and the accumulated amount of the insured person remains small. In June, the average amount of the monthly contributions of those insured in the voluntary pension funds was nearly BGN 90, according to data from the Financial Supervisory Service. The total number of those insured in the voluntary funds is nearly 646 thousand people. But many are self-insured and only contribute when they have money they want to save. Still others are provided by former employers, their available money stands, but the new employer does not make voluntary contributions for them.


The article is in bulgaria

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