SOCIAL INSURANCE CODE (title amend. SG/67 of 2003)
Promulgated State Gazette, issue 110/17.12.2000; Decision No 5 of the Constitutional Court of the Republic of Bulgaria of 29.06.2000 – issue 55/07.07.2000; amended and supplemented issue 64/04.08.2000; a,. issue 1/02/01.2001; am. and suppl. issue 1/04.01.2002, in force from 01.01.2002; am. and suppl. issue 10/29.01.2002, in force from 01.01.2002; am. and suppl. issue 45/30.04.2002, in force from 30.04.2002; issue 74/30.07.2002, in force from 01.01.2003., suppl. issue 112 of November 29th 2002, amended and supplemented, issue 119 of December 27th 2002, in force from January 1st 2003, suppl., issue 120 of December 2002, amended and supplemented, issue 8 of January 28th 2003, in force form March 1st 2003, suppl. issue 42 of may 9th 2003, amended and supplemented, issue 67 of July 29th 2003
Subject
Article 1. (suppl. SG 1/2002, amended, issue 67 of 2003) This Code shall regulate the public relations concerning: 1. public social insurance for general sickness, work injury, occupational sickness, maternity, unemployment, old age and death; 2. supplementary social insurance, which includes: а) supplementary mandatory pension insurance for old age and death; b) supplementary voluntary pension insurance for old age, disability and death; c) supplementary voluntary insurance for unemployment and/or professional training.
PART ONE PUBLIC SOCIAL INSURANCE (Title amended – SG 67/2003)
CHAPTER ONE GENERAL PROVISIONS Scope of Social Insurance
Article 2. Public social insurance shall provide benefits, assistance and pensions in the following cases: 1. temporary incapacity; 2. temporarily reduced working capacity; 3. disability; 4. maternity; 5. (new - SG 1/2002) unemployment; 6. (previous item 5 – SG, issue 1 of 2002) old age; 7. (previous item 5 – SG, issue 1 of 2002) death.
Social Insurance Principles
Article 3. Public social insurance shall be performed on the basis of the following principles: 1. mandatory participation and comprehensiveness of the insurance; 2. solidarity of the insured persons; 3. equality of the insured persons; 4. social dialogue in the management of the social insurance system; 5. fund organization of insurance funds.
Insured Persons
Article 4. /1/ The following persons shall be obliged to be insured for all social insurance risks under this code: 1. (amended, issue 119 of 2002) workers and employees hired for more than five working days, or 40 hours, in one calendar month, regardless of the nature of the work, the way of payment, and the source of funding. Persons included in the program From Social Assistance to Employment shall not be insured for unemployment; 2. government employees. 3. (new – SG 74/2002) judges, prosecutors, investigators, bailiffs, recordation judges and court employees; 4. (amended – SG 64/2000, previous item 3, issue 74 of 2002, amend., issue 119 of 2002) regular duty military staff under the Act on the Defense and Armed Forces of the Republic of Bulgaria, government employees – officers, sergeants, and civilians under the Act on the Ministry of the Interior, as well as the government employees - officers, sergeants and civil persons under the Penalty Enforcement Act;
2 5. (amended – SG 1/2002, previous item 4, issue 74 of 2002) individuals employed as cooperative members compensated for their labor; cooperative members working without labor relations shall not be insured for unemployment; 6. (previous item 5 – SG, issue 74 of 2002) individuals working under a second or additional labor contract; 7. (previous item 6 – SG, issue 74 of 2002) individuals working under contracts for management and control of commercial companies. /2/ (amended – SG 64/2000, 1/2002) Workers hired by one or more employers for not more than five working days (40 hours) during a calendar month shall be obliged to be insured for disability, old age and death, and for work injury and occupational sickness. /3/ (Partially declared unconstitutional by the Constitutional Court of the Republic of Bulgaria with respect to working pensioners included in the scope of persons obliged to be insured under this provision – SG, 55/2000) The following persons shall be obliged to be insured for disability due to general sickness, for old age and death: 1. individuals registered as freelance professionals and/or craftsmen; 2. individuals performing economic activity as sole traders, owners of, or partners in, commercial companies; 3. (declared unconstitutional by the Constitutional Court of the Republic of Bulgaria – SG, 55/2000) Ph.D. students if they do not have pension insurance on other premises; 4. (amended – SG 64/2000) agricultural producers; 5. (amended – SG 64/2000, suppl. issue 119 of 2002) persons working without labor relations and receiving monthly remuneration equal to, or higher than, one minimum monthly wage, after the allowable expenses have been deducted from it, if such persons have not been insured on other grounds during the respective month; 6. (new – SG 119/2002) persons working without labor relations, who are insured on different grounds during the respective period, regardless of the amount of their remuneration. /4/ (amended – SG, 64/2000, suppl. 1/2002) Individuals under paragraph 3, items 1, 2 and 4, may, by their own choice, be insured for all insured social risks with the exception of work injury and occupational sickness and unemployment. /5/ (New– SG, 64/2000, suppl. 10/2002) Individuals assigned to work abroad by a Bulgarian intermediary may be insured for general sickness disability, for old age and death, on selected insured income between the minimum and the maximum insured income determined in the Social Security Budget Act.
3 /6/ (new – SG, 64/2000) Persons, to whom pension has been granted, may insure themselves by their own will in the cases when they exercise activities under para 3, items 1, 2, 4 and 5 of this Code. /7/ (new – SG, 1/2002) The procedure for social insurance of self-insured persons, persons working without a labor or official relation, and persons assigned to work abroad by a Bulgarian employer or through intermediation of a Bulgarian organization, shall be determined by the Council of Ministers upon proposal of the NSSI.
Insurers
Article 5. /1/ Insurer shall be any individual, legal entity or its branches, as well as other organizations obliged by law to make social insurance contributions for other individuals. /2/ Self-insured persons shall be individuals obliged to make social insurance contributions entirely at their own account. /3/ (New – SG, issue 67 of 2003) Legal entities, their branch offices, and sole traders shall be registered at the regional offices of the NSSI within 7 days following their entry in the court register or the act of their constitution. Self-insured persons shall be registered at the regional offices of the NSSI within 7 days following the commencement of their activity. /4/ (amended – SG, 1/2002, previous para 3, issue 67 of 2003) Insurers shall be obliged to provide the National Social Security Institute with periodical information concerning insured income, public social insurance contributions, health insurance and supplementary mandatory pension insurance, social insurance payments, and length of service, separately for each worker or employee. /5/ (previous para 4, amended – SG, issue 67 of 2003) Data under paragraph 4 above shall also be provided to the National Social Security Institute by individuals under paragraph 2. /6/ (previous para 5, amended – SG, issue 67 of 2003) The National Social Security Institute shall issue instructions regarding the terms, content, manner, and procedures for presenting and keeping the information under paragraph 4. /7/ (previous para. 6, amended – SG, issue 67 of 2003) The insurer shall be obliged, upon request by the insured person or his representative, to issue, free of charge, all required documents concerning length of participation and insured income within 14 days. /8/ (new – SG, 1/2002, previous para 7, issue 67 of 2003) In case of liquidation, merger, acquisition, spin-off, split-up or transformation, insurers shall be obliged to notify the territorial office of the NSSI, where they are registered, prior to the submission of the request to court. The
4 evidence of the notification shall be a condition for processing of the request by the court. /9/ (new – SG, 1/2002, previous para 8, issue 67 of 2003) In case of opening of a bank account, the insurer shall declare such circumstance within seven days, to the territorial office of the NSSI where it is registered.
Social Insurance Contributions and Insured Income
Article 6. (Am. and suppl. SG 64/2000, am. 1/2002) /1/ Contribution rates for public social insurance funds shall be determined separately for each fund by the Public Social Security Budget Act in accordance with the covered social insurance risks. /2/ The income for which contributions shall be owed, shall include all kinds of remuneration and income from labor. The Public Social Security Budget Act shall determine: 1. the maximum monthly amount of the insured income during the calendar year; 2. the minimum monthly amount of the insured income during the calendar year for self-insured individuals 3. (new – SG 119/2002) the main economic activities and occupation groups for which minimum monthly insured income is introduced for the calendar year by activity and group of occupations, as well as the minimum insured income for them. /3/ (am. SG 119/2002) Social insurance contributions for workers and employees and for persons under art. 4, para 1, item 7, shall be owed on the received gross monthly compensation, not less than the minimum insured income under para 2, item 3, and not more than the maximum monthly amount of the insured income. Social insurance contributions for workers and employees and for persons under art. 4, para 1, items 5 and 7, and para 3, items 5 and 6, and shall be divided between insurers and insured persons in the following ratio; a) in 2000 – 2001 – 80:20; b) in 2002 2004 – 75:25; c) in 2005 – 70:30; d) in 2006 – 65:35; e) in 2007 – 60:40 f) in 2008 – 55:45; g) in 2009 and after – 50:50 /4/ (am. SG 119/2002) Gross remuneration for persons under art. 4, paragraph 1, item 7 and para 3, item 5 and 6, on which insurance contributions shall be due, shall be determined after deduction of the allowable expenses.
5 /5/ (Am. and suppl. – SG 74/2002, suppl. SG 119/2002) Social insurance contributions for persons under art. 4, paragraph 1, items 2, 3 and 4, shall be owed on the received gross monthly compensations related to such relations, but on not more than the maximum amount of the insured income, and shall be at the expense of the state budget, the judiciary power budget, respectively. /6/ Social insurance contributions to the Work Injury and Occupational Sickness Fund shall be paid at the expense of the insurers. /7/ Social insurance contributions for persons under art. 4, paragraph 3, items 1, 2 and 4, shall be paid at the expense of the insured persons and shall be owed in advance: 1. for persons under art. 4, para 3, items 1 and 2 – on monthly insured income between the minimum and the maximum monthly amount of the income determined with the Public Social Insurance Budget Act for the respective year; 2. for persons under art. 4, para 3, item 4 – on monthly insured income between 50 per cent of the minimum and the maximum monthly amount of the income determined with the Public Social Insurance Budget Act for the respective year. /8/ (suppl. SG 119/2002) The final amount of the monthly insured income for persons under para 7 shall be determined for the period during which labor activity has been performed in the previous year, on the basis of the income declared in a schedule of the annual tax return under the Individual Income Tax Act, and may not be smaller than the minimum monthly insured income or higher than the maximum monthly insured income. The final contribution shall be owed on the annual insured income, determined as a difference between the declared income and the sum of incomes on which advance contributions have been paid. Social insurance contributions shall be paid at the expense of the insured persons in the amounts determined for the Pensions Fund. /9/ Farmers registered in accordance with the law, whose only activity is farming, shall not determine a final amount of their insured income. Social insurance contributions for such persons may be paid from funds for aiding farmers, in accordance with terms and conditions determined by the Council of Ministers. /10/ For persons receiving income from activities on grounds different from art. 4, contributions shall be paid on the sum of their insured incomes, but on not more than the maximum monthly amount of the insured income as follows: 1. incomes from labor and/or official relations, from company management and control contracts and from labor activity as cooperative members;
6 2. insured income as sole traders, owners of, or partners in, commercial companies, freelance professionals and/or craftsmen, and farmers; 3. income from activity without labor relations. /11/ Contributions in the amount established for the Pensions Fund, determined in accordance with para 3, 4, and 5, respectively, shall be charged on funds for social expenses allocated permanently or periodically to persons under para 4, item 1, in cash or in kind. /12/ Social insurance contributions at the expense of the employer may not be deducted from the compensation of the insured persons. Such compensation may not be reduced with their amount. /13/ Compensation elements and incomes for which contributions are paid shall be determined by an act of the Council of Ministers upon proposal of the NSSI. /14/ (new SG 119/2002) The schedule under para 8 of the annual tax return under the Individual Income Tax Act shall be approved by the Minister of Finance and the Governor of the National Social Security Institute.
Art. 6a. (new – SG 45/2002) /1/ The tax bodies shall present to the NSSI information regarding declared income or income established by an act of the tax bodies for the taxable persons in accordance with the Individual Income Tax Act. /2/ The NSSI shall provide the tax administration with information concerning the income under art. 6, para 2.
Terms for Payment of Social Insurance Contributions
Article 7. /1/ (am. – SG 1/2002) Contributions for public social insurance, which are paid at the expense of the insurers, shall be paid simultaneously with the payment of the wage or a part thereof. /2/ (am. – SG 1/2002) Contributions paid at the expense of the insured person under art. 4, paragraph 1, shall be paid upon payment of the compensation due. /3/ (am. – SG 1/2002) Contributions for self-insured persons shall be paid in person or through contribution payment centers by the 10th day of the month following the month for which they are due. /4/ (new – SG, 64/2000, in force from 01.08.2000) Private farmers only involved in farming and insured only for general sickness disability, old age and death, may pay their contributions by March 31 of the year following the year for which they are due.
7 /5/ (new – SG 1/2002) Social insurance contributions for persons working without a labor relation shall be paid by the insurer by the 10th day of each month following the month for which they are due. /6/ (new – SG 1/2002) Social insurance contributions shall be paid at banks or post branches and offices in accordance with terms and provisions determined by the NSSI, to the respective accounts of public social insurance and supplementary mandatory pension insurance. /7/ (new – SG 1/2002) Insurers shall pay social insurance contributions by means of payment orders each month separately by making transfers from their accounts to the respective account of public social insurance and supplementary mandatory pension insurance upon payment of salaries, including advance payments. In case of withdrawal of amounts for payments, termination of the insurance or leave other than the regular payment of salaries or advance payments, no separate payment order shall be issued – these amounts shall be included in the payment order for the first following payment of social insurance contributions. /8/ (new – SG 1/2002) Banks shall allow withdrawal of money for making payments of labor remunerations, including advance payments, as well as cash benefits, and other payments from public social insurance, only after submission of a payment order for transfer of social insurance contributions and a declaration of the insurer that the contributions due on such amounts for public pension, health and supplementary pension insurance have been paid. /9/ (new – SG 1/2002) Insurers who do not have a bank account shall pay social insurance contributions in cash at banks and post branches and offices to the respective account of the public social insurance and supplementary mandatory pension insurance. /10/ (new – SG 1/2002) The portion of social insurance contributions which is at the expense of the insured persons pursuant to art. 6, para 3, shall be paid upon payment of their salaries and shall not be deducted from advance payments with the exception of cases when only advance payment has been made for the respective month.
Contribution Payment Centers
Article 8. /1/ (am. – SG 64/2000) Individuals under art. 4, para 3, items 1, 2 and 4, as well as legal entities, may establish contribution payment centers, which shall be registered in the regional office of the NSSI. Contribution payment centers shall perform the insurance of their members. Insurers who are members of such contribution payment centers and who have up to ten employees, may perform their social insurance, as well as the social insurance of individuals working for them without a labor relation, through such contribution payment centers.
8 /2/ (am. – SG 64/2000) Contribution payment centers shall perform social insurance of individuals under paragraph 1: 1. (am. – SG 64/2000, 1/2002) by collecting contributions due for public social insurance, supplementary mandatory pension insurance, health insurance, and transferring them to the respective accounts of the National Social Security Institute. 2. in case of occurrence of an insurance event, they shall pay benefits and assistance due to the insured persons; 3. forming and maintaining documentation related to the social insurance of the members of the contribution payment centers. /3/ The terms and conditions for establishment and functioning of contribution payment centers, shall be regulated by an act of the Council of Ministers upon proposal of the National Social Security Institute.
Length of Participation in the System
Article 9. (Am. and suppl. SG 64/2000, am. 1/2002) /1/. (am. SG 119/2002) Length of participation shall be calculated in days, months, and years. The following shall be considered as length of participation: 1. the time during which persons under art. 4, para 1, items 1 – 4, and para 2 have worked in accordance with the full legal working time, if contributions have been paid or are due on the paid remuneration, but not less than the minimum insured income under art. 6, para 2, item 3 for the respective occupation; when the person has worked part time, the length of participation shall be recognized in proportion with the legally determined working hours; 2. the time for which contributions have been paid or are due on not less than the minimum salary established for the country, for persons under art. 4, para 1, item 5 and para 3, item 5; when the remuneration of persons under art. 4, para 1, item 5, on which contributions have been paid, is smaller than the minimum salary established for the country, the length of participation shall be recognized in proportion with the latter; 3. the time for which contributions have been paid or are due on not less than the minimum insured income under art. 6, para 2, item 3, for persons under art. 7, para 1, item 7; 4. the time for which contributions have been paid by self- insured persons. /2/ The following periods shall also be recognized as length of participation without payment of contributions: 1. paid and unpaid leave for raising a small child; 2. paid and unpaid leaves for temporary incapacity and pregnancy and birth-giving;
9 3. unpaid leave up to 30 days in one calendar year; 4. period during which the person has received unemployment benefits. /3/ Length of participation shall also be: 1. (am. SG 119/2002) the period during which persons under art. 4, para 1, items 1, 2, 3 and 4 have not worked due to incorrect prevention from work or suspension from work; contributions for this period shall be paid at the expense of the insurer on the last gross salary if the person has not been insured; if the person has been insured on different grounds, contributions shall be paid on the difference between the last gross compensation and the insured income for the period, if this income is lower; 2. (am. SG 119/2002) the period during which persons under art. 4, para 1, items 1, 2, 3 and 4 have been unemployed due to discharge officially recognized as illegitimate by the competent bodies – from the date of discharge until the person’s reinstatement in his/her former position; contributions for this period shall be paid at the expense of the insurer on the last gross salary if the person has not been insured; if the person has been insured on different grounds, contributions shall be paid on the difference between the last gross compensation and the insured income for the period, if this income is lower; 3. the period during which a person discharged due to detention by the authorities has become unemployed as a result of that, when he/she has not been prosecuted, has been acquitted or the penal proceedings have been terminated because the person has not committed the crime or the act is not a criminal offence; contributions for this period shall be paid at the expense of the republican budget on the last gross salary; 4. the period during which the person, transferred to a more appropriate job, has not worked because the employer has not provided an appropriate position in accordance with the prescription of the health bodies; contribution shall be paid for this period at the expense of the employer on the benefit due; 5. the period during which the individual has received benefits for the period he/she has been unemployed, pursuant to the Labor Code, the Government Employees Act, the Higher Education Act; contributions for this period shall be paid on the benefit due; contributions for workers shall be in the ratio under art. 6, para 3. /4/ The period recognized as length of participation under paragraph 3, items 1-4, shall be recognized in accordance with the labor category under which the person has been employed prior to the incorrect prevention from work or discharge, dismissal, serving the time in prison and the period during which the person, transferred to a more appropriate job, has not worked, if this is more favorable for the person.
10 /5/ Social insurance contributions under para 3 shall be in the amount required for the Pensions Fund and supplementary mandatory pension insurance. /6/ The period during which the parent (step-parent) or spouse has taken care of disabled persons with over 90 per cent lost working capacity needing constant care, due to which the former were not insured and did not receive pension, shall be considered length of participation at retirement. At retirement, contributions for the period considered length of participation shall be paid from the state budget in the amount determined for the Pensions Fund on the minimum salary established through the date of granting of pension. /7/ The period of military or peace time alternative service and the period during which a non-working mother has raised a child up to the age of three shall be recognized as length of participation at retirement. Contributions for such periods shall be paid in the amount for Pensions Fund at the expense of the republican budget on the minimum salary established through the date of granting of the pension. /8/ Length of participation at retirement, if this is more favorable for the persons, in the ratio 4 years for 5 years of labor category three, shall be the period during which the persons have worked full-time under a labor contract: 1. under a supplementary or second labor contract with not less than three working hours; 2. have exercised labor activity as sole traders, owners or partners in commercial companies; 3. have exercised a freelance profession and/or crafts. /9/ Length of participation under para 8 shall be recognized for government employees who have exercised any of the occupations under the same paragraph in conformity with the provisions of the Government Employees Act. /10/ Length of participation under para 8 and 9 shall be recognized only for the purposes of eligibility for length of participation and old age pension under art. 68. /11/ (new SG 119/2002) The terms and procedure for calculation of length of participation shall be determined by a regulation of the Council of Ministers upon proposal of the National Social Security Institute.
Commencement, Duration, and Termination of Social Insurance
Art. 10. (am. and suppl. SG 64/2000, am. 1/2000) Social insurance shall commence on the day the persons start the performance of labor activity under art. 4 and shall continue until its termination.
11 Social Insurance Rights of Persons Insured for All Social Insurance Risks
Article 11. /1/ Persons insured for all social insurance risks shall be entitled to: 1. cash benefits for: a) temporary incapacity due to general sickness, work injury and occupational sickness, for sanatorium treatment and urgent medical tests or examination, quarantine, suspension from work upon prescription of the medical bodies, sick person care or a quarantined family member care, urgent accompanying of a sick family member for medical examination, tests or treatment, as well as for healthy child care suspended from kindergarten due to a quarantine at the kindergarten or of the child; b) labor readjustment in the event of temporarily reduced working capacity due to general sickness, work injury or occupational sickness; c) labor readjustment due to pregnancy and breast feeding; d) pregnancy and birth giving; e) child raising; 2. cash benefits for: a) disability due to general sickness when there are no grounds for granting a pension; b) prevention and rehabilitation; c) ancillary equipment related to the injury; 3. (new SG 1/2002) unemployment benefits; 4. (previous item 3 – SG, issue 1 of 2002) pensions for: a) length of participation and old age; b) disability due to work injury or occupational sickness; c) disability due to general sickness. /2/ (am. SG 1/2002) In case of death of the insured person, his/her spouse, children and parents shall be eligible for a lump sum benefit amounting to two times the minimum wage and a survivor pension. /3/ (new SG 1/2002) Cash benefits for disability due to general sickness, when the insured person does not have the required length of participation for granting of a disability pension due to general sickness, shall amount to a 60-day benefit for temporary incapacity determined under art. 41.
Social Insurance Rights of Individuals Insured for Work Injury and Occupational Sickness
12 Article 12. /1/ (am. SG 1/2002) Individuals insured for work injury and occupational sickness shall be entitled to the following: 1. cash benefits for temporary incapacity due to work injury or occupational sickness, sanatorium treatment, urgent medical examination, medical tests and/or treatment; 2. cash benefits for prevention and rehabilitation; 3. disability pension for work injury or occupational sickness; 4. amounts for ancillary equipment related to the injury. /2/ (am. SG 1/2002) In case of death of the insured person, caused by the work injury or the occupational sickness, his/her spouse, children, and parents shall be eligible for a lump sum benefit amounting to two times the minimum wage and a survivor pension.
Rights of Persons Insured for General Sickness Disability, Old Age and Death
Article 13. /1/ (am. SG 1/2002) Individuals insured for general sickness disability, old age and death, shall be entitled to: 1. general sickness disability pension; 2. old age and length of participation pension; 3. amounts for ancillary equipment related to the injury. /2/ (am. SG 1/2002) In case of death of the insured person, his/her spouse, children, and parents shall be eligible for a lump sum benefit amounting to two times the minimum wage and a survivor pension.
Working Capacity Evaluation
Article 14. /1/ Working capacity evaluations shall be organized and managed by the Ministry of Health Care. /2/ The degree of permanently reduced working capacity shall be determined as a percentage in comparison with the capacity of a healthy person. /3/ The principles and criteria of working capacity evaluations, as well as the manner for establishment of working capacity, shall be determined by an act of the Council of Ministers. /4/ (new SG 1/2002) The control on the working capacity evaluation shall be exercised by the Ministry of Health Care and the National Social Security Institute.
Working Capacity Evaluation Bodies
Article 15. /1/ Evaluation of temporary incapacity shall be performed by the respective medical doctors, the medical advisory committees,
13 territorial boards of health experts (TBHE) and the National Board of Health Experts (NBHE). /2/ Evaluation of permanent incapacity shall be performed by the territorial boards of health experts (TBHE) and the National Board of Health Experts (NBHE).
Appealing of Decisions of Evaluation Bodies
Article 16. /1/ (am. SG 1/2002) Appeals and objections on behalf of interested persons and bodies (certified individuals, insurers, the National Social Security Institute, and the medical working capacity evaluation bodies, as well as the working capacity evaluation controlling bodies within the health care system) shall be raised: 1. (am. SG 1/2002) against decisions of the respective medical doctor - before the medical advisory board; 2. (am. SG 1/2002) against decisions of the medical advisory board - within 14 days following their receipt, before the Territorial Board of Health Experts; 3. against decisions of the Territorial Board of Health Experts – within 14 days following their receipt, before the National Board of Health Experts; 4. (am. SG 1/2002) against decisions of the National Board of Health Experts – before Sofia City Court in accordance with the provisions of the Administrative Proceedings Code. /2/ Working capacity evaluation bodies may also, upon their own initiative, repeal or amend incorrect decisions of bodies under them, as well as send back their decisions for elimination of errors or incompleteness. /3/ The director of the National Board of Health Experts may assign reconsideration of incorrect or contradictory decisions by its members.
Implementation of Decisions
Article 17. Decisions of working capacity evaluation bodies, which have not been subject to appeal, or the respective appeals have been completed, shall apply to all individuals, bodies, and organizations in the country.
CHAPTER TWO
FINANCIAL STRUCTURE
14 Social Insurance Funds
Article 18. Public social security funds under this Code shall be allocated in: a) the Pensions Fund; b) (new SG 1/2002) the Non-Labor Related Pensions Fund; c) the Work Injury and Occupational Sickness Fund; d) the General Sickness and Maternity Fund; e) (new SG 1/2002) the Unemployment Fund.
Budget of the Funds
Article 19. /1/ (suppl. SG 1/2002) The Parliament shall adopt the Public Social Security Budget Act which shall include a consolidated budget of public social insurance, the budgets of the funds under art. 18 and the budget of the National Social Security Institute, and shall be effective for one calendar year. /2/ The draft law on the public social security budget shall be prepared by the National Social Security Institute and shall be presented to the Council of Ministers for coordination with the draft state budget. The Ministry of Finance shall present to the National Social Security Institute the main indicators for the draft social security budget after adoption of the macroeconomic framework of the state budget. /3/ The draft law under paragraph 2 shall be prepared in accordance with a complete budget classification for the state budget. /4/ The Public Social Security Budget Act shall determine a general reserve for all funds under art. 18, formed by reallocations in accordance with a rate determined under the Public Social Security Budget Act, on the basis of a social insurance technical plan. Revenues from deficiency acts shall also be allocated to this reserve. /5/ The draft law on the public social security budget shall be reviewed by the Parliament simultaneously with the draft law on the state budget. /6/ In the event that the public social security budget is not adopted by the Parliament by the beginning of the budget year, social insurance revenues shall be collected and social insurance expenditures shall be incurred in accordance with the active legislation, and up to one twelfth of the expenses provided for in the budget of the previous year may be used for the National Social Security Institute bodies per month.
Budget of the National Social Security Institute
15 Article 20. /1/ The budget of the National Social Security Institute shall be part of the consolidated budget of public social security and shall be developed in accordance with the revenue and expenditure items of the budget classification. /2/ The revenue to the National Social Security Institute budget shall be formed as: 1. (am. and suppl. SG 1/2002) a percentage of the income from social insurance contributions to the Pensions Fund, the General Sickness and Maternity Fund, the Work Injury Occupational Sickness Fund and the Non-Labor Related Pensions Fund; 2. a percentage of the income from health insurance contributions; 3. (repealed SG 1/2002); 4. a percentage of the income from mandatory supplementary pension contributions; 5. loans; 6. non-tax revenue. /3/ (in effect from Jan 1, 2001) The expenditures of the budget of the National Social Security Institute shall be allocated for: 1. expenditures for activities related to public social security and for activities related to health insurance, Professional Qualification and Unemployment Fund, for mandatory supplementary pension insurance (for collection and control of social insurance contributions); 2. capital expenditures (for acquisition of fixed tangible assets, non- tangible assets and general repair), related to the overall activity of the National Social Security Institute; 3. expenditures for paying off loans. /4/ The percentages under paragraph 2 items 1 - 4 shall be determined in the Public Social Security Budget Act. /5/ Expenditures under paragraph 3 shall be determined by the Supervisory Board of the National Social Security Institute upon proposal by the Governor.
Revenues to the Pensions Fund
Article 21. /1/ Revenues of the Pensions Fund shall be raised from: 1. social insurance contributions from insurers, insured persons and self- insured persons; 2. social insurance contributions and revenue as provided for by other laws for general sickness disability, old age and death insurance; 3. (am. SG 1/2002, issue 67 of 2003, in force as of January 1st 2003) amounts from the state budget intended for social insurance of individuals under art. 4, paragraph 1, items 2 and 4 and art. 9,
16 paragraph 6 and sums from the judicial authorities’ budget for persons under Art. 4, para. 1, item 3; 4. (am. SG 1/2002) amounts from the republican budget intended for: a) social insurance contributions in the cases under this Code; b) subsidies determined under the State Budget Act for the current financial year; c) health insurance contributions for pensioners. 5. reimbursement of social insurance expenditures incurred in the cases under the respective laws and regulations; 6. (suppl. SG 1/2002) fines, property sanctions and penal interest; 7. fees as determined in a tariff by the Council of Ministers; 8. interest and dividends; 9. donations and bequests; 10. (repealed SG 1/2002); 11. other sources.
Expenditures of the Pensions Fund
Article 22. The resources of the Pensions Fund shall be appropriated for the following: 1. (am. SG 1/2002) payment of pensions for old age and length of participation, general sickness disability pensions, survivor pensions and supplements thereto; 2. (suppl. SG 1/2002) updating, indexation and compensation of pensions under item 1; 3. other expenses related to pension insurance. 4. (new SG 1/2002) health insurance contributions for pensioners.
Revenues to the Non-Labor Related Pensions Fund
Art. 22a. (new SG 1/2002) Revenues to the Non-Income Related Pensions Fund shall be raised from: 1. amounts from the republican budget for: a) payment of pensions for which contributions are not due and for indexation, compensations and supplements thereto; b) supplements to pensions of war veterans; c) supplements under art. 84, determined by pensions under item a); 2. reimbursement of social insurance expenditures in the cases determined in laws and regulations; 3. fees determined in a tariff of the Council of Ministers; 4. interest and dividends; 5. donations and bequests.
17 Expenditures of the Non-Labor Related Pensions Fund
Art. 22b. (new SG 1/2002) /1/ The resources of the Non-Income Related Pensions Fund shall be used for payment of pensions for military disability, civil disability, social pensions for old age, social disability pensions, special merit pensions, personal pensions, for indexations, compensations and supplements thereto, as well as for supplements to pensions of war veterans and for supplements under art. 84, determined by pensions for which contributions are not due. /2/ / The resources of the Non-Income Related Pensions Fund shall also be used for payment of pensions for which contributions are not due under the repealed Pensions Act and the Public Social Insurance Act, as well as for indexations, compensations and supplements thereto.
Revenues to the Work Injury and Occupational Sickness Fund
Article 23. /1/ The revenues to the Work Injury and Occupational Sickness Fund shall be raised from: 1. social insurance contributions; 2. amounts from the state budget for social insurance of persons under art. 4, paragraph 1, items 2 and 4 and amounts from the judicial authorities’ budget for persons under Art. 4, para. 1, item 3; 3. revenue as provided for by other laws for work injury and occupational sickness insurance; 4. reimbursement of social insurance expenses incurred in the cases under the respective laws and regulations; 5. (suppl. SG 1/2002) fines, property sanctions and penal interest; 6. fees as determined in a tariff of the Council of Ministers; 7. interest and dividends; 8. donations and bequests; 9. other sources.
Expenditures of the Work Injury and Occupational Sickness Fund
Article 24. The resources of the Work Injury and Occupational Sickness Fund shall be appropriated for the following: 1. payment of cash benefits, pensions and assistance; 2. updating, indexation and compensation of cash benefits, pensions and assistance; 3. activities for prevention of work injuries and occupational sicknesses; 4. ancillary equipment related to the injury;
18 5. other expenses related to work injury and occupational sickness insurance.
Revenue to the General Sickness and Maternity Fund
Article 25. The revenue of the General Sickness and Maternity Fund shall be raised from: 1. social insurance contributions; 2. (amend. – SG 67/2003, in force as of January 1st 2003) amounts from the state budget for social insurance of persons under art. 4, paragraph 1, items 2 and 4 and amounts from the judicial authorities’ budget for persons under Art. 4, para. 1, item 3; 3. revenue as provided for by other laws for general sickness and maternity insurance; 4. (new SG 1/2002) transfers from the republican budget for payment of: a) monthly child allowances; b) lump sum assistance for birth-giving; c) monthly allowances for disabled children; 5. (previous item 4 – SG 1/2002) reimbursement of social insurance expenditures incurred in the cases under the respective laws and regulations; 6. (previous item 5 – SG 1/2002) fines, penalty payments and penal interest; 7. (previous item 6 – SG 1/2002) fees as determined in a tariff of the Council of Ministers; 8. (previous item 7 – SG 1/2002) interest and dividends; 9. (previous item 8 – SG 1/2002) donations and inheritances; 10. (previous item 9 – SG 1/2002) other sources.
Expenditures of the General Sickness and Maternity Fund
Article 26. The resources of the General Sickness and Maternity Fund shall be appropriated for the following: 1. payment of cash benefits and assistance; 2. updating, indexation and compensation of cash benefits, pensions and assistance; 3. funding of activities for reduction of general sicknesses; 4. ancillary equipment; 5. other expenses related to general sickness and maternity insurance; 6. (new SG 1/2002) payment of monthly child allowances; 7. (new SG 1/2002) payment of lump sum assistance for birth-giving; 8. (new SG 1/2002) payment of monthly allowances for disabled children.
19 Revenues to the Unemployment Fund
Art. 26 a. (new SG 1/2002) The revenues of Unemployment Fund shall be raised from: 1. social insurance contributions; 2. fines, property sanctions and penal interest; 3. targeted transfers from the state budget for benefits under art. 233 of the Defense and Armed Forces of the Republic of Bulgaria Act; 4. interest and dividends; 5. donations and bequests; 6. other sources.
Expenditures of the Unemployment Fund
Art. 26b. (new SG 1/2002) The resources of the Unemployment Fund shall be used for payment of unemployment benefits, benefits under art. 233 of the Defense and Armed Forces of the Republic of Bulgaria Act and health insurance contributions for the unemployed.
Short -Term Interest-Free Loans to the Funds
Article 27. (am. SG 119/2002) In the event of temporary deficiency of resources in the funds necessary for payment of immediate social insurance benefits, short-term interest-free loans may be taken from the republican budget with the permission of the Minister of Finance upon proposal of the Governor of the National Social Security Institute, as well as loans from social purpose funds, up to the amount of their reserves, with the permission of the Minister of Finance and the Minister of Labor and Social Policy, upon proposal by the Supervisory Board of the National Social Security Institute.
Investment of Free Funds
Article 28. (suppl. SG 64/2000, am. SG 1/2002) Temporarily free funds in the public social security funds may be invested in deposit accounts in the Bulgarian National Bank or for acquisition, at the primary market or through the Ministry of Finance, of government securities issued by the Bulgarian government.
Bank Services
20 Article 29. (am. SG 1/2002) /1/ Banks, servicing accounts of the NSSI, shall be determined by the Ministry of Finance and the Bulgarian National Bank. The Supervisory Board of the National Social Security Institute shall choose the banks authorized to serve the accounts of the NSSI from the list of banks determined by the Bulgarian National Bank and the Ministry of Finance. /2/ The terms and conditions for servicing of NSSI accounts shall be determined by the Ministry of Finance and the Bulgarian National Bank.
Implementation of the Budget
Article 30. /1/ The implementation of the public social security budget shall be performed by the National Social Security Institute. /2/ The primary administrator of the public social security budget shall be the Governor of the National Social Security Institute. /3/ Secondary administrators of the public social security budget in the regional offices of the National Social Security Institute shall be their directors.
Annual Report
Article 31. /1/ The annual report on the implementation of the public social security budget shall be drawn up by the National Social Security Institute and shall be submitted to the Parliament by the Governor of the National Social Security Institute for adoption simultaneously with the report on the implementation of the state budget. /2/ The decision of the Parliament for adoption of the report on the implementation of the public social security budget shall be promulgated in the State Gazette.
CHAPTER THREE
MANAGEMENT
Functions of the Ministry of Labor and Social Policy
Art. 32. The Ministry of Labor and Social Policy shall develop, coordinate and implement the government policy related to public social security.
National Social Security Institute
21 Article 33. /1/ Public social security shall be managed by the National Social Security Institute. It shall report to the Parliament. /2/ The National Social Security Institute shall be a legal entity with head office in Sofia. The institute shall establish its regional offices. /3/ The National Social Security Institute shall: 1. implement the public social security budget; 2. collect social insurance contributions and all public social security receivables; 3. collect social insurance contributions: a) for health insurance; b) (repealed SG 1/2002); c) for supplementary mandatory pension insurance; 4. control compliance with social insurance legislation; 5. organize the activity related to detection of administrative violations and administrative penalties; 6. (suppl. SG 1/2002) pay out pensions and unemployment benefits and organize the activity related to other social insurance payments; 7. collect information and maintain an information system for insured persons, insurers and self-insured persons; 8. organize activities related to preparation and implementation of international agreements in the sphere of public social security; 9. (new SG 1/2002) issue an information newsletter; 10. (new SG 120/2002) create and maintain an information system with data on persons working under labor relations. 11. (new – SG 68/ 2003) conclude contracts for providing information, information products and social insurance activities. /4/ The functions of the National Social Security Institute related to collection of contributions under paragraph 3, items 2 and 3, and distribution of collected amounts, shall be regulated in accordance with an act of the Council of Ministers. /5/ (new SG 120/2002) The information under para 3, item 10 may be presented to the General Labor Inspection Executive Agency, the controlling bodies of the Ministry of Finance, the Ministry of Interior bodies, and the bodies of the judiciary power in accordance with a procedure determined by the Governor of the National Social Security Institute.
Managing Bodies
Article 34. Managing bodies of the National Social Security Institute shall be: 1. the Supervisory Board;
22 2. the Governor and Deputy Governor.
Supervisory Board
Article 35. /1/ (suppl. SG 112/2002, amend. Issue 67 of 2003) The Supervisory Board shall be comprised of one representative of each representative organization of workers and employers recognized in accordance with the Labor Code and an equal number of representatives determined by the Council of Ministers, one of which shall be the Executive Director of the National Revenue Agency. /2/ The representatives of workers’ and employers’ organizations under paragraph 1 shall be determined by their managing bodies at a national level. /3/ (new SG 1/2002) When the number of representatives of workers or employers is different, the quota of organizations with a smaller number of representatives shall be supplemented up to the quota of the organizations with a bigger number of representatives, upon agreement between the interested organizations. /4/ (new SG 1/2002) In case of absence of an agreement under para 3, the quota of national organizations with a smaller number of representatives shall not be supplemented and the membership of the Supervisory Board shall be determined in accordance with para 1 only. /5/ (previous para. 3 – SG 1/2002) The mandate of the Supervisory Board shall be four years. /6/ (previous para. 4 – SG 1/2002) The list of members of the Supervisory Board, as well as all changes in this list, shall be promulgated in the State Gazette by its chairman. /7/ (previous para. 5 – SG 1/2002) The members of the Supervisory Board shall appoint a chairman among themselves on a rotation principle. /8/ (previous para. 6 – SG 1/2002) The Supervisory Board shall be convened by the chairman or upon request by one third of its members. /9/ (previous para. 7 – SG 1/2002) The meetings of the Supervisory Board shall be regular if they have been attended by at least one half of all members. Decisions shall be made if more than one half of all members of the Supervisory Board have voted. /10/ (previous para. 8 – SG 1/2002) The Governor of the National Social Security Institute shall participate in the meetings of the Supervisory Board with a deliberative vote.
Functions of the Supervisory Board
Article 36. The Supervisory Board shall:
23 1. determine the main directions of the activity of the National Social Security Institute; 2. approve the drafts of the annual budget of public social security and the respective report; 3. exercise control on the activity of the National Social Security Institute, its Board of Managers, its Governor and Deputy Governor; 4. approve draft laws and regulations for public social security before their submission for adoption by the respective government bodies; 5. adopt Rules for the organization and operation of the National Social Security Institute, and Rules for the operation of the Supervisory Board; 6. (suppl. SG 1/2002) upon request by debtors to public social security funds, in exceptional cases of financial difficulties, upon proposal by the Governor, the Supervisory Board may defer the payment of receivables over 100 thousand leva for a period of up to three years in accordance with art. 116; deferred payments shall be collected with the respective legal interest; 7. (amend. – SG issue 67 of 2003) make decisions for writing off bad debts after completion of the bankruptcy or liquidation proceedings of the insurers, as well as for liabilities to public social security of insurers and self-insured persons up to 1,000 BGN, which cannot be collected under the terms of Art. 110, para 5; 8. make decisions for acquisition and disposal with National Social Security Institute property above the amount determined by the Rules for Organization and Activity of the National Social Security Institute; 9. make decisions for appropriation of funds from the reserve of the public social security budget; 10. make decisions for acquisition of real estate by the National Social Security Institute against liabilities to public social security funds; 11. determine the compensation of the Governor and Deputy Governor.
Governor and Deputy Governor
Article 37. /1/ The Governor and the Deputy Governor of the National Social Security Institute shall be appointed by the Parliament for a period of four years. /2/ The Governor of the National Social Security Institute shall act on behalf of the institute, shall organize and manage its activity and shall represent it before all individuals and legal entities in the country and abroad. /3/ In the absence of the Governor his functions shall be undertaken by the Deputy Governor. The Deputy Governor may perform functions
24 assigned to him/her by the Governor. The Deputy Governor shall convene and chair the meetings of the Board of Managers. /4/ The Governor and the Deputy Governor may be discharged before the expiration of this period if they have been convicted for a general criminal offense and a sentence has come into effect, if they regularly fail to fulfill their obligations, if they have been impeded from performing them for a period longer than six months, or if they have filed a resignation before the Parliament. /5/ The Governor shall: 1. perform the operation management of the National Social Security Institute; 2. determine instructions, social insurance related forms and other documents mandatory for all individuals and legal entities in the country; 3. present for approval of the Supervisory Board: a) the draft public social security budget; b) a draft report on the implementation of the public social security budget; c) draft legislation for public social security; d) draft rules for the organization and operation of the National Social Security Institute; e) draft decisions for appropriation of the reserve in the public social security budget; 4. establish and close down offices of the National Social Security Institute and determine their structure and budget; 5. make transactions for disposal with the property of the National Social Security Institute up to the amount determined in the rules for organization and operation of the National Social Security Institute; 6. (am. SG 1/2002) upon request of debtors to public social security, in exceptional cases, may defer the payment of arrears from 10,000 to 100,000 leva for a period of up to three years in accordance with art. 116; deferred payments shall be collected with the respective legal interest; 7. determine the distribution of capital investment for management of National Social Security Institute property. 8. (new SG 64/2000) approve and announce the insured income under art. 70.
Governor’s Council
Art. 38. /1/ In his activity, the Governor shall be assisted by a Governor’s Council of the National Social Security Institute which shall be
25 comprised of the managers of the functional departments of the institute and the Deputy Governor. /2/ The meetings of the Governor’s Council shall be deemed regular if two thirds of the members have attended them. Decisions shall be made with ordinary majority. /3/ The Governor’s Council shall propose to the Governor draft decisions in relation to his/her authorities under art. 37, paragraph 5.
Requirements to Supervisory Board Members, the Governor and the Deputy Governor
Article 39. /1/ The following may not be members of the Supervisory Board, Governor and Deputy Governor: 1. persons who have been deprived of the right to take managerial, reporting or financial responsibility position; 2. persons who are members of managing or controlling bodies of other social insurance funds; 3. persons convicted for criminal offense; 4. persons who have been members of managing bodies of legal entities terminated due to bankruptcy if any creditors have been unsatisfied; 5. persons who have direct or collateral relation or in-law relation up to fourth degree with members of the Supervisory Board, the Governor and the Deputy Governor .
CHAPTER FOUR
BENEFITS
Part I Benefits for Temporary Incapacity and Labor Readjustment
Eligibility for Benefits
Article 40. /1/ Insured persons shall be entitled to a cash benefit in lieu of employment compensation for the leave due to temporary incapacity provided that they have at least 6 months of participation in the system. /2/ The requirement under paragraph 1 shall not apply to eligibility for cash benefits for temporary incapacity due to work injury and occupational sickness, pregnancy and birth giving, and to insured persons below the age of 18.
26 /3/ (suppl. SG 1/2002) Cash benefits for temporary incapacity, assistance, and other benefits from public social security, shall be paid through the insurers within the terms for payment of salaries. /4/ (am. SG 64/2000) Cash benefits for the first three working days of the temporary incapacity, but for no longer than 15 working days in one calendar year, shall be at the account of the insurers.
Remuneration on the Basis of Which the Benefit is Determined
Article 41. /1/ (suppl. SG 64/2000) Daily cash benefit for temporary incapacity due to general sickness shall be calculated as 80 per cent, and for temporary incapacity due to work injury and occupational sickness as 90 per cent, of the average daily gross wage or the average insured income on which insurance contributions have been paid for the period of six calendar months preceding the month of occurrence of the incapacity. The daily cash benefit for temporary incapacity due to general sickness may not exceed the average daily net wage for the period for which the benefit is calculated. /2/(am. SG 1/2002) For the days included in the period under paragraph 1, the average daily minimum wage established for the country for the respective period shall be taken into consideration, provided that the person: 1. has not been insured for all social insurance risks; 2. has not been insured for all social insurance risks with the exception of work injury, occupational sickness and unemployment; 3. has used unpaid leave which is recognized as length of service or official service; 4. has used child care leave. /3/ The amount of the benefit shall be taken into account for the days included in the period under paragraph 1 during which the person has received social security cash benefits for temporary incapacity or for pregnancy and birth giving. /4/ (new – SG, issue 67 of 2003) The amount used for calculation of cash benefits may not exceed the maximum monthly amount of the insured income determined by the Public Social Security Budget Act for the period, from which the cash benefits are determined. /5/ (previous para. 4 – SG, issue 67 of 2003) The method of benefit calculation shall be determined by an act of the Council of Ministers.
Terms of Benefit Payment
Article 42. /1/ Cash benefit for temporary incapacity due to general sickness, work injury and occupational sickness shall be paid from the
27 first day of the occurrence until working capacity is regained or disability is established. /2/ (am. SG 64/2000, 1/2002) When temporary incapacity due to general sickness, work injury or occupational sickness has occurred within up to 2 months following the termination of the labor contract or the insurance, the cash benefit shall be paid for the duration of the incapacity but not longer than 75 calendar days. In these cases cash benefit shall not be paid to individuals receiving pension or unemployment benefits paid under the Labor Code, the Civil Servant Act, and the Higher Education Act. /3/ (am. SG 1/2002) When temporary incapacity has occurred before the termination of labor or official relations for a certain period of time, contracts for military staff service, and contracts for management and control of commercial companies, the cash benefit shall be paid for not more than 75 calendar days after the termination of the relations or contracts. If the temporary incapacity is a result of work injury or occupational sickness, the cash benefit shall be paid until working capacity is regained or disability is established.
Benefits for Quarantine or Suspension from Work
Article 43. Cash benefits for temporary incapacity due to quarantine or suspension by prescription by the health bodies shall be paid for: 1. the period during which the insured person has been under quarantine; 2. the period of suspension, if the job of the insured person cannot be readjusted for this period but for not longer than 90 calendar days in one calendar year.
Sanatorium Treatment Benefits
Article 44. Incapacitated individuals who are assigned sanatorium treatment by the health bodies shall be paid a cash benefit for the entire treatment, including up to 3 calendar days for travel, in accordance with the amounts determined for general sickness or for work injury and occupational sickness, respectively.
Benefits for Care of a Sick Family Member
Article 45. /1/ Cash benefits under the terms and conditions and in the amount of the cash benefit for temporary incapacity due to general sickness shall also be paid for: 1. care or urgent accompanying for medical examination, tests or treatment in the country or abroad, of a sick family member over the
28 age of 18 - up to 10 calendar days per calendar year for each insured person; 2. care or urgent accompanying for medical examination, tests or treatment in the country or abroad, of a sick child below the age of 18 - up to 60 calendar days per calendar year for all insured family members. This period shall not include the time for child care under items 3 – 5; 3. care of a quarantined child up to 18 years of age having a contagious disease - until the expiration of the quarantine; 4. care of a sick child up to 3 years of age staying in a hospital with the insured person - for the period during which the insured person has stayed in the hospital; 5. care of a healthy child sent back from a kindergarten due to quarantine - for the duration of the quarantine. /2/ For one and the same insurance event, for one and the same period of time, cash benefit under paragraph 1 may only be paid to one insured family member. /3/ For care of a family member suffering from a chronic disease, cash benefit shall only be paid in case of aggravation. /4/ Family members shall be the husband, wife and their direct descending and ascending relatives.
Cases for Which There Shall Be No Payment of Benefit
Article 46. /1/ Cash benefit for temporary incapacity shall not be paid to insured persons who: 1. deliberately damage their health in order to obtain leave or benefit; 2. violate the regime determined by the health bodies - only for the days of violation; 3. have lost their working capacity due to consumption of alcohol, strong narcotic substances without medical prescription, or due to actions performed under the influence of such substances; 4. have lost their working capacity due to misdemeanor and other actions violating the public order, which have been determined in the respective manner; 5. have lost their working capacity due to failure to comply with the labor safety rules, determined in the respective manner. /2/ In the cases under paragraph 1, items 3 and 4, the period for which benefits shall not be paid, shall not exceed 15 calendar days, and in the case under item 5 – not longer than 3 calendar days.
Cash Benefit in Case of Labor Readjustment
29 Article 47. /1/ In the event of labor readjustment due to temporarily reduced working capacity resulting from general sickness, work injury or occupational sickness, the insured person shall be paid a cash benefit if his/her remuneration at his/her new job is lower. /2/ The daily cash benefit shall amount to the difference between the average daily wage during the six months preceding the labor readjustment, and the average daily wage received after the labor readjustment. When the insured person has worked less than 6 months as of the day of labor readjustment, the compensation shall be determined as a difference between the average daily wage as determined under art. 41 and the average daily wage received after the labor readjustment. /3/ Cash benefit under paragraphs 1 and 2 shall be paid for the period of labor readjustment but not longer than 6 calendar months.
Part II
Maternity Benefits
Benefits for Labor Readjustment due to Pregnancy or Breast Feeding
Article 48. /1/ In the event of labor readjustment to another job due to pregnancy or breast feeding of a child, the insured woman shall be paid a cash benefit if her wage at the new job is reduced. /2/ The daily cash benefit shall amount to the difference between the average daily wage received during the six months preceding the month of labor readjustment and the average daily wage received after the labor readjustment. When the insured woman has worked less than 6 months as of the day of labor readjustment, the benefit shall be determined as a difference between the average daily wage as determined under art. 41 and the average daily wage received after the labor readjustment. /3/ In the event that on her new job the insured woman’s average daily wage is smaller than the minimum daily wage established for the country or the average wage as determined in accordance with art. 41 is smaller than the minimum wage established for the country, the daily benefit shall amount to the difference between the average daily wage received before the labor readjustment and the minimum daily wage established for the country.
Benefits for Pregnancy and Birth-Giving
30 Article 49. /1/ The daily cash benefit for pregnancy and birth giving shall amount to 90 per cent of the average daily wage or of the insured income as determined under art. 41. /2/ The daily cash benefit may not be smaller than the minimum daily wage established for the country and may not exceed the average daily net wage for the period for which the benefit is calculated.
Terms for Payment of Cash Benefits for Pregnancy and Birth Giving
Article 50. /1/ (suppl. SG 1/2002) A mother insured for all insurance risks shall be entitled to a cash benefit for pregnancy and birth-giving for a period of 135 calendar days of which 45 days prior to birth giving. /2/ When birth giving takes place before the expiration of the 45 day period from the beginning of the leave, the remainder of the 45 day period shall be used after the birth giving. /3/ When the child is still born, dies or is given to a budget-funded orphanage or for adoption, the mother shall be entitled to a leave of up to 42 days after the birth giving. If the working ability of the mother is not regained within 42 days after the birth giving, this leave shall be extended by decision of the health bodies until working ability is regained. Until the expiration of the term under paragraph 1, this benefit shall be paid as pregnancy and birth giving benefit. /4/ When the child is given for adoption, is given to a budget-funded orphanage, or dies within 42 days after the birth, the benefit under paragraph 1 shall be suspended on the following day. In these cases, if the working capacity of the mother after the birth giving is not regained, sentences two and three of paragraph 3 shall apply. /5/ The woman or man insured for all insurance events who adopts a child shall be entitled to a benefit under paragraph 1 in the amount of the difference between the child’s age on the day of submission for adoption until the expiration of the benefit due for birth giving.
Benefits in Case of Death or Sickness of the Mother
Article 51. (am. SG 64/2000) In case of death or serious sickness of the mother (foster mother) which impedes her from caring of the child, the person using a leave under art. 167 of the Labor Code shall be paid the cash benefit under art. 49.
Benefits for Pregnancy and Birth Giving in Case of Termination of Social Insurance
31 Article 52. In the event of termination of the social insurance for all social insurance events during a period when benefit for pregnancy and birth giving is received, the insured woman shall be paid a cash benefit until the expiration of the benefit for pregnancy and birth giving under art. 50.
Benefits for Care of a Small Child
Article 53. /1/ (am. SG 1/2002) After the expiration of the benefit for pregnancy and birth-giving during the additional paid leave for care of a small child, the mother (foster mother) shall be paid a monthly cash benefit in an amount determined in the Public Social Security Budget Act. /2/ (am. SG 1/2002) When the additional paid leave for care of a small child is used by the father (foster father) instead of the mother (foster mother) or by the person responsible for caring of the child, a monthly cash benefit shall be paid in an amount determined in the Public Social Security Budget Act. Such benefit shall be paid to the guardian when he uses the leave under art. 167, paragraph 2 of the Labor Code. /3/ Payment of cash benefits under paragraphs 1 and 2 shall be suspended in case of death of the child, when the child is given for adoption or is sent to a budget-funded orphanage.
Benefits When the Additional Paid Leave for Care of a Small Child is not Used
Article 54. /1/ (am. and suppl. SG 1/2002) In cases when the additional paid leave for care of a small child is not used or when the person using this leave interrupts it, the mother (foster mother) shall be paid a cash benefit amounting to 50 per cent of the benefit under art. 53 if she is insured for all insured social risks, including without work injury and occupational sickness. /2/ (am. SG 1/2002) If the mother (foster mother) is deceased, has been deprived of parental rights or the parental rights for the child are given to the father (foster father), this benefit shall be paid to the father (foster father), and if he is also deceased - to the guardian. The benefit shall be paid if the person who has undertaken the care of the child is insured as employed under labor or official relations or at his/her account for all social insurance risks, as well as in the cases when the person is not insured for work injury, occupational sickness and unemployment. /3/ The benefit under paragraphs 1 and 2 shall not be paid if the child is accepted in a budget-funded orphanage.
Chapter Four “a”
32 (new SG 1/2002)
CASH UNEMPLOYMENT BENEFITS
Eligibility for Cash Unemployment Benefit
Art. 54a. /1/ Cash unemployment benefit shall be paid to persons who have been subject to mandatory social insurance for all insured social risks for at least nine months in the last 15 calendar months prior to the termination of the insurance and who: 1. are registered as unemployed in the respective territorial office of the Employment Agency; 2. have not become eligible for pension for old age and length of participation or occupational early retirement pension; 3. are not exercising labor activity for which they are subject to mandatory social insurance under art. 4. /2/ The cash unemployment benefit shall be granted on the basis of an application filed with the territorial office of the NSSI. /3/ The cash unemployment benefit shall be paid from the date of termination of the social insurance, if the application under para 2 has been filed within three months following this date. If the application has been filed after that date due to unjustified reasons, the cash benefit shall be paid for the period under art. 54s, reduced by the delay. /4/ Persons who are eligible for cash unemployment benefit shall be obliged to declare the circumstances under para 1 every month to the territorial offices of the NSSI. /5/ The order for granting and payment of cash unemployment benefits shall be determined by the Council of Ministers upon proposal of the NSSI.
Amount of the Cash Unemployment Benefit
Art. 54b. /1/ The amount of the cash unemployment benefit for unemployed persons shall be 60 per cent of the received average monthly insured income for the last nine months, during which they have been subject to mandatory social insurance for all insured social risks, and may not be smaller than the minimum and higher than the maximum amount of the unemployment benefit. /2/ The minimum and maximum amount of the unemployment benefit shall be determined every year with the Public Social Security Budget Act. /3/ (suppl. – SG 67/2003) Unemployed persons whose relations have been terminated by their own will, with their consent or due to their
33 guilty behavior in accordance with art. 325, para 1 and 2, art. 326 and 330 of the Labor Code, art. 103, para 1, item 1, 2 and 5, art. 105 and 107 of the Civil Servant Act, art. 128, item 1, 7 and 8, art. 128a and art. 128c, item 2 of the Defense and Armed Forces of the Republic of Bulgaria Act, and art. 253, para 1, items 4, 7 and 8 of the Ministry of Interior Act and art. 131, para 1, items 2, 3, and 6 of the Judicial System Act, shall receive the minimum amount of the cash unemployment benefit for a period of four months. /4/ Unemployed persons who have become eligible for a cash unemployment benefit under art. 54a prior to the expiration of three years from a previous occasion of exercising of the right to an unemployment benefit, shall receive the minimum amount of the benefit for a period of four months. /5/ The amount of the cash benefit of unemployed persons who have worked part-time shall be determined in proportion with the agreed time. In such cases, the amount of the benefit may be smaller than the determined minimum amount of the unemployment benefit. /6/ Persons hired part-time during the period of payment of the cash benefit and receiving compensation smaller than the minimum salary established for the country, shall be eligible for an unemployment benefit amounting to 50 per cent of the cash benefit due for the remaining period of the payment under art. 54c, para 1
Terms for Payment of Cash Unemployment Benefits
Art. 54c. /1/ Cash unemployment benefits shall be paid monthly during the month following the month for which they are due, depending on the length of participation, for a period as follows:
Length of participation (years) Period for payment of benefit (months) up to 3 4 from 3 to 5 6 from 5 to 10 8 from 10 to 15 9 from 15 to 20 10 from 20 to 25 11 over 25 12
/2/ (new – SG 67/2003) When determining the period for payment of a benefit under para 1, length of participation shall be the length of service until January 1, 2000, in accordance with the Labor Code or other
34 special acts and the period after that date during which the persons have been insured for unemployment. /3/ (previous para. 2 – SG 67/2003) The period under para 1 shall not include the term of the benefits under art. 222, para 1 of the Labor Code, art. 106, para 2 of the Civil Servant Act, and art. 58, para 3 of the Higher Education Act, and such benefits may not be received simultaneously with the cash unemployment benefit. / 4/ (previous para. 3 – SG 67/2003) Cash unemployment benefits, which have not been received due to unjustified reasons within three months following the latest date determined for receiving them, shall remain in the account of the Unemployment Fund.
Suspension of Payment of Cash Unemployment Benefits
Art. 54d. /1/ The payment of cash unemployment benefit shall be suspended for the period during which the person receives temporary incapacity benefit. /2/ The unemployed person shall be obliged to declare the commencement and termination of the circumstances under para 1 with the declaration under art. 54a, para 4. /3/ The payment shall recommence on the day of termination of the grounds for suspension, until the end of the period.
Termination of Payment of Cash Unemployment Benefit
Art. 54e. /1/ The payment of the cash unemployment benefit shall be terminated in the following cases: 1. commencement of labor activity for which the person is subject to mandatory social insurance under para 4; 2. termination of the registration by the Employment Agency; 3. eligibility for pension for old age and length of participation or occupational early retirement pension; 4. lack of compliance with the obligation under art. 54a, para 4; 5. death of the unemployed person. /2/ The Employment Agency shall be obliged to notify immediately the NSSI in case of occurrence of the circumstances under para 1, item 2. /3/ The person shall be obliged to declare to the respective territorial office of the NSSI the occurrence of circumstances under para 1, item 1 within seven days. /4/ In case of provision of evidence of justified reasons for incompliance with the obligation under art. 54a, para 4, the payment of cash benefit shall be resumed for the period remaining as at the date of termination.
35 /5/ If, during the period of receiving the cash benefit, the person begins exercising any activity, which is a reason for mandatory social insurance under art. 4, which will terminate in less than nine months, the payment of cash benefit shall be resumed for the period remaining as at the date of termination.
Return of Cash Unemployment Benefit Received in Good Faith
Art. 54f. /1/ (suppl. – SG 67/2003) Paid cash unemployment benefits shall be returned by person whose discharge has been abrogated as illegal, for the period of the benefit received under art. 225, para 1 of the Labor Code, art. 104, para 1 of the Civil Servant Act, art. 134, para 1of the Defense and Armed Forces of the Republic of Bulgaria Act, and art. 263 of the Ministry of Interior Act and Art. 139e of the Judicial System Act. /2/ Within seven days following the payment of benefits under para 1, the insurer shall be obliged to present copies of the court decision and payment documents to the respective territorial office of the NSSI. /3/ For the purposes of reimbursing the amounts, the official assigned with the administration of unemployment insurance in the respective regional NSSI office, shall issue instructions which are subject to enforcement in accordance with the Tax Proceedings Code. /4/ Persons under para 1 shall not be entitled to receive cash unemployment benefit until the complete reimbursement of the amount.
Order for Granting, Modification, Suspension, and Termination of Cash Unemployment Benefits
Art. 54g. /1/ Cash unemployment benefits shall be granted, modified, denied, suspended, terminated, resumed, and reimbursed by instruction of the official, assigned with the administration of unemployment insurance in the respective territorial office of the NSSI. /2/ The official under para 1 shall issue instructions for reimbursement of incorrectly paid unemployment benefits. Amounts due in accordance with the instructions may be deducted from the unemployment benefits and assistance due and shall be subject to enforcement in accordance with the Tax Proceedings Code.
Obligations for Disclosure
Art. 54h. /1/ The Employment Agency shall present to the NSSI monthly information required for granting, payment, suspension, termination or modification of unemployment benefits.
36 /2/ The NSSI shall provide monthly information to the Employment Agency concerning payment, suspension and termination of unemployment benefits.
CHAPTER FIVE
WORK INJURY AND OCCUPATIONAL SICKNESS INSURANCE
Work Injury
Article 55. /1/ Work injury shall be any sudden damage of the health which has occurred during, or in relation with, or because of, the work done, as well as during any activity performed in the interest of the enterprise which has resulted in incapacity or death. /2/ Work injury shall also be any injury of a person insured under art. 4, paragraphs 1 and 2 of this Code during the usual commute to or from the working place to: 1. the main place of residence or another additional residential location of permanent nature; 2. the location where the insured person usually eats during working hours; 3. the location where the compensation is received. /3/ In cases when the insured person has deliberately damaged his/her health there shall not be work injury.
Occupational Sickness
Article 56. /1/ Occupational sickness shall be any sickness which has occurred solely or mainly under the influence of harmful factors of the working environment or the working process on the organism and is included in the List of Occupational Sicknesses issued by the Council of Ministers upon proposal by the Minister of Health. /2/ Occupational sickness may also be a sickness which is not included in the List of Occupational Sicknesses when it is established that it has been caused mainly and directly by the regular employment activity of the insured person and has caused permanent incapacity or death of the insured person. /3/ Any aggravation and later consequences of the occupational sickness shall also be related to it.
Declaring Work Injury
37 Article 57. /1/ The insurer shall be obliged to declare every injury to the territorial office of the National Social Security Institute, within three days. /2/ (am. SG 1/2002) If the insurer fails to declare the injury, the injured person or his/her dependents shall be entitled, within one year following the injury, to declare it to the territorial office of the National Social Security Institute. /3/ The manner of establishing, investigating and reporting work injuries shall be determined by an act of the Council of Ministers.
Work Injury Investigation
Article 58. /1/ The territorial office of the National Social Security Institute, in cooperation with the Labor Inspection, the committees and groups on working conditions, and other competent bodies, shall, in accordance with the type of injury, investigate any lethal work injury, any injury, which has caused damage to more than three workers, as well as any injury for which there are grounds to assume that it may lead to permanent disability. /2/ The territorial office of the National Social Security Institute may, upon its discretion, also investigate other injuries, in addition to those indicated in paragraph 1. /3/ The work injury investigation shall determine: 1. the causes and circumstances for occurrence of the work injury; 2. the type of damages; 3. (am. SG 1/2002) other information which may help the territorial office of the National Social Security Institute to express an opinion on the nature of the injury and damage. /4/ For the work injury investigation, the injured person may attend or may authorize to attend: 1. an employee or worker of the same occupation; 2. a family member or a descending or ascending relative; or 3. a representative of a trade union organization in which he/she is a member; 4. a representative of the workers in the committees and groups on working conditions. /5/ (am. SG 1/2002) In case the health condition of the injured person prevents him/her from indicating a representative, the dependents of the person deceased as a result of a work injury and the persons under item 2 shall have the rights under paragraph 4. /6/ The investigation results shall be formulated in a protocol that shall be valid until proven otherwise. A copy of the protocol shall be
38 submitted to the territorial office of the National Social Security Institute of the affected person or to his/her dependents and to the insurer.
Records
Article 59. /1/ (am. SG 1/2002) A record shall be established for each work injury or occupational sickness at the territorial office of the National Social Security Institute, which shall contain the following: 1. a declaration of the injury or a notification of occupational sickness; 2. a work injury investigation protocol, if an investigation has been carried out or a protocol of investigation of the occupational sickness; 3. the instruction for acknowledgment or non-acknowledgment of the occupational nature of the injury or the expert decision for confirmation or refutation of the occupational sickness and the registration card for acknowledged occupational sickness; 4. copies of sick leave certificates (primary and continuations) related to the injury or sickness; 5. documents related to medical and other expenses; 6. other documents related to the injury or sickness. /2/ The injured person and the insurer shall have the right to be informed about the content of the record. /3/ All records shall be maintained in the territorial office of the National Social Security Institute for five years after termination of the insurance. After that they shall be submitted to the State Archive.
Categorization of the Occupational Nature of the Injury
Article 60. /1/ The official designated by the director of the regional National Social Security Institute office, on the basis of the documents in the record, shall issue instructions for acknowledgment or non- acknowledgment of the occupational nature of the injury within seven days following the declaration. /2/ (new SG 1/2002) In case of a declared injury related to a non- traumatic damage, the instructions under para 1 shall be issued on the basis of the decision of the bodies carrying out the working capacity investigation. /3/ The instruction shall be sent to the insured person and the insurer within seven days following its issuance. /4/ The instruction shall be subject to appeal by the interested parties in accordance with art. 117.
Occupational Sickness Notification
39 Article 61. In case of suspicion of an occupational sickness, every practicing medical doctor and dentist shall send a notification to the territorial office of the National Social Security Institute.
Preparation of Documents for Occupational Sickness
Article 62. /1/ For each written notification under article 61, the territorial office of the National Social Security Institute shall perform an investigation, prepare documents, and present them to the expert medical bodies. /2/ The insurer shall prepare and present all necessary documents under paragraph 1 to the territorial office of the National Social Security Institute within thirty days following their request. /3/ (new SG 1/2002) Working capacity investigation bodies shall issue an expert decision for confirmation or refutation of the occupational sickness and shall fill out an occupational sickness registration form.
Order for Notification, Registration, and Appeal of Occupational Sicknesses
Article 63. The order for notification, registration, confirmation, appeal, and reporting of occupational sicknesses shall be determined by an act of the Council of Ministers.
Rates of Social Insurance Contributions to Work Injury and Occupational Sickness Fund
Article 64. /1/ The rate of social insurance contributions paid by insurers shall be calculated as a percentage of the gross monthly wage of the insured persons on the basis of actuarial projections. /2/ The Law for the Public Social Security Budget shall determine the work injury and occupational sickness contribution rate, as well as the upper and lower limits within which this contribution may vary. /3/ (in force from 01.01.2004) The contribution rate may be increased or decreased by the territorial office of the National Social Security Institute in accordance with a methodology determined by an act of the Council of Ministers. /4/ (in force from 01.01.2004) The contribution rate under paragraph 3 shall be determined annually on the basis of the main activity of the enterprise, the frequency and degree of work injuries and occupational sicknesses, the number and degree of violations related to provision of healthy and safe working conditions, implementation of investment programs and work organization for provision of healthy and
40 safe working conditions, as well as depending on the degree of occupational risk.
Activities for Prevention of Work Injury and Occupational Sickness
Article 65. The Work Injury and Occupational Sickness Fund shall finance activities for prevention of work injuries and occupational sicknesses and for improvement of working conditions, such as: 1. provide assistance, counseling, and cooperation to insurers for establishment and implementation of an efficient system for labor safety and health management; 2. develop and participate in the development of national sector programs (strategies) in the area of labor safety and health; 3. organize training and qualification for workers in labor safety and health; 4. perform and commission research in the area of labor safety and health; 5. check labor safety conditions in the enterprises; 6. investigate, independently and together with the other competent bodies, work injuries and occupational sicknesses; 7. organize campaigns, provide information to the public on labor safety and health; 8. develop and participate in the development of laws and regulations on labor safety and health; 9. study and disseminate information on the positive experience in the area of safe working conditions; 10. perform other activities related to the prevention of work injuries and occupational sicknesses.
Obligations of the Insurer
Article 66. The insurer shall be obliged: 1. to notify within 30 days the respective territorial office of the National Social Security Institute of: a) changes in the technology or nature of the work in the enterprise; b) liquidation of the enterprise. 2. to notify immediately the territorial office of the National Social Security Institute, the Labor Inspectorate and other competent bodies of all lethal work injuries, of all injuries which have caused damages to more than three workers, as well as of all injuries for which there are grounds to assume that they will cause permanent disability;
41 3. (am. SG. 1/2002) to present on an annual basis to the territorial office of the National Social Security Institute copies of sick leave certificates (primary and continuations) for work injury and occupational sickness 4. (repealed SG 1/2002); 5. (repealed SG 1/2002).
Obligations of the Insured Person
Article 67. The insured person shall be obliged: 1. to be aware of, and to meet the requirements of, labor safety and health laws and regulations, as well as the internal rules of operation of the enterprise; 2. to notify immediately the insurer or his representative of any work injury or occupational sickness with the exception of cases when this is not possible.
CHAPTER SIX
MANDATORY PENSION INSURANCE
Part I Old Age and Length of Service Pensions
Eligibility for Pension
Article 68. /1/ Eligibility for length of service and old age pension shall be acquired upon completion of 60 years and 6 months of age for men and 55 years and 6 months for women, provided that their sum of the years of participation in the insurance system and age is not less than 98 points for men and 88 points for women. /2/ As of December 31, 2000, the age under paragraph 1 shall be increased from the first day of each calendar year with 6 months for men and women, until the age of 63 years for men and 60 years for women is reached, and the sum of the years of participation and age shall be increased by one until 100 points is reached for men and 90 for women. /3/ As of December 31, 2004, the sum total of length of service and age for women under paragraph 2 shall be increased by one from the first day of each consecutive year until 94 is reached. /4/ In the event that the sum of years of participation and age is lower than the one required under paragraphs 1 – 3, eligibility for pension shall be acquired with 15 years of service, of which 12 years of actual service, and 65 years of age for men and women.
42 Eligibility for Pension of Military Officials under the Defense and Armed Forces of the Republic of Bulgaria Act and Government Employees – Officers, Sergeants and Civilians under the Ministry of Interior Act (title amended SG 64/2002)
Art. 69. /1/ Military officials shall be eligible for pension upon dismissal regardless of their age if they have 25 years of service of which two thirds are actually served at a permanent military service. /2/ (am. SG 64/2000, 74/2002, 67/2003) Government employees – officers, sergeants and civilians under the Ministry of Interior, officers and sergeants under the Specialized Investigation Service, under the General Department of Penitentiaries and the Main Directorate “Investigation Detention” under the Ministry of Justice, the Special Courier Service under the Ministry of Transport and Communications, investigators and assistance-investigators, as well as government employees - officers, sergeants and civil persons under the Penalty Enforcement Act shall, in case of dismissal, become eligible for pension with 25 years of service of which two thirds are actually served at such positions at the respective agencies, regardless of their age. /3/ (suppl. SG 67/2003) Regular service military staff and officers and sergeants under para 1 and 2, who have served 15 years on positions in aircraft crews, paratroopers, underwater vessel crews and diving crews, shall be eligible for pension upon dismissal regardless of their age.
Amount of the Pension
Article 70. /1/ The amount of the length of service and old age pension shall be calculated as follows: the income on the basis of which the pension has been calculated, multiplied by the amount formed in the following way – one per cent for each year of participation in the system and the respective proportionate part of the percentage for the months of insurance participation. /2/ (suppl. – SG 67/2003, in force as of January 1st 2004) The income, on the basis of which the pension is calculated, shall be determined as follows: the average monthly insured income established for the country for 12 calendar months prior to the month of granting of the pension is multiplied by the individual coefficient of the person. /3/ The individual coefficient shall be calculated on the basis of the individual’s income on which social insurance contributions are paid for three consecutive years from the last 15 years of participation in the
43 insurance system until January 1, 1997, as chosen by the person, and for the period after that date until the moment of retirement. /4/ For the purpose of calculating the individual coefficient the following shall be determined: 1. the ratio between the average monthly insured income of the person for the period through December 31, 1996, and the average monthly insured income established for the country for the same period as announced by the National Social Security Institute; 2. the ratio between the average monthly insured income of the person for the period after December 31, 1996, and the average monthly insured income established for the country for the same period. /5/ The individual coefficient shall be determined in the following way: each ratio under paragraph 4 shall be multiplied by the number of months for which it has been established, and the sum of the results achieved in this way shall be divided by the total number of months included in the two periods. /6/ If the persons have not worked after January 1, 1997, the individual coefficient shall be equal to the ratio under paragraph 4 item 1, and if the basic period is entirely after this date, the individual coefficient shall be equal to the ratio under paragraph 4 item 2. /7/ (am. SG 64/2000, in force from 01.01.2001) The amount of old age and length of participation pension under art. 68, paragraphs 1 through 3, may not be smaller than 115 per cent of the social pension for old age, whereas for persons under art. 68, paragraph 4, this amount shall not be smaller than 105 percent of the social pension for old age. /8/ (new SG 1/2002) When determining the pension under an international agreement, to which the Republic of Bulgaria is a party, the insured income required for the length of participation shall be that acquired under the Bulgarian legislation.
Income Used for Calculation of Pension
Art. 70a. (new SG 1/2002) /1/ The average monthly insured income shall be determined from the remuneration or insured income, on which contributions have been paid or are due, for persons under para 4, para 1, 2 and para 3, item 5, and for self-insured persons – from the income on which contributions have been paid. /2/ When determining the average monthly insured income, the income during the following periods shall not be taken into consideration: 1. military draft or alternative service; 2. leave for raising a child, if a benefit has been received during the period; 3. the acknowledged length of participation of non-working mothers;
44 4. training of persons who have a college or university degree, for which contributions have been paid; 5. after January 1, 1996, during which a parent (foster parent) of a disabled child has looked permanently after such child until the child’s 16th year, because of which such person has not worked under a labor or official relation and has not been insured; 6. after January 1, 2001, a period during which a parent (foster parent) or spouse have looked after disabled persons who have lost 90 per cent of their working capacity, or who permanently need help from another person, for which they have not been insured or have not received a pension; 7. a period during which the persons have received unemployment benefits, when the granting of the pension commences before December 31, 1999. /3/ When the period used for determining the individual coefficient includes periods of legal leave or legal strike, the following shall be taken into consideration: 1. for the period of paid leave paid by the employer – the salary received during such leave or legal strike, for which contributions have been paid; 2. for the period of leave due to temporary incapacity or pregnancy and birth-giving, during which benefit has been received from the public social security system – the income used for calculation of the benefit; 3. for the period of unpaid leave, which is recognized as length of service, or of legal strike – the minimum monthly salary established for the country for the respective period. /4/ When determining the insured income for persons under art. 4, para 1 and 2, salaries that are due and unpaid shall not be taken into consideration.
Part II
Disability Pensions
Eligibility for Pension
Article 71. Insured persons shall be eligible for disability pension when they have lost, fully or partially, their working capacity, permanently or for an extended period of time.
Determining Disability Pension
45 Article 72. Disability pension shall be granted to individuals who have lost 50 per cent or more of their working capacity.
Commencement and Duration of the Pension
Article 73. /1/ (am. SG 64/2000) Eligibility for disability pension shall start from the moment when the disability has occurred, and for individuals blind by birth and those who have become blind before the employment – as of the date of the application under art. 94. /2/ Disability pension shall be granted for the period of disability. /3/ (am. SG 1/2002) Disability pensions of persons who have completed the age under Article 68 shall be for life.
Eligibility for Disability Pension for General Sickness
Article 74. (suppl. SG 64/2000, former language of art. 74, 1/2002)) Insured persons shall become eligible for disability pension for general sickness, if they have lost their working capacity and have the following length of service prior to the occurrence of the disability, whereas individuals blind by birth and those who have become blind before employment shall become eligible as of the date of application under art. 94: 1. up to 20 years of age and for individuals blind by birth and individuals who have lost their vision prior to employment – regardless of their length of participation; 2. up to 25 years of age – one year of participation; 3. up to 30 years of age – three years of participation; 4. (Decision No 5 of the Constitutional Court of the Republic of Bulgaria of 29.06.2000 has established inconsistency with the provisions of art. 5, para 2 of Conventions No 37 and 38 of the ILO – SG 55/2000, am. 64/2000) over 30 years of age – 5 years; 5. (Decision No 5 of the Constitutional Court of the Republic of Bulgaria of 29.06.2000 has established inconsistency with the provisions of art. 5, para 2 of the Conventions No 37 and 38 of the ILO – SG 55/2000, repealed 64/2000). /2/ (new SG 1/2002) Persons disabled by birth and persons who have become disabled prior to employment shall become eligible for disability pension for general sickness with one year of participation.
Determining Disability Pension for General Sickness
Article 75. /1/ (am. SG 64/2000) Disability pension for general sickness shall be calculated in the following way: the income on the basis of which
46 the pension is calculated multiplied by a coefficient equal to one for each year of participation in the system. /2/ When on the date of disablement the person’s age is smaller than the age determined under art. 68, the difference between his/her actual age and that age under art. 68 shall be recognized as participation. When determining the disability pension, the years recognized as participation shall be multiplied by a percentage, as follows: 1. for persons who have lost over 90 per cent of their working capacity – 0.9; 2. for persons who have lost between 71 and 90 per cent of their working capacity – 0.7; 3. (am. SG 1/2002) for persons who have lost between 50 and 70.99 per cent of their working capacity – 0.5. /3/ (repealed SG 64/2000). /4/ The amount of disability pension for general sickness may not be smaller than: 1. for persons who have lost over 90 per cent of their working capacity – 140 per cent of the social pension for old age; 2. for persons who have lost between 71 and 90 per cent of their working capacity – 130 per cent of the social pension for old age; 3. (am. SG 1/2002) for persons who have lost between 50 and 70.99 per cent of their working capacity – 105 per cent of the social pension for old age. /5/ (new - SG 67/2003) Pensions of persons under art. 74, para 1, item 1, whose length of participation is up to 1 year, shall be determined in accordance with the minimum amounts under para 4. After the completion of one year of length of participation, pensions shall be determined under the provisions of art. 75-77.
Income for Calculation of Disability Pension for General Sickness
Article 76. (amend. – SG 67/2003, in force as of January 1st 2004) The income, used to calculate the amount of the disability pension for general sickness, shall be determined in the following way: the average monthly insured income established for the country under art. 70, para. 2 shall be multiplied by the individual coefficient of the person.
Individual Coefficient
Article 77. (suppl. 64/2000, am. SG 1/2002) The individual coefficient for calculation of disability pension for general sickness shall be determined in accordance with art. 70, paragraphs 3 - 6 through the date of disability, and for individuals blind and disabled by birth and those
47 who have become blind before employment – through the date of the application under art. 94.
Disability Pension for Work Injury and Occupational Sickness
Article 78. Insured persons who have lost 50 per cent, or over 50 per cent, of their working capacity due to a work injury or an occupational sickness, shall be eligible for a disability pension for work injury or occupational sickness, regardless of their length of participation.
Amount of Disability Pension for Work Injury and Occupational Sickness
Article 79. /1/ Personal disability pension for work injury or occupational sickness shall be calculated in the following way: the monthly insured income established for the country under art. 70, para. 2 shall be multiplied by the individual coefficient as calculated under art. 70, paragraphs 3 - 6 through the date of disability, and by the following coefficients: 1. for persons who have lost over 90 per cent of their working capacity – 0.4; 2. for persons who have lost between 71 and 90 per cent of their working capacity – 0.35; 3. (am. SG 1/2002) for persons who have lost between 50 and 70.99 per cent of their working capacity – 0.30. /2/ The amount of disability pension for work injury or occupational sickness may not be smaller than: 1. for persons who have lost over 90 per cent of their working capacity – 150 per cent of the social pension for old age; 2. for persons who have lost between 71 and 90 per cent of their working capacity – 140 per cent of the social pension for old age; 3. (am. SG 64/2000) for persons who have lost between 50 and 70.99 per cent of their working capacity – 115 per cent of the social pension for old age. /3/ (new SG 64/2000) The amount of disability pension due to work injury and occupational sickness may not be smaller than the amount calculated as disability pension for general sickness.
Part III
Survivor Pensions
48 Eligibility for Survivor Pension
Article 80. /1/ Individual pensions may be transformed into survivor pensions with the exception of pensions under art. art. 87, 89, 90, 91, and 92. /2/ (am. SG 1/2002) Surviving children, spouse, and parents shall be entitled to survivor pensions. /3/ Giving up one’s rights of inheritance shall not deprive the dependents of a survivor pension. /4/ Receiving a survivor pension shall not be treated as receiving an inheritance.
Determining the Amount of Survivor Pension
Article 81. /1/ Survivor pension shall be determined as a percentage of the individual pension of the deceased insured person as follows: 1. in case of one survivor - 50 per cent; 2. in case of two survivors - 75 per cent; 3. in case of three and more survivors - 100 per cent. /2/ (suppl. SG 64/2000, in force from 01.01.2001) Survivor pension shall be granted as a total amount to all eligible persons and shall be divided equally among them. The minimum amount of the survivor pension may not be smaller than 90 per cent of the social pension. /3/ In case of death of both parents (foster parents), the children shall be entitled to receive a survivor pension which shall be determined from the sum of the pensions of the deceased.
Conditions for Eligibility and Granting of Survivor Pension
Article 82. /1/ Children shall be entitled to receive survivor pensions until completion of 18 years of age, and above this age – if they are students, for the whole period of their studies, and for the time of the military draft but not later than their 26th year of age, as well as above that age in case they became disabled before the age of 18, 26 years of age, respectively. /2/ (amend. – SG 67/2003), in force as of January 1st 2003) The surviving spouse shall be entitled to receive a survivor pension five years earlier than the age under art. 68, para 1 and para 2, or before that age if he/she is incapacitated. /3/ (amend. – SG 67/2003), in force as of January 1st 2003) Parents shall be entitled to receive a survivor pension after reaching the age under art. 68, para 1 and para 2. /4/ Parents of persons who have died during their military service shall be entitled to survivor pension regardless of their age.
49 Types of Survivor Pensions
Article 83. /1/ In case of death of the insured person, survivors shall be granted a pension in accordance with the type of the individual pension for general sickness or for work injury or occupational sickness that the deceased person would have received as a disabled person with lost working capacity over 90 per cent. /2/ When the deceased has become eligible for old age and length of service pension, survivors shall receive a survivor pension calculated on the basis of the old age and length of service pension, if that is more favorable for them. /3/ In case of death of a pensioner who has been receiving an individual disability pension, the amount of survivor pension shall be determined on the basis of his personal pension as a disabled person with lost working capacity over 90 per cent. /4/ In case of death of a military draft soldier, his dependents shall be eligible for pension whose basis shall be the amount under art. 86, paragraph 1, equal to the pension due for military disability with lost working capacity over 90 per cent. /5/ (new SG 64/2000) In case of death of a pensioner, the amount of the pension of the dependents shall be determined on the basis of the pension due for military disability with working capacity reduced over 90 per cent, determined under art. 86.
Supplement from the Pension of a Deceased Spouse
Article 84. Pensioners shall be entitled to a supplement in the amount of 20 per cent of the pension of the deceased spouse. This supplement may not be received together with a survivor pension from the same person.
Part IV
Pensions Not Related to Employment
Military Disability Pension
Article 85. /1/ Military disability pension shall be granted to persons who have lost their working capacity due to a sickness or injury during, or in relation with: 1. military draft service; 2. reserve troops or reserve service.
50 /2/ Individuals who have been injured while providing assistance to the armed forces shall also be eligible for military disability pension. /3/ “Injured” under paragraphs 1 and 2 shall also be deceased and missing persons.
Amount of Military Disability Pension
Article 86. /1/ (am. SG 1/2002) The amount of the military disability pension shall be determined as a percentage of the social pension for old age using the table below:
Reduced working capacity
over 90 % 71 – 91 % 50 – 70.99 % Privates and sergeants 150 % 140 % 115% Officers 160 % 150 % 120 %
/2/ When persons under art. 85 have been insured for all social risks or only for work injury or occupational sickness prior to their recruitment or reserve troops service, the amount of the military disability pension shall be determined in the manner established for determining pension for work injury or occupational sickness, if this is more favorable for them.
Civil Disability Pension
Article 87. Eligibility for civil disability pension shall be acknowledged for persons who have lost their working capacity due to injury or sickness in the following cases: 1. while performing their civil duties; 2. by accident, caused by the authorities when performing their civil duties.
Amount of Civil Disability Pension
Article 88. /1/ The amount of civil disability pension shall be determined as a percentage of the social pension for old age as follows: 1. for persons who have lost over 90 per cent of their working capacity – 150 per cent; 2. for persons who have lost between 71 and 90 per cent of their working capacity – 140 per cent;
51 3. (am. SG 1/2002) for persons who have lost between 50 and 70.99 per cent of their working capacity – 115 per cent. /2/ The pension of persons who have been insured for all social risks or only for work injury or occupational sickness shall be calculated in the manner determined for work injury or occupational sickness pensions if this is more favorable for them.
Social Pension for Old Age
Article 89. /1/ (am. SG 1/2002) Eligibility for social pension shall be acknowledged for persons who have completed 70 years of age and whose annual income per family member as at the day of reaching the age is smaller than the sum of the guaranteed minimum income established for the country for the last 12 months. If the request has been filed after completion of 70 years and after expiration of the six-month period under art. 94, the income per family member shall be evaluated through the date of the application. /2/ The amount of the social pension for old age, as well as the terms and conditions for its granting, shall be determined by the Council of Ministers upon proposal by the Ministry of Labor and Social Policy and the National Social Security Institute.
Social Disability Pension
Article 90. /1/ Individuals who have completed 16 years of age and whose working capacity is reduced by more than 71 per cent shall be eligible for social disability pension. /2/ The amount of the social disability pension for persons with lost working capacity over 90 per cent shall be 120 per cent, and for persons who have lost 71 - 90 per cent of their working capacity – 110 per cent of the social pension for old age.
Special Merits Pension
Article 91. Individual pensions for special service to the state and the nation shall be granted by the Parliament upon proposal by the Council of Ministers.
Individual Pensions
Article 92. The Council of Ministers may, in the manner determined by it, grant pensions under special circumstances, to persons who do not meet certain requirements of this code.
52 Funds for Payment of Pensions not Related to Employment
Article 93. The funds for payment of pensions, which are not related to employment, shall be at the account of the republican budget.
Part V
General Provisions on Pensions
Date of Granting of Pension
Article 94. (am. SG 1/2002) Pensions shall be granted as of the date of eligibility for pension, and pensions for old age and length of participation – as of the date of termination of the social insurance, if the application with all required documents has been filed within six months after the date of eligibility, termination of the social insurance, respectively. If the documents have been filed after that six-month period, or after the termination of social insurance, respectively, pensions shall be granted as of the date of their filing.
Suspension of Pension
Article 95. The pension shall be suspended: 1. upon request of the pensioner; 2. when the pensioner fails to appear for re-certification by the medical and social bodies after he/she has received an official invitation; 3. when the pensioner has not received his/her pension more than six months; 4. when payment is not due in accordance with art. 101.
Termination of Pension
Article 96. /1/ The payment of pension shall cease when: 1. the pensioner dies; 2. the children reach the age when they are no longer eligible for survivor pension or are adopted; 3. the surviving spouse who receives the survivor pension marries; 4. the grounds for its granting no longer exist. /2/ In cases under paragraph 1, item 1, the pension shall be stopped as of the end of the month in which the pensioner died, and under items 2 - 4 - as of the date on which the event has occurred.
53 Renewal and Reinstatement of the Pension
Article 97. /1/ Payment of stopped pension shall be renewed and suspended eligibility shall be granted again upon written request by the pensioner when the reason for the suspension or termination no longer exists. /2/ The payment of pension shall be renewed or granted again as of the day on which the respective reasons no longer exist, provided that the request is filed within three years following this date, or as of the date of its filing when the deadline has been missed. /3/ Pensions interrupted under art. 95, item 2 shall be renewed as of the date of its interruption if it is established that the pensioner has failed to appear for re-certification due to good reasons.
Order for Granting and Modification of Pension
Article 98. /1/ (am. SG 64/2000) Pensions and supplements to them shall be granted, modified, updated, suspended, renewed, terminated, and re- granted by instruction of the respective official in charge of the management of pension insurance at the territorial National Social Security Institute office. Pensions under an international agreement shall be granted, modified, updated, suspended, renewed, terminated, and re- granted by instruction of the official assigned with the management of the activity related to granting and payment of pensions in accordance with international agreements in the NSSI. /2/ The official under paragraph 1 shall also issue instructions for renewal of incorrectly paid amounts for pension. Amounts due under these instructions shall be collected from the individual’s pension. In case the pension has been suspended, these amounts shall be collected in accordance with the terms and conditions of the Tax Proceedings Code. These instructions shall be subject to appeal under art. 117. /3/ Obvious factual errors in the instructions under paragraphs 1 and 2 shall be corrected by the body which has issued them. The correction shall come into effect as of the day of granting, amending, updating, revocation, renewal, interruption, and re-granting of the pension.
Amendment or Cancellation of the Instruction
Article 99. /1/ The instruction under art. 98 may be amended or repealed by the body that has issued it in the following cases:
54 1. when the pensioner provides new evidence of acquired length of service, insured income, civil status, etc.; 2. when the pension is granted on the basis of false of forged documents or documents with false content; 3. when the disability for which the pension is granted has been caused by the person deliberately or has occurred as a result of a premeditated crime committed by him/her; 4. when the death of the person receiving the pension has been caused deliberately by the survivor or is a result of a crime committed by him/her; 5. when the pension has been granted incorrectly or its granting has been denied incorrectly; 6. when the amount of the pension is incorrectly determined as lower or higher. /2/ In cases under paragraph 1, the instruction shall be amended or repealed: 1. under item 1 – as of the date of submission of evidence; 2. under items 2 – 6 – as of the date of granting or change in the pension, and in case of incorrect denial – as of the date under art. 94.
Indexation of Pensions
Article 100. /1/ (am. SG 41/2001) Pensions granted through December 31 of the previous year shall be updated annually as of June 1, by decision of the Supervisory Board of the National Social Security Institute. Indexation shall be done depending on the growth of the insured income established for the country and the consumer price index for the previous calendar year.
Receiving More than One Pension
Article 101. /1/ The following pensions may not be received simultaneously: 1. individual pension for old age and length of service with survivor pension for old age and length of service; 2. individual or survivor pension for old age and length of service with individual or survivor general sickness disability pension; 3. individual general sickness disability pension with survivor general sickness disability pension; 4. (new SG 64/2000) social pension, individual pension, and special merit pension with another type of pension. /2/ When the person is entitled to more than one individual disability pension for different sicknesses, the highest pension shall be granted.
55 /3/ (suppl. SG 64/2000, in force from 01.08.2000) When a person is eligible for more than one pension, one of the pensions, by choice, shall be received in full, and the other pensions shall be paid in the amount of 50 per cent. When one of the pensions in this case is social disability pension, 25 per cent of its amount shall be paid. /4/ Individuals with military disability shall receive the full amount of the two pensions - military disability pension and old age and length of service pension, upon completion of the age under art. 68. /5/ When a survivor pension is granted to dependents of a person with military disability who has received or has been eligible for the full amount of the two pensions under paragraph 4, the basis shall be the full amount of the two pensions. /6/ (new SG 1/2002) Parents may not receive simultaneously an individual and a survivor pension, with the exception of cases under para 7. /7/ Parents of persons deceased during their military service shall receive the full amount of their individual pension as well as the pension granted under art. 82, paragraph 4.
Recalculation of Pension
Art. 102. (am. SG 64/2000) /1/ (am. SG 1/2002) Persons who have been granted old age and length of participation pension, general sickness disability pension or work injury or occupational sickness disability pension, may request recalculation of the pension for length of participation and insured income acquired after retirement, if this is more favorable for them. Recalculation of pensions shall be done in accordance with art. 70, or art. 75-77, respectively, for length of participation acquired after retirement. /2/ Individuals under para 1 may request recalculation of their length of participation pension after retirement in accordance with art. 70, para 1 and art. 75, para 1.
Allowance for Support by Another Individual
Article 103. Pensioners with lost working capacity over 90 per cent who permanently need assistance shall receive a supplement to their pension amounting to 75% of the social pension for old age.
Labor Categories
56 Article 104. /1/ The Council of Ministers shall determine which type of labor belongs to which category in accordance with the nature and specific working conditions. /2/ (suppl. SG 1/2002, amend. 67/2003) Upon retirement for length of participation and age, the length of participation shall be transformed by recognizing three years under category I or four years under category II as five years under category III. /3/ (am. SG 1/2002) For workers, engineers and technical experts as well as managers, including heads of departments, working underground in mines, geologic research sites and hydro-technical sites, underground tunnel and mine construction, one year of service under labor category I shall be recognized as three years under labor category III. /4/ The length of service of individuals under art. 69 shall be transformed by recognizing three years of actual service as five years of service under labor category III. /5/ The length of service of individuals under art. 69 who are members of the air staff of the jet aviation, crews of submarine vessels and divers, shall be transformed by recognizing one year of actual service as three years of service under labor category III. /6/ The length of service of individuals under art. 69 who are members of the propeller motor aviation, paratroopers, border area officials and ship crews shall be transformed by recognizing one year of actual service as two years of service under labor category III. /7/ The length of service of individuals under art. 69 who are directly involved in military actions during war time, one year of service shall be recognized as three years of participation under labor category III.
Prescription
Article 105. /1/ Eligibility for pension shall not be denied by prescription. /2/ The pension shall no longer be due after expiration of a three year period following the date of eligibility.
Regulations
Article 106. The Council of Ministers shall issue regulations for the application of this Chapter and for payment of pensions.
CHAPTER SEVEN
57 CONTROL
Controlling Bodies
Article 107. (am. SG 1/2002) Control on the compliance with the legal provisions related to public social security, as well as to payment of health insurance and supplementary mandatory pension contributions shall be performed by the controlling bodies of the National Social Security Institute.
Rights of the Controlling Bodies
Article 108. /1/ The controlling bodies of the National Social Security Institute, when performing their official duties, shall have the right: 1. (am. SG 1/2002) to inspect all individuals and legal entities for their activity related to public social security, as well as for payment of health insurance contributions and supplementary mandatory pension contributions. For the purposes of their inspections they shall have the right to free access to all office premises and sites; 2. (am. SG 1/2002) to take measures for indicting persons who have violated social insurance laws and regulations and provisions for payment of health insurance contributions and supplementary mandatory pension contributions; 3. (am. SG 1/2002) to issue mandatory instructions for compliance with the legal provisions on public social security and payment of health insurance contributions and supplementary mandatory pension contributions; 4. to demand from sole traders and legal entities and their branches a declaration of their bank accounts in the country, as well as to provide documents related to their economic activity; 5. to perform cross-references and to appoint experts. /2/ (new SG 45/2002) The controlling bodies of the NSSI may carry out controlling and auditing activity in cooperation with the tax authorities in accordance with a plan coordinated in advance between the Governor of the NSSI and the General Tax Director. /3/ (am. SG 1/2002, former para 2, 45/2002) Individuals and legal entities shall be obliged to present to the controlling bodies of the National Social Security Institute, all documents, data, references, declarations, explanations, and other information carriers, as requested from them, in relation to the performance of public social security and payment of health insurance contributions and supplementary mandatory pension contributions and to assist them in the performance of their official duties.
58 /4/ The controlling bodies of the National Social Security Institute shall be obliged to have accident insurance at the account of the public social security budget. /5/ (am. SG 1/2002, former para 4, 45/2002) The Governor of the National Social Security Institute and the directors of its offices may issue mandatory instructions for interruption of the implementation of instructions and actions which are in contradiction with the public social security laws and regulations, as well as of the health insurance legislation with respect to collection of contributions and control.
Whistle-blowing Function of the Controlling Bodies of the National Social Security Institute
Art. 108a. (new – SG 67/2003) When the controlling bodies of the National Social Security Institute establish that documents with incorrect content have been drawn up for the purposes of avoiding payment of public social security contributions, health insurance contributions and supplementary mandatory pension contributions in significant amounts, they shall notify the bodies of the Prosecution.
Prohibition of Other Activities
Article 109. /1/ Members of controlling bodies of the National Social Security Institute may not have additional employment related to their official duties, under labor or civil contracts with another employer. Nor shall they be allowed to perform any activity related to their official duties as sole traders, partners in commercial and other partnerships, cooperatives and other organizations. /2/ (am. SG 1/2002) National Social Security Institute officials shall keep the confidentiality of, and shall and not use for purposes other than performing their duties at work, all facts and circumstances related to insured persons and insurers, which came to their knowledge while performing their duties, including after termination of their contract. Such facts and circumstances may be submitted to the judiciary power bodies or other state bodies under the terms and conditions set by the Governor of the National Social Security Institute in accordance with the provisions of the effective legislation.
Audit Acts for Deficiencies
Article 110. /1/ The controlling bodies of the National Security Institute shall draw up audit acts for deficiencies to individuals and legal entities:
59 1. (amend. – SG 67/2003) for all damages caused by them to public social security by unpaid social insurance contributions, incorrect social insurance expenditures, and retirement documents with incorrect content or by repealed medical board decisions, etc.; 2. for unpaid health insurance contributions; 3. (repealed SG 1/2002); 4. for unpaid supplementary mandatory pension contributions. 5. (new SG 1/2002) simultaneously with the audit act for deficiencies, measures may be imposed for advance securing of mandatory contributions in accordance with the Tax Proceedings Code. /2/ The responsible persons may appeal the audit acts for deficiencies within seven days following their submission. The controlling body of the National Social Security Institute shall express an opinion on the appeal by a motivated statement. /3/ For collection of amounts under the audit acts for deficiencies, the official assigned with the management of the control of income and expenditures of public social security in the respective division of the National Social Security Institute shall issue instructions. These instructions shall be subject to implementation within 14 days following their submission. /4/ Instructions and acts for deficiency shall be handed personally to the accountable persons, which shall be certified by his/her signature or mailed to them with advice of delivery. /5/ The amounts under the effective instructions, which have not been paid on a voluntary basis, shall be collected through: 1. (am. SG 1/2002, 67/2003) lien on bank accounts of liable persons and persons related to them for receivables of public social security, health insurance and supplementary mandatory pension insurance; 2. (suppl. – SG 67/2003) enforcement on movable and real estate owned by the liable persons and their claims to third parties; 3. (new SG 1/2002, am. 45/2002) enforcement on amounts reimbursed by a tax body on an account of the debtor which is under a lien. /6/ (am. SG 1/2002) Lien on accounts of persons liable to public social security and health insurance shall be imposed by sending a lien notification by the director of the territorial office of the National Social Security Institute to the banks which shall make immediate transfers to the public social security account. The lien imposed on the debtor’s account shall apply to all branches of the bank. The lien imposed on the debtor’s bank account shall be valid for all branches of such bank. The lien shall be deemed effective as of the hour on the respective date when the lien notification is received by the bank. In case there are not enough funds in the debtor’s account, the bank shall notify the territorial office of
60 the National Social Security Institute of the reasons for which the lien has not been enforced within seven days. /7/ (new SG 1/2002, amend. 67/2003) A person who pays claims to the debtor on which a lien has been imposed under this Code, shall be liable together with the debtor for the paid amounts, up to the amount of the liability, together with the interest under art. 113 after payment. When the payment is made by a legal entity or non-personified entity, the manager or the managing body members, or a managing partner, who has authorized the payment, shall be held liable together with the debtor. /8/ (new SG 64/2000) The body, which has imposed lien on the account by a notification of the bank, may allow for a certain part of the amounts deposited to the account of the debtor to be temporarily left at its disposal for urgent payments related to the operations of the liable entity in case the latter provides other collateral. /9/ Public social security receivables shall be paid off in the following order: expenditures, interest, principal. Cession of receivables of public social security shall be prohibited. /10/ Collection of receivables through enforcement on movable or real estate of the liable person, as well as receivables from third persons, shall be performed in accordance with the Tax Proceedings Code. The claim to the public executor shall be filed by the director of the territorial office of the National Social Security Institute; this claim shall determine the type of security measures on movable and real estate, as well as the manner of selling. /11/ Ten per cent of the amounts collected under acts for deficiencies due to unpaid public social security contributions, health insurance contributions, and Professional Qualification and Unemployment Fund contributions, damages caused by incorrect expenditures and interest due on them, shall be collected as revenue to the public social security budget. The money collected in this way shall only be used for qualification and material stimulation of employees in the manner determined by the director of the National Social Security Institute. /12/ Funds collected for health insurance, for the Professional Qualification Fund and for supplementary mandatory pension insurance, shall be transferred from the respective division of the National Social Security Institute to an account of the National Health Insurance Fund, the Professional Qualification and Unemployment Fund, and the supplementary mandatory pension funds.
Property Sanctions on Banks
Article 111. /1/ (am. SG 64/2000, 1/2002) For every withdrawal of money for salaries, including advance payments, payment documents for
61 social insurance contributions and declarations to public social security, to the National Health Insurance Fund and for supplementary mandatory pension insurance shall be deposited with the banks. /2/ (am. SG 64/2000, 10/2002) Banks which have permitted withdrawal of money for salaries, including advance payments and cash benefits, without having submitted a statement under art. 7, paragraph 8, shall be penalized in the amount of the unpaid social insurance contributions regardless of the administrative penal responsibility of the guilty officials. /3/(am. – SG 67/2003) Property sanctions under paragraph 2 shall be imposed by the Governor of the National Social Security Institute or by the director of the regional NSSI office in accordance with the Administrative Violations and Penalties Act.
Data Entry Obligations
Article 112. (am. SG. 1/2002) Documents for withdrawal of benefits and for payment of public social security, health insurance and supplementary mandatory pension contributions shall contain the BULSTAT identifier of the insurers or self-insured persons, and the common civic number for individuals who are not subject to entry in the BULSTAT register.
Interest on Receivables of the National Social Security Institute
Article 113. (amend. – SG 67/2003, in force as of January 1st 2004) Receivables of the National Social Security Institute from unpaid public social security contributions and for incorrect social insurance expenditures shall be collected with an interest amounting to the basic interest rate of the Bulgarian National Bank for the period, plus 20 points.
Reimbursement of Incorrectly Received Amounts
Article 114. /1/ (amend. – SG 67/2003) Unconscientiously received social insurance benefits shall be reimbursed by the individuals who have received them, together with the interest under Art. 113. /2/ (am. SG 64/2000, suppl. 1/2002) Conscientiously received amounts for social insurance payments shall not be subject to reimbursement by the insured persons with the exception of cases under art. 54f. /3/ Disputes related to unconscientiousness shall be settled pursuant to the provisions of Chapter Eight.
Prescription
62 Article 115. /1/ (suppl. SG 1/2002) Receivables of the National Social Security Institute from unpaid social insurance contributions, incorrect social insurance payments, incorrect payment of cash benefits, higher pensions and the interests on them, shall be terminated by prescription with the expiration of a five-year period. All receivables shall be terminated with the expiration of a ten-year period regardless of the termination of the prescription. /2/ Prescription shall be terminated: 1. upon enactment of the instruction for determining the receivables; 2. upon enforcement of security measures; 3. upon initiation of enforcement. /3/ Upon termination of the prescription, a new period of prescription shall be initiated. /4/ (suppl. SG 1/2002, amend. and suppl. 67/2003) Receivables due by public social security may be claimed at the latest within three years following the date on which they have become payable, with the exception of receivables under art. 54c, para 4. The official responsible for the management of public social security control in the respective NSSI office shall give instructions as to the request for reimbursement of funds. The instruction shall be subject to appeal under the provisions of art. 117.
Deferral of Liabilities
Article 116. (am. SG 1/2002) /1/ Upon request of debtors to public social security, payment of amounts due may be deferred in accordance with an approved payment plan. /2/ Deferral shall be allowed when it has been established that the debtor’s funds are not sufficient for covering his liabilities to public social security funds; however, after assessment of his activity, a justified conjecture may be made that such difficulties may be temporary and in case of deferral of the liabilities the debtor will be able to pay his liabilities and to cover his current liabilities to the public social security funds and other public liabilities. /3/ (amend. – SG 67/2003) The debtor shall owe the interest under art. 113 for the period of deferral. /4/ (suppl. – SG 42/2003) Deferral shall not be allowed to a trader for whom there is a permission for termination through liquidation or for whom bankruptcy proceedings have been constituted, as well as after determining sales procedures under art. 201 of the Tax Proceedings Code. /5/ The following shall be attached to the request under para 1:
63 1. evidence of financial and economic condition of the debtor and a development program – for a sole trader, legal entity and the equivalents of the latter; 2. declaration for all other public liabilities, including interest thereon, as well as liabilities to private creditors and interest thereon; 3. payment plan for deferral of liabilities; 4. income and expense statement of the debtor for the previous financial year; 5. balance sheet for the previous financial year and for the last reporting period; 6. statement on the insurer’s liabilities through the date of request for deferral, which shall include the following information: a) liabilities to public social security, health insurance and supplementary mandatory pension insurance; b) liabilities to the staff; c) other public liabilities; d) other liabilities; 2. other documents by judgment of the deferral body. /6/ The decision for deferral shall be issued by: 1. the director of the territorial NSSI office – for liabilities amounting to up to BGN 10,000 for a period of one year; 2. the Governor of the NSSI – for liabilities amounting from BGN 10,000 to BGN 100,000 for a period of three years; 3. the Supervisory Board of the NSSI – for liabilities exceeding BGN 100,000 for a period of three years. /7/ The decision shall determine the deadline, payment installments and other conditions, including the consequences from failure to comply with them. /8/ The prescription of public social security receivables shall be suspended for the period of the deferral. /9/ Denial of deferral shall not be subject to appeal. /10/ (new – SG 67/2003) The consolidation of public receivables and redress plans in cases of deferral and spreading under art. 152 and 153 of the Tax Proceedings Code shall be coordinated with the competent body of the NSSI under para 6.
CHAPTER EIGHT
DISPUTES
Appeals
64 Article 117. /1/ Appeals may be filed to the director of the territorial office of the National Social Security Institute against: 1. denial or incorrect determination of cash benefits, assistance, and other social insurance payments, allowances, and compensations to them; 2. instructions: a) for denial or incorrect determination or amendment of pensions, allowances and compensations on them; b) (new SG 1/2002) denial or incorrect calculation, suspension and termination of the unemployment benefit; c) for collection of amounts under audit acts for deficiencies; d) for acknowledgement or non-acknowledgement of the occupational nature of an injury; e) for reimbursement of incorrectly received benefits from public social security; f) for denial of reimbursement of incorrect payments. /2/ (am. SG 1/2002, 67/2003) Instructions under item 2, b - f, may be appealed within 14 days, and instruction for pensions - within three months following their receipt. /3/ The director of the territorial office shall express an opinion on the appeals or claims by a motivated decision within one month following their receipt. By this decision, the director of the territorial office may repeal the instructions and may decide on the appeals and claims. The affected parties shall be informed of the decision within seven days following its issuance. /4/ (new SG 64/2000) Instructions for pensions granted under international agreements may be appealed before the NSSI director within three months following their receipt. The decision shall be issued within the terms and in the manner determined under paragraph 3. /5/ All decisions and notifications related to the review of appeals and claims shall be drawn up in accordance with the Administrative Proceedings Act. /6/ (repealed SG 45/2002).
Art. 117a. (new SG 45/2002) /1/ Appeal of instructions under art. 117, para 1, item 2 shall not suspend their implementation. /2/ Implementation of the instructions under art. 117, para 1, item 2, sub-item “c” shall be suspended by request of the insured person, if a collateral is provided amounting to the principal and interests thereon. /3/ The request for suspension of the implementation shall be made simultaneously with the appeal by presenting evidence of existence of the collateral.
65 /4/ Legal interest on the principal shall be owed for the period of the suspension.
Appeals of the Director’s Decision
Article 118. /1/ The decision of the director of the territorial office may be appealed before the regional court within 14 days following its receipt. The appeal shall be filed through the director of the territorial office who shall be obliged to submit it together with the correspondence to the court within seven days. /2/ The court shall review and rule on these cases in accordance with the Administrative Proceedings Act.
Suspension of Court Enforcement
Art. 118a. (new SG 45/2002) /1/ Filing an appeal with the court as to the decisions of the director of the territorial NSSI office, issued with respect to instructions under art. 117, para 1, item 2, shall not suspend their implementation. /2/ Implementation may be suspended by the regional court under the conditions of art. 177a, para 2 and 4 for decisions issued with respect to instructions under art. 117, para 1, item 2, sub-item “c”. The request for suspension shall be made simultaneously with the filing of the appeal and the court shall rule within seven days.
Cassation Appeal
Article 119. All decisions of the regional court shall be subject to cassation appeal in accordance with the Supreme Administrative Court Act.
State Fee Waiver
Article 120. /1/ Insured persons and pensioners shall not pay any state fees for court proceedings under this Chapter. /2/ If the appeal is taken into consideration, the appealing party shall be entitled to receive all expenses incurred by him and the defense compensation in proportion with the approved amount.
PART II
SUPPLEMENTARY SOCIAL INSURANCE
66 TITLE ONE
SUPPLEMENTARY SOCIAL INSURANCE COMPANIES
CHAPTER NINE
ESTABLISHMENT, LICENSING, AND MANAGEMENT OF SUPPLEMENTARY SOCIAL INSURANCE COMPANIES
Section one
General provisions
Implementation of Supplementary Social Insurance
Art. 120a. (new – SG 67/2003) Supplementary social insurance shall be carried out through participation in universal and/or occupational pension funds, supplementary voluntary pension funds and supplementary voluntary social insurance funds for unemployment or professional training, which shall be established and managed by pension companies or supplementary voluntary social insurance companies for unemployment and/or professional training, licensed in accordance with this Code.
Regulation and Control
Art. 120b. /1/ (new – SG 67/2003) The government shall exercise effective regulation and control over the activity of supplementary social insurance companies and funds in order to protect the interests of the insured persons and the pensioners. /2/ The supervision over the activity of the supplementary social insurance companies and funds shall be exercised by the Financial Supervision Commission, hereafter referred to as ‘the Commission’. /3/ The Commission and its deputy Chairperson, head of the Social Insurance Supervision Division, hereafter referred to as ‘the deputy Chairperson of the Commission’ shall implement their supervisory powers in accordance with this Code and the Financial Supervision Commission Act.
Section Two Pension Companies
67 Definition Art. 121 /1/ (amend. – SG 67/2003) The pension company shall be a joint stock company licensed in accordance with this Code and registered under the Commercial Act. /2/ The scope of business of the pension company shall be only supplementary pension insurance. /3/ The pension company may not perform commercial operations, which are not related directly to its business. /4/ Pension companies may establish non-profit organizations for representation of common interests and for implementation of joint projects. /5/ The pension company may not participate in civil associations and commercial companies as an unlimited liability partner, nor may it acquire shares in other pension companies. /6/ The pension company shall perform its activity in compliance with the provisions of this Code and in accordance with its articles of incorporation and the rules for the structure and activity of the supplementary pension fund under its management.
Name
Art. 121a. /1/ (new – SG 67/2003) The commercial name of the pension company shall obligatorily contain in combination the words ‘pension’ and ‘insurance’ or their derivatives. /2/ Companies not holding a license for supplementary pension insurance may not use in their names in combination the words under para 1 or their correspondences in Bulgarian or any foreign language.
Founders and Shareholders
Art. 121b. /1/ (new – SG 67/2003) Founders of pension companies may be: 1. Bulgarian individuals or legal entities; 2. foreign legal entities provided they are registered as a social insurance, insurance or financial institution under their domestic law and if they present bank references from a first rate international bank confirmed by the Bulgarian National Bank. /2/ Entities under paragraph 1 may hold shares in only one pension company, which carries out activity in the country.
Shares and Capital
68 Art. 121c. /1/ (new – SG 67/2003) The pension company may issue only registered dematerialized shares giving the right to one vote. /2/ The minimum start-up capital of the pension company shall be BGN 5,000,000. /3/ The capital shall be fully paid in cash as of the moment of the filing of the pension license application. /4/ The pension company shall, at any time, dispose with equity capital (capital base) amounting to not less than 50 per cent of the minimum capital under para 2. /5/ Pension companies may not distribute dividends in amounts and in a manner, which would result in a violation of the requirements under para 4. /6/ When the equity capital (capital base) of the pension company drops below the amount determined in para 4, it shall notify within three days the deputy Chairperson of the Commission and shall propose a redress program for bringing the equity capital in compliance with the requirements of the Code within three months. /7/ The deputy Chairperson of the Commission shall approve or refuse to approve the redress program within 7 days from its receipt. /8/ During the period of implementation of the redress program, pension companies may not distribute dividends and shall allocate the entire amount of the profit after taxation with the due taxes to the Reserve Fund. /9/ In case of disapproval of the program or of failure to implement the approved program, the deputy Chairperson of the Commission shall undertake the actions under art. 344, para 1, item 5. /10/ The requirements to the composite and structure of the pension company’s equity capital (capital base) and to the minimum liquid funds of the company and the supplementary pension insurance funds under its management shall be determined by a Commission regulation.
Loans
Art. 121d. /1/ (new – SG 67/1003) The pension company may not give loans or become a guarantor to third parties. /2/ The pension company may take a loan amounting to up to 10 per cent of the company’s equity capital (capital base), if the loan is intended for acquisition of fixed tangible assets which are directly necessary for the performance of the company’s activity and the term of the loan is not longer than three months. /3/ The pension company may not issue bonds.
Requirements to Members of Managing and Controlling Bodies
69 Art. 121e. /1/ (new – SG 67/1003) Members of managing or supervisory bodies of pension companies may be individuals or legal entities. /2/ Members, who are individuals, and persons who are representatives of legal entities shall: 1. be university graduates; 2. shall not have been convicted for intentionally committed crimes of general nature; 3. not have been members of managing or controlling bodies or unlimited liability partners in a commercial company or cooperative closed down for bankruptcy, if unsatisfied creditors remain or if bankruptcy proceedings have been initiated; 4. not have been members of managing or controlling bodies of commercial banks, which have been declared bankrupt or are undergoing bankruptcy proceedings; 5. not have been deprived of the right to hold positions related to the holding of financial liability; 6. not be between themselves spouses or relatives down to the fourth degree, inclusive, by direct or lateral kinship or connected by marriage; 7. not be members of a managing or controlling body of another company in the same business; 8. not be members of managing or controlling bodies of the legal entities or be among the individuals included in the list under the Non- serviced Credits Information Act; 9. not have carried out or still carrying out protective services or related activity; 10. not have been partners or shareholders, as well as members of a managing or controlling body of a commercial company, which carries out protective services or related activity. /3/ Members – legal entities shall: 1. not have been members of managing or controlling bodies or unlimited liability partners in a commercial company, that has been closed down for bankruptcy, if unsatisfied creditors remain or if bankruptcy proceedings are initiated. 2. not be members of managing or controlling bodies of legal entities or legal entities that are included in the list under the Non- Serviced Credits Information Act; 3. comply with the conditions under para. 2, item 4, 7, 9 and 10. /4/ A member of the managing or supervisory body of the pension company may not be a partner or a shareholder, a member of a managing or supervisory body or an entity under art. 123c para. 1, with which the
70 pension company has contractual relations, or a related party thereto, of the custodian bank or a party related to it. /5/ Members of the managing or supervisory body of the pension company and entities related to them may not be parties in transactions with the pension company except in their capacity as shareholders or insured persons in funds managed by them. /6/ The Chairman of the Managing Board, the Chairman of the Board of Directors, the Executive Director, the procurator and the actuary shall meet the requirements under paragraphs 2,4 and 5 and have a permanent residence or permit for extended stay in the country. /7/ In the event of changes to the circumstances under para 2 through 6, the pension company shall notify the deputy Chairperson of the Commission within 14 days following the change.
Liability of Members of Managing and Controlling Bodies
Art. 121f. (new – SG 67/1003) Members of managing or supervisory body of the pension company shall be held liable with their property for any damages caused by them in the management of the supplementary pension insurance fund, which are a direct or indirect result of their guilty behavior or lack of action.
Requirements to Shareholders
Art. 121g. (new – SG 67/1003) /1/ Shareholders who hold directly or through related parties 10% and above 10% of the capital of the company, or may exercise control over it shall: 1. comply with the conditions under art. 121e, paragraph 2, items 2 through 5, and items 7 and 8, if they are individuals; 2. 2. comply with the requirements under art. 121e, paragraph 3, if they are legal entities. /2/ Each subsequent increase of the shareholder interest as a result of which one entity acquires 10, 25, 34, 50 or 67 percent and more of the pension company’s shares, directly or through related parties, shall be performed following a permit by the deputy Chairperson of the Commission. /3/ The deputy Chairperson of the Commission shall issue or refuse to issue the permit under paragraph 2 within one month following the receipt of the application, and in the event that additional information and documents are required – within one month following their receipt.
71 /4/ The deputy Chairperson of the Commission shall refuse to issue a permit, if the requirements of this Code are not complied with in cases under paragraph 2.
Pension License
Art. 122. (amend. – SG 67/2003) /1/ In order to provide supplementary pension insurance services, any joint stock company shall be granted a pension license by the Commission. /2/ The pension license shall give the right to performance of supplementary pension insurance activity following the receipt of a supplementary pension insurance fund management license from the deputy Chairperson of the Commission. Such permit shall be issued separately for each fund.
Necessary Documents for Application for Pension License
Art. 122a (new – SG 67/2003) /1/ In order to receive a supplementary pension insurance license, the company shall file to the Commission an application in writing enclosing the following: 1. minutes from the establishment meeting; 2. Articles of Incorporation adopted at the establishment meeting; 3. decision of the supervisory board for the nomination of a managing board and decision of the respective governing body on the way of representation of the company and the persons authorized to represent it; 4. Rules for the functions of the managing and supervisory body or the Rules for the organization of the work of the Board of Directors; 5. a domestic bank certificate for the deposition of the minimum required capital; 6. Business plan for the activity of the pension company for a three- year period, which shall contain information on the types of supplementary pension funds the company intends to set up. 7. Documents, incl. declarations, certifying compliance with the requirements of art. 121e and 121g, paragraph 1. 8. List of shareholders with their EGN, BULSTAT identifiers or other analogous identification data in case of foreign entities, the percentage of their shareholder interest, as well as information on the affiliation between them. 9. Information on the internal controls and the IT system of the company. 10.Draft contract with the custodian bank.
72 /2/ The deputy Chairperson of the Commission may require other data, evidence and information with respect to the documents under para 1. /3/ Persons who directly or through related parties hold 10% and more of the shares or have a significant influence over the company, shall submit: 1. a sample form declaration, approved by the deputy Chairperson of the Commission, on the source of the capital with which the contributions have been paid up in exchange of subscribed shares, proving that this is not borrowed capital; 2. a declaration that they are not in arrears to the state or the municipalities; 3. documents certifying taxes charged and paid during the last three years. /4/ In the event of any changes in documents or circumstances under paragraph 1, items 2 – 4, and 6 and 9, the company shall notify the deputy Chairperson of the Commission within fourteen days following their registration or the decision for such changes.
Issuance and Denial of Pension License
Art. 122b. (new – SG 67/2003) /1/ Within two months following the receipt of the documents under art. 122a, the deputy Chairperson of the Commission shall submit to the Commission a proposal for issuance or denial of a pension license. /2/ In case the deputy Chairperson of the Commission has requested additional information and documents or has issued prescriptions for elimination of inconsistencies with the provisions of this Code, the deadline under paragraph 1 shall be three months. /3/ The Commission shall come up with a justified decision within one month following the submission of the proposal under para 1, with which it shall grant or refuse to grant a pension license. /4/ The Commission shall inform the applicant company in writing of the decision within seven days as of its issuance. /5/ The pension license shall be issued for an unlimited period of time. /6/ In case of denial, the applicant may reapply for a license not earlier than 6 months after the date of the denial. /7/ The decision of the Commission under para. 3 shall be promulgated in the State Gazette.
Grounds for Denial
73 Art. 122c. (new – SG 67/2003) The Commission shall refuse to grant a pension license when: 1. the necessary documents have not been submitted or they are not in compliance with the requirements of this Code or the inaccuracies in cases under art. 122b have not been corrected; 2. the paid up capital is below the established minimum; 3. some of the members of the supervisory and managing bodies or the shareholders owning directly or through related parties 10% and more of the company’s capital do not comply with the requirements under art. 121e and art. 121g, paragraph 1; 4. untrue data or information has been presented.
Entry in the Commercial Register
Art. 122d. (new – SG 67/2003) /1/ The District Court where the pension company’s head office is situated shall enter the company, whose scope of business is provision of supplementary pension insurance, in the Commercial register following submission of the pension license issued by the Commission. /2/ The pension company shall be obliged to present to the Commission a certified copy of the court decision for entry within seven days following its receipt.
Register of Pension Licenses
Art. 122e. (new – SG 67/2003) The Commission shall maintain a public register of licensed pension companies and supplementary pension funds managed by them.
License Revocation
Art. 122f (new – SG 67/2003) /1/ The issued pension license shall be revoked by the Commission upon proposal by the deputy Chairperson of the Commission when the pension company: 1. fails to start the operations, for which it has been licensed, within six months following the issuance of the license; 2. performs other commercial activity apart from the one directly related to supplementary pension insurance; 3. is transformed by means of split up, acquisition or merger with another pension company; 4. is terminated by decision of the general meeting of shareholders; 5. is insolvent;
74 6. the permits for management of all supplementary pension funds established by it have been revoked; 7. has presented documents, which served as grounds for granting of the license, which contain incorrect data. /2/ In addition to cases under para 1, the deputy Chairperson of the Commission may make a proposal for revocation of the issued pension license when the pension company: 1. violates the requirements of art. 121e and 121g; 2. impedes the supervision and/or fails to fulfill the enforced administrative measures that have been imposed on it; 3. fails to fulfill its obligations to the members of funds managed by it and commits regular violations of art. 123h, paragraph 1; 4. fails to comply with the principle of voluntary selection of a supplementary pension fund; 5. conducts transactions which affect the financial stability of the supplementary pension funds under its management thus endangering the interests of the fund members; 6. systematically violates the provisions of this Code and the regulations for its implementation. /3/ The Commission shall come up with a motivated decision within one month following the submission of the proposal or revocation of the license.
Obligations of the Pension Company after Revocation of the Pension License
Art. 122g (new – SG 67/2003) /1/ After revocation of the pension license, the pension company may not enter into new contracts or offer new conditions for supplementary pension insurance, nor may it amend the conditions, including the term and amount of contributions under concluded social insurance contracts. /2/ The revocation of the license shall not exempt the pension company from its obligations under concluded contracts.
Obligations of the Commission after Revocation of the Pension License
Art. 122h. (new – SG 67/2003) The Commission shall notify the Court, which performed the court registration, of the revocation of the pension license. The decision for revocation of the pension license shall be promulgated in the State Gazette and shall be published in at least two central daily newspapers.
75 Actuarial Servicing Art. 123. (amend. – SG 67/2003) /1/ Actuarial servicing of a pension company and supplementary pension funds managed by it shall be performed only by a licensed actuary. /2/ Actuary of a pension company and supplementary pension funds managed by it, may be a person with university education in the field of mathematics, information science, economics or statistics and econometrics, who possesses the necessary professional experience. /3/ The possession of the necessary experience shall be proved with documents, certifying that the person has at least three years of experience in pension insurance, insurance and/or as a university lecturer in the field of life insurance or actuarial issues. /4/ Licensing of actuaries shall be performed under terms and procedures approved by the Commission.
Custodian Bank
Art.123a. (new – SG 67/2003) /1/ All assets of a supplementary pension fund shall be kept in one custodian bank pursuant to a contract for custodian services between the pension company managing the fund and the custodian bank. /2/ A custodian bank under this Code shall be a bank which: 1. is a domestic bank or a foreign bank which has received a permit for executing banking operations on the territory of the country through a branch office; 2. has been licensed to perform transactions with securities including transactions under art. 54, para 1 of the Public Offering of Securities Act; 3. has received a permit for a primary dealer of government securities; 4. whose license, activity, transactions or operations are not limited to a degree which would impede or render impossible the appropriate performance of obligations under this Code or under the respective contract; 5. has not been subject to measures under art. 65, para 2, items 11 and 14 of the Banking Act during the last 12 months; 6. has sufficient capital, staff, and information resources for the efficient performance of its custodial functions and obligations in accordance with this Code and the regulations on its implementation; 7. is not one and the same entity or a related party with the entities under art. 123c, para. 1. /3/ The custodian bank shall:
76 1. safekeep and report in client accounts and registers in the specialized depository institutions in the country the dematerialized securities owned by the supplementary pension fund; 2. account and keep in client accounts and registers in banks or specialized depository institutions abroad the foreign securities owned by a supplementary pension fund; 3. safekeep all documents certifying ownership of the dematerialized and materialized securities of the supplementary pension fund; 4. keep accounts and maintain accounting records and a register of all assets separately for each supplementary pension fund and apart from its own assets and the assets attracted by other clients; 5. safe keep all payment documents certifying the receipt and the investment of the supplementary pension fund’s financial resources; 6. keep all documents and instructions by the respective pension company related to investment of the funds and safekeeping of the assets of the supplementary pension fund. /4/ All financial resources of the supplementary pension fund shall be submitted to the custodian bank. Within five working days, the pension company shall give written instructions to the custodian bank as to the investment of the received cash. /5/ The custodian bank shall perform operations with the cash, the materialized and dematerialized securities of the fund, only in case of existence of a written instruction by officials authorized by the pension company in accordance with the contract. /6/ The custodian bank shall not perform an instruction under paragraph 5 for investment in assets different from those regulated in this Code. /7/ At the end of each working day, the custodian bank shall send to the deputy Chairperson of the Commission information concerning the received cash, the conducted transactions and the assets of the supplementary pension fund. /8/ In discharging its duties, the custodian bank shall inform, in due time, the deputy Chairperson of the Commission of any established violation of this Code by of the pension company.
Contract for Custodian Services
Art. 123b. (new – SG 67/2003) /1/ The contract between the custodian bank and the pension company shall be presented to the deputy Chairperson of the Commission within three days following the date of its conclusion and shall contain:
77 1. the rights and obligations of the custodian bank and the pension company; 2. the terms and procedures for performing the obligations under item 1; 3. the liability of the custodian bank, incl. cases of subcontracting by the custodian bank of some of the functions under this contract; 4. the fees paid by the pension company to the custodian bank; 5. the terms and procedures for exchanging information between the custodian bank and the pension company; 6. the terms and procedures for termination of the contract. /2/ A bank included in the list under para. 12 may not conclude a contract for custodian services with the pension company in case: 3. it is a shareholder in it or a related party to it; 4. it is a loan-holder or a creditor to it; 5. it is one and the same or a related entity to the broker dealer, with which the company is under contractual relations. /3/ The pension company shall sign a contract with only one custodian bank for custodian services to each supplementary pension funds managed by it. The custodian bank may sign a contract for custodian services with more than one pension company. /4/ All fees paid to the custodian bank under the contract for custodian services shall be at the expense of the pension company. /5/ The contract between the pension company and the custodian bank may be terminated by each party with a one-month notification in writing, where the pension company shall inform the deputy Chairperson of the Commission within three days from the sending or the receipt of the notification. This notification term shall not apply to cases when there is a mandatory prescription of the deputy Chairperson of the Commission for changing the custodian bank. /6/ In the event of termination of the contract with the pension company, the custodian bank shall: 1. transfer all claimable or due cash resources in the pension fund’s accounts to the new custodian bank in accordance with the instructions provided by the pension company; 2. carry out the order of the pension company for transferring of the dematerialized securities held by it in the fund’s account as per the fund’s register to an account in the new custodian bank, where the securities are to be registered; 3. submit to the pension company a list of all materialized securities, ownership certificates and other documents related to the implementation of the contract for custodian services.
78 /7/ The custodian bank shall carry out activities under para 6 within a term negotiated with the pension company, which, however, may not be longer than 30 days after the date of signing of the contract for custodian services between the PIC and the new custodian. The pension company shall immediately transfer the documents under para. 6, item 3 for safekeeping in the new custodian bank. /8/ The procedures related to changing custodian banks shall be done in such a way as to guarantee the continuous performance of the functions and safekeeping of the supplementary pension fund’s assets. /9/ The Bulgarian National Bank, through the Banking Supervision Division, shall notify in due time the Commission of any enforced measure or sanction, which limits the license, the transactions or operations of the custodian bank to a degree, which would render difficult or impossible the adequate implementation of the obligations provided for in this Code or in the contract. /10/ If the custodian bank is declared bankrupt, the supplementary pension fund’s assets kept in it in accordance with this Code, with the exception of bank deposits under § 1, item 1 of the Act on Guaranteeing of Bank Deposits, shall not be considered as part of the insolvency mass. /11/ The Bulgarian National Bank, after coordination with the Commission, shall issue a regulation for the implementation of art. 123a. /12/ The Bulgarian National Bank, jointly with the Commission, shall issue lists of the banks, which could be custodians.
Contract with a Broker Dealer
Art. 123c. (new – SG 67/2003) /1/ In order to conduct transactions with securities, related to the management of supplementary pension fund assets, the pension company shall be obliged to conclude a contract with one or more broker dealers. /2/ The pension company may not conclude a contract with a broker dealer if it is related to it. /3/ The choice of a broker dealer shall be approved by the managing bodies of the pension company. /4/ The pension company shall notify the deputy Chairperson of the Commission about the contracts concluded under para 1, within seven days from their conclusion.
Contract with a Sales Agent
Art. 123d. (new – SG 67/2003) /1/ Pension companies may conclude contracts with sales agents – individuals or legal entities.
79 /2/ Sales agents who are individuals, as well as individuals authorized by sales agents who are legal entities, shall have the right to conclude social insurance contracts and receive applications for supplementary pension insurance on behalf of, and at the expense of, the pension company, as well as to perform other activities related to supplementary pension insurance pursuant to the written contract concluded with the company. /3/ For the performance of their functions, sales agents and authorized individuals shall comply with the principle of voluntary choice and shall diligently explain the rights and obligations arising from the social insurance contract, and keep the commercial secret and the good commercial reputation of the pension companies. /4/ Persons who have offered or are offering security services or are engaged in other similar activities, including persons who have been or are partners, shareholders, or members of a managing or a supervisory body of a commercial company, performing security services or other similar activities, may not be sales agents or entities authorized by sales agents. /5/ Employers may not act as sales agents on behalf of a pension company for their workers and employees. /6/ Sales agents, as well as individuals authorized by sales agents who are legal entities, may not work for more than one pension company. /7/ Within 14 days, the pension company shall notify the Commission of the conclusion or termination of every contract with a sales agent, as well as of authorization of individuals by sales agents who are legal entities. /8/ The Commission shall include the sales agents and the authorized individuals in the general register of sales agents. /9/ The pension company shall provide every sales agent, respectively the individuals authorized by sales agents who are legal entities, with an identification document to prove their authorization during the implementation of their activity. The sample identification document shall be approved by the deputy Chairperson of the Commission.
Revenues of the Company
Art. 123e. (new – SG 67/2003) /1/ Pension company revenues shall be formed from fees and deductions as established in this Code, as well as from the management of their own assets. /2/ The pension company may allocate among its shareholders the return from the management of its supplementary pension funds and its own assets pursuant to the Commercial Act and this Code.
80 Internal Control
Art. 123f. (new – SG 67/2003) /1/ The pension company shall set up a specialized internal control service whose management shall be appointed and dismissed by the management bodies of the company. /2/ The general meeting of shareholders shall adopt rules on the organization and activities of the internal control service.
IT System
Art. 123g. (new – SG 67/2003) To perform its supplementary pension insurance activities, the company shall be obliged to set up and maintain an IT system compliant with the requirements approved by the deputy Chairperson of the Commission.
Provision of Information
Art. 123h (new – SG 67/2003) /1/ Pursuant to its Articles of Incorporation and the Rules of the respective supplementary pension fund, each pension company shall: 1. acquaint the insured persons and insurers with the Rules of the supplementary pension fund and with all amendments and supplements to it; 2. by May 31 of each year, provide the insured persons free of charge with a statement of their individual account for the previous year in accordance with a sample form approved by the deputy Chairperson of the Commission; 3. in addition to the case under para 2, allow each insured person to receive information concerning their individual account, upon request. /2/ The pension company, sales agents and individuals authorized by them may not provide to third parties the information they have regarding insured persons, pensioners, their survivors and insurers, with the exception of cases regulated by other laws.
Requirements Related to Advertisements
Art. 123i. (new – SG 67/2003) /1/ The pension company shall: 1. not advertise products or services which it does not provide at the moment, nor shall it advertise future investment return; 2. not hide or conceal material information and facts and include in its advertisement materials vague information on its performance, untrue or misleading data;
81 3. not organize lottery games. /2/ The deputy Chairperson of the Commission shall approve the requirements to the contents of advertising or written information materials of pension funds and pension companies. /3/ All advertising expenses of the pension company and supplementary pension funds managed by it shall be at the expense of the pension company.
Section III Supplementary Voluntary Insurance Companies for Unemployment and/ or Professional Training
Definition
Art. 123j. (new – SG 67/2003) /1/ Supplementary voluntary insurance companies for unemployment and/or professional training, hereafter referred to as ‘unemployment and/or professional training insurance companies’, shall be joint stock companies licensed in accordance with this Code and registered under the Commercial Act. /2/ The scope of business of unemployment and/or professional training insurance companies shall be only supplementary voluntary insurance for unemployment and/or professional training. /3/ Unemployment and/or professional training insurance companies may not perform commercial operations, which are not related directly to their business. /4/ Unemployment and/or professional training insurance companies may establish non-profit organizations for representation of common interests and for implementation of joint projects. /5/ Unemployment and/or professional training insurance companies may not participate in civil associations and commercial companies as unlimited liability partners, nor may they acquire shares in other unemployment and/or professional training insurance companies. /6/ Unemployment and/or professional training insurance company shall perform its activity in accordance with the provisions of this Code and in accordance with its articles of incorporation and the rules of operation of unemployment or professional training supplementary voluntary insurance funds under its management.
Shares and Capital
Art. 123k. (new – SG 67/2003) /1/ Unemployment and/or professional training insurance companies may issue only registered dematerialized shares with the right to one vote.
82 /2/ The minimum amount of capital of an unemployment and/or professional training insurance company shall be 500 000 BGN. /3/ The capital shall be fully paid in cash as of the moment of submission of the application for obtaining a license for carrying out unemployment and/or professional training supplementary voluntary insurance. /4/ The unemployment and/or professional training insurance company shall, at any time, dispose with equity capital (capital base) amounting to not less than 50 per cent of the minimum capital under para 2. /5/ Unemployment and/or professional training insurance companies may not distribute profits in amounts and in a manner, which would result in a violation of the requirements under para 4. /6/ When the equity capital (capital base) of the unemployment and/or professional training insurance company drops below the amount determined in para 4, it shall notify, within three days, the deputy Chairperson of the Commission and shall propose a redress program for bringing the equity capital in compliance with the requirements of the Code within three months. /7/ The deputy Chairperson of the Commission shall approve or refuse to approve the redress program within seven days from its receipt. /8/ During the period of implementation of the redress program, unemployment and/or professional training insurance companies may not distribute dividends. /9/ In case of disapproval of the program or of failure to implement the approved program, the deputy Chairperson of the Commission shall undertake actions under art. 344, para 1, item 5. /10/ The requirements to the composite and structure of the equity capital (capital base) of the unemployment and/or professional training insurance company and to the minimum liquid funds of the company and the supplementary voluntary insurance funds for unemployment and/or professional training under its management, shall be determined by the regulation under art. 121c, para 10.
Name
Art. 123l. (new – SG 67/2003) /1/ The commercial name of the unemployment and/or professional training insurance company shall obligatorily contain in combination the words ‘supplementary’, ‘voluntary’, ‘insurance’, ‘for unemployment’ and ‘for professional training’ or their derivatives. /2/ Companies not holding a license for carrying out activities related to supplementary voluntary insurance for unemployment and/or
83 professional training, may not use in their names in combination the words under para 1 or their correspondences in Bulgarian or any foreign language.
Applicable Provisions
Art. 123m. (new – SG 67/2003) The provisions of Section Two, Chapter nine shall apply to all unsettled issues related to establishment, licensing, management, representation and activities of unemployment and/or professional training companies, including contracts with custodian banks and entities under Art. 123c.
TITLE TWO SUPPLEMENTARY MANDATORY PENSION INSURANCE
Chapter Nine ‘a’ General Provisions
Procedures for Implementation
Art. 124. (amend. – SG 67/2003) /1/ Supplementary mandatory pension insurance shall be carried out in accordance with the terms and procedures of this Title on the grounds of a concluded contract by the insured person with the pension company or on the basis of formal distribution under the conditions of art. 137, para 4 and art. 140, para 4. /2/ The social insurance legal relationship with the pension company shall originate from the date of conclusion of the social insurance contract or from the date of formal distribution to a supplementary mandatory pension fund.
Principles
Article 125. /1/ Supplementary mandatory pension insurance shall be performed in observance of the following principles: 1. mandatory participation, 2. legal independence of the pension insurance company from the universal and occupational pension funds, 3. transparency, separateness and exclusiveness of the activity; 4. licensing regime and government regulation; 5. mandatory periodic reporting and disclosure; 6. fair competition among the pension insurance companies; 7. representation of the interests of the insured persons.
84 /2/ Supplementary mandatory pension insurance shall be performed through pension schemes on a fully-funded principle on the basis of defined contributions.
Management of Pension Fund Assets
Article 126. The assets of the pension fund shall be managed with the care of a prudent person in observance of the principles of reliability, liquidity, profitability and diversification in the best interest of insured persons.
Insured Persons
Article 127. /1/ (in force from 01.01.2002, am. SG 64/2000, 67/2003) Every individual born after December 31, 1959, shall be obliged to be insured for supplementary pension with a universal pension fund provided that he or she is insured under the terms and conditions of Part I. /2/ Persons working under the conditions of labor categories I and II shall also be insured with an occupational pension fund for early retirement pension regardless of their age. /3/ The individual coefficient under art. 70 of persons under paragraph 1 shall be decreased on the basis of the ratio between the social insurance contribution rates for the universal pension fund and for the Pension Fund in the order determined by a decree of the Council of Ministers. /4/ (new SG 119/2002, amend. 67/2003) As of January 1st 2004, persons under art. 4, para. 1, item 4, shall be insured for supplementary pension at a universal pension fund. /5/ (new – SG 67/2003) Employees of the National Intelligence Service, the Military Information Service under the Ministry of Defense, and the Special Courier Service under the Ministry of Transport and Communications, shall not be insured for supplementary pension at a universal pension fund.
Individuality of Social Insurance
Article 128. (former art. 128 – SG 1/2002) /1/ Supplementary mandatory pension insurance shall be individual. Each person insured with an occupational and universal pension fund shall have an individual insurance number and an individual insurance account. /2/ (new SG 1/2002, amend. 67/2003) The National Social Security Institute and the pension companies shall keep separate registers for data
85 concerning persons under art. 4, para. 1, item 4, in accordance with the provisions of the Classified Information Protection Act. /3/ (new – SG 67/2003) Data concerning persons under para 2 shall be provided under procedures determined by the governor of the NSSI and the Chairperson of the Government Commission for Information Security.
Individual Account
Article 129. (amend. – SG 67/2003) /1/ Supplementary mandatory pension contributions and amounts transferred from another supplementary mandatory pension fund shall be registered and accrued to the insured persons’ individual account as of the date of their receipt in the fund’s account. /2/ Every insured person may have only one individual account in a universal, respectively in an occupational pension fund. Paid contributions, transferred amounts, and deductions shall be recorded in the individual account. /3/ The individual account shall be kept in leva and in units. Supplementary mandatory pension contributions and amounts, transferred frоm another fund, shall be accounted in units and in fractions of units. /4/ Deductions, as а percentage of every social insurance contribution, shall be made before the determination of units under para 3. /5/ Each unit shall represent a proportional part of the fund’s net assets. The units in a fund shall be equal in value, which shall be determined and declared in accordance with para 9. /6/ The value of all units and fractions of units in the fund shall be equal to the value of the fund’s net assets. /7/ The investment return of the moneys of the fund shall be included in the determination of the value of one unit under para. 5. /8/ No reallocation of moneys and units between the individual accounts shall be permitted. /9/ The terms and the manner of calculation and declaration of the value of one unit, as well as the requirements to the keeping of the individual account shall be set up with the regulation under art. 181. /10/ On the day of payment of the first contribution to a supplementary mandatory pension fund or on the day of the first reporting of the individual account accumulations in units, the value of one unit shall be equal to 1 lev. /11/ Individual account accumulations of insured persons shall not be subject to enforcement.
86 Insured Social Risks
Article 130. Repealed – SG 67/2003.
Amount of Pension
Article 131. /1/ (former art. 131 – SG 1/2002) Pensions shall be determined on the basis of the amount accrued in the individual account from contributions and from the return on their investment as reduced by the fees and deductions under this Part, as well as depending on the life expectancy after retirement in accordance with the approved biometric tables. /2/ (new SG 1/2002) When the amount of the pension is up to 20 per cent of the social pension for old age, the amount shall be paid to the pensioner as a lump sum or in the form of programmed withdrawal upon eligibility.
Government Regulation and Control
Article 132. Repealed – SG 67/2003.
CHAPTER TEN
SUPPLEMENTARY MANDATORY PENSION FUNDS
Establishment, Management, and Representation of Pension Funds
Article 133. (amend. – SG 67/2003) /1/ Supplementary mandatory pension insurance shall be performed through participation in universal and/or occupational pension funds which shall be established and managed by pension insurance companies licensed pursuant to this Code. /2/ In their relations with third parties, occupational and universal pension funds shall be represented only by licensed pension insurance companies. /3/ Pension insurance companies and universal and occupational pension funds shall be separate legal entities. /4/ Pension insurance companies may establish only one universal and one occupational fund. /5/ Universal and occupational pension funds shall be established for an unlimited period of time.
87 Responsibility of Pension Insurance Companies
Article 134. (amend. – SG 67/2003) /1/ Pension insurance companies shall be liable with their property to the insured persons for losses incurred as a result of unconscientious performance of their obligations in terms of management and representation of the respective pension funds. In case of insolvency, the assets of pension insurance companies shall not include the amounts in the pension reserve under art. 192, paragraph 2. /2/ Pension funds shall not be responsible with their assets for any losses resulting from actions of the pension insurance companies which have established them, nor for losses from the activity of the pension insurance company which manages and represents the fund.
Name of the Pension Fund
Article 135. /1/ The name of the pension fund shall contain in some combination the words “pension”, “occupational” or “universal and "fund" or their derivatives, as well as an instruction of its type. /2/ Only a fund registered in compliance with this law may use in its name, when describing its activity or when advertising, in some combination the words “pension”, “occupational” or “universal and "fund" or their derivatives.
Prohibition of Acquisition By Prescription
Article 136. Assets of a universal and/or occupational fund may not be acquired by prescription.
Universal Pension Fund
Article 137. /1/ A universal pension fund shall be established by a licensed pension insurance company by decision of its managing bodies. /2/ A licensed pension insurance company may establish only one universal pension fund. /3/ Insured persons may participate in a universal pension fund through an individual application filed to the pension insurance company within three months following the occurrence of obligation for social insurance. /4/ (amend. – SG 67/2003) Persons who have not chosen a universal pension fund in accordance with paragraph 3, shall be distributed formally to one of the registered universal funds in the manner determined by the National Social Security Institute and the deputy Chairperson of the Commission. /5/ Repealed – SG 67/2003.
88 Minimum Number of Participants in a Universal Pension Fund
Article 138. Repealed – SG 67/2003.
Rights Gained from Insurance in Universal Pension Funds
Article 139. Participation in a universal pension fund shall give the right to: 1. (amend. SG 67/2003) supplementary life-long pension for old age after the person becomes eligible for old age and length of service pension under Part I; 2. (am. SG 1/2002, 67/2003) a lump sum payment amounting to up to 50 per cent of the amount accrued in the individual account in case of permanently lost capacity over 70.99%; 3. lump sum or limited period payment of accrued amounts to dependents of a deceased member or pensioner of the fund under the terms and conditions of this Title. /2/ Repealed – SG 67/2003.
Occupational Pension Fund
Article 140. /1/ An occupational pension fund shall be established by a licensed pension insurance company by decision of its managing bodies. /2/ A licensed pension insurance company may establish only one occupational pension fund. /3/ Insured persons may participate in an occupational pension fund through an individual application filed to the pension insurance company within three months following the occurrence of obligation for social insurance. /4/ (amend. – SG 67/2003) Individuals who have not chosen an occupational pension fund in accordance with paragraph 3 shall be distributed formally to the registered occupational funds in the manner determined by the National Social Security Institute and the deputy Chairperson of the Commission. /5/ Repealed – SG 67/2003.
Participants in an Occupational Pension Fund
Article 141. Repealed – SG 67/2003.
Rights Gained from Participation in Occupational Pension Funds
89 Article 142. Participation an occupational pension fund shall give the right to: 1. limited period occupational pension for early retirement for labor category I and II workers in accordance with their labor category; 2. (suppl. SG 1/2002, 67/2003) a lump sum payment amounting to up to 50 per cent of the amount accrued in the individual account in case of permanently lost capacity over 70.99%; 3. (amend. – SG 67/2003) lump sum or deferred payment of amounts to survivors of the deceased insured person or pensioner under the terms and conditions set out in this Title. /2/ Repealed – SG 67/2003.
Rules of Organization and Operation of a Supplementary Mandatory Pension Fund
Article 143. /1/ The Rules of Operation and Organization of a supplementary mandatory pension fund shall be adopted by the General Meeting of the shareholders of the pension insurance company. /2/ The Rules of Operation and Organization of the pension fund shall contain: 1. the name of the fund; 2. the name, head office, and management address of the managing pension insurance company; 3. the terms and conditions for supplementary mandatory pension insurance differentiated for universal and occupational pension funds; 4. (amend. – SG 67/2003) the terms and conditions for concluding social insurance or pension contracts, and the conditions for their amendment and supplementation as well as the conditions for their termination; 5. (amend – SG 67/2003) the terms and conditions for maintenance of individual accounts and for provision of account statements to insured persons; 6. (suppl. – SG 67/2003) the period and the way to allocate investment return and the main objectives and limitations in the fund’s investment policy; 7. the amount of fees and deductions collected by the pension insurance company; 8. the procedures, terms and conditions of supplementary pension payment and of lump sums and limited period payments; 9. the order, terms and conditions for transfer of amounts accrued in the individual account; 10. the order and conditions for making amendments and supplements to the Rules;
90 11. explicit indication of the order and manner of making announcements related to the activity of the pension fund; 12. the methodology and periodicity for evaluation of fund assets; 13. (suppl. – SG 67/2003) the rights and obligations of the pension insurance company, of persons under art. 123d, para 2, insured person, employers and other insurers. 14. (new – SG 67/2003) the terms and procedures for establishing a reserve for payment of life pensions; 15. (new – SG 67/2003) the terms and procedures of guaranteeing the minimum rate of return on investment of the insured persons’ funds.
Amendment and Supplement to the Rules of a Supplementary Mandatory Pension Fund
Article 144. (amend. –SG 67/2003) /1/ Amendments and supplements to the Rules of Operation under art. 143, para 2, shall be approved by the deputy Chairperson of the Commission. The deputy Chairperson of the Commission shall make a decision within one month as of the receipt of the application. The applicant shall be notified of the decision in writing within a seven-day period. /2/ (amend. –SG 67/2003) The pension company shall inform the insured persons of the specific amendments and supplements to the Rules of Organization and Operation of the pension fund in person or by means of publication in two central daily newspapers within one week following the receipt of the decision of the deputy Chairperson of the Commission.
Permit for Management of a Pension Fund
Art. 145. (amended SG 8/2003) The permit for management of a universal or an occupational pension fund shall be issued by the deputy Chairperson of the Commission. In order the obtain a permit, the licensed pension company shall send a written application to the Commission, accompanied by the following attachments: 1. the decision of the General Meeting of the licensed pension company for establishment of a universal or occupational pension fund; 2. the Rules of Organization and Operation of the universal or the occupational pension fund; 3. actuarial projections concerning the offered pension schemes and the full name and ID data of the actuary; 4. samples of social insurance and pension contracts; 5. preliminary contracts with a custodial bank and a broker dealer; 6. financial statement of the company as of the last date of the previous month;
91 7. information on the software and hardware of the fund’s IT system; 8. information on the organizational structure of the company and its staffing; 9. current status certificate of the pension company. /2/ The deputy Chairperson of the Commission may require additional data and information in relation to documents under para 1 as well as determine a deadline for their submission.
Term for Reviewing the Application for Management of a Pension Fund
Art. 146. (amend. –SG 67/2003) /1/ The deputy Chairperson of the Commission shall come up with an opinion within one month as of filing of the application under art. 145, and in case additional information and documents have been required - within one month following their submission. /2/ When a request has been accepted for issuance of a permit with missing or incorrect documents, the deputy Chairperson of the Commission shall notify the pension company within 14 days of the irregularities and shall determine a deadline for their rectification. /3/ The deputy Chairperson of the Commission shall notify the applicant of his decision under para 1 in writing within seven days following its adoption.
Denial of Issuance of a Permit for Management of a Pension Fund
Art. 147. (amend. – SG 67/2003) /1/ The deputy Chairperson of the Commission shall deny issuance of a permit, when: 1. after the expiry of the deadline determined under art. 146, para 1 and 2, the additional documents or information have not been submitted or the irregularities have not been rectified; 2. the requirements of this Code are not complied with; 3. the pension company does not have the necessary financial, human or information resources. /2/ In case of refusal, the pension company may file a new application for permit for management of a universal or occupational fund not sooner than six months following the date of refusal.
Court Entry
92 Art.148. (amend. – SG 67/2003) /1/ The respective district court by head office of the fund shall enter in its register the universal or respectively the occupational pension fund, if the pension company has filed an application for entry within six months following the receipt of the permit by the deputy Chairperson of the Commission. /2/ The court entry application shall contain the following: 1. name, head office and address of management of the pension company; 2. name of the pension fund; 3. full name and EGN of the persons who manage and represent the pension company. /3/ Universal or occupational funds shall be entered in the register of the district court where its head office is situated. /4/ The supplementary mandatory pension fund shall materialize as a legal entity as of the date of court registration.
Revocation of the Permit for Fund Management
Art. 149. (amend. – SG 67/2003) The deputy Chairperson of the Commission shall revoke the permit for management of a universal or occupational fund in the following cases: 1. establishment of the fact that the documents used as basis for issuance of the permit contain incorrect data; 2. failure to file an application for court registration within six months following the receipt of the permit for managing a universal or occupational fund. 3. transformation of the pension company when the management of the fund is transferred to another pension company; 4. termination of the fund due to a merger or acquisition by another supplementary mandatory pension fund; 5. existence of real and imminent danger for the interests of the pension fund members; 6. revocation of the license of the pension company managing the pension fund.
Documents Required for Entry
Article 150. /1/ The following documents shall be presented for the purposes of court entry of the occupational and/or universal fund: 1. (amend. – SG 67/2003) permit for management of a universal or occupational pension fund; 2. (amend. – SG 67/2003) the Rules of Operation and Organization of the universal or occupational pension fund;
93 3. the Articles of Incorporation of the pension insurance company managing and representing the pension fund; 4. a certificate of current legal status of the pension insurance company; 5. (am. SG 64/2000) a list of all members of the managing bodies of the pension insurance company; 6. the pension license of the pension insurance company; 7. (amend. – SG 67/2003) the decision of the general meeting of the pension company for establishment of a supplementary mandatory pension fund; 8. full name and EGN number of all persons managing and representing the pension insurance company. /2/ The following shall be entered in the register: the name of the universal and/or occupational pension fund, the name, head office, and management address of the pension insurance company which has established the fund, the manner of representation of the pension insurance company.
Term for Court Ruling
Article 151. The court shall review the application for entry within 14 days after the date of submission.
Entry Denial
Article 152. The court shall deny entry if the requirements of this Part are not met.
Obligation for Submission of a Copy of the Court Ruling
Article 153. (amended SG 8/2003, 67/2003) The pension insurance company shall be obliged to present to the Commission a certified copy of the court decision for entry within seven days following its receipt.
Responsibility for Entry Costs
Article 154. All expenses related to the entry of the occupational and/or universal fund and all actions taken for the purposes of its establishment and registration shall be on behalf of, and at the account of, the pension insurance company.
Obligations of the Pension Company after Revocation of the Permit for Management of a Pension Fund
94 Art. 154a. (new – SG 67/2003) /1/ After revocation of the permit for management of a universal or occupational pension fund, the pension company may not enter into new contracts or offer new conditions for supplementary mandatory pension insurance, nor may it amend the conditions under concluded social insurance contracts for the respective fund. /2/ Revocation of the permit for management of a universal or occupational pension fund shall not exempt the pension company from its obligations under existing contracts.
Obligations of the Deputy Chairperson of the Commission after Revocation of a Permit for Management of a Pension Fund
Art. 154b. (new – SG 67/2003) /1/ The deputy Chairperson of the Commission shall send notification of the revocation of the permit for management of a universal or occupational fund to the court, which has executed the registration, shall promulgate the notification in the State Gazette and publish it in at least two central daily newspapers.
Board of Trustees
Article 155. /1/ The interests of the persons insured in the funds shall be represented by a Board of Trustees. /2/ The Board of Trustees shall be comprised of an equal number of representatives of the nationally represented employer and worker organizations and one representative of the pension insurance company. /3/ (amended SG 8/2003, 67/2003) The rights and obligations of the Board of Trustees shall be regulated in a decree of the Council of Ministers upon proposal of the Commission. /4/ Proposals and decisions of the Board of Trustees shall have an advisory nature for the pension insurance company.
Supervision
Article 156. (amended SG 8/2003, repealed 67/2003)
CHAPTER ELEVEN SOCIAL INSURANCE CONTRIBUTIONS
Type and Rates of Social Insurance Contributions
95 Article 157. /1/ Supplementary mandatory pension insurance shall be performed through monthly cash contributions whose rate shall be determined by the Public Social Security Budget Act. /2/ (am. SG 1/2002) Contributions to universal pension funds shall be divided between the insurers and the insured persons in the ratio under art. 6, para 3. /3/ Contributions to occupational pension funds shall be entirely at the expense of the insurers. /4/ Self-insured persons shall be insured with a universal pension fund at their account. /5/ (new SG 1/2002) Supplementary mandatory pension contributions shall be paid on the income for which contributions for public pension insurance are due, with the exception of cases under art. 9, para 6 and 7 and § 9, para 2 and 3. /6/ (new SG 67/2003) Social insurance contributions for supplementary mandatory pension insurance in an occupational pension fund for persons, who receive a pension for length of participation and old age, shall be transferred to the public social security Pensions Fund.
Payment of Social Insurance Contributions
Article 158. Supplementary mandatory pension contributions shall be paid simultaneously with the public social security contributions.
Collection of Social Insurance Contributions
Article 159. /1/ Social insurance contributions to pension funds shall be collected by the National Social Security Institute. /2/ Social insurance contributions under paragraph 1 shall be transferred to a specialized account for supplementary mandatory pension insurance at the National Social Security Institute. /3/ (am. SG 1/2002) The National Social Security Institute shall transfer the received contributions from the special account to the account of the respective pension fund, indicated by the managing pension insurance company, within thirty days following their receipt. /4/ The pension insurance company shall pay the National Social Security Institute service fees in accordance with the amount of the contributions received in the pension insurance fund. The amount of these fees shall be determined on an annual basis by the provisions of the Public Social Security Budget Act. /5/ Service fees under paragraph 4 shall be paid by the pension insurance company to the National Social Security Institute within ten
96 days from the deposition of the social insurance contributions in the account of the pension fund. /6/ In case of an unjustifiable delay of the transfer of amounts under para 3 and para 5, the pension insurance company and the National Social Security Institute shall pay each other the legal interest for the period of delay. /7/ The relations between the National Social Security Institute and the pension insurance company shall be settled through a contract. /8/ The pension insurance company shall be held responsible before the insured persons for social insurance contributions actually transferred by the National Social Security Institute.
CHAPTER TWELVE
TAX PREFERENCES
Exemption from Tax
Article 160. /1/ Income of occupational and universal pension funds shall not be subject to tax under the Corporate Income Tax Act. /2/ Investment return on assets of the occupational and universal fund, distributed among the individual accounts of the insured persons, shall not be subject to tax under the Individual Income Tax Act. /3/ Services related to supplementary mandatory pension insurance shall not be subject to tax under the VAT Act. /4/ The financial result of licensed supplementary mandatory pension insurance company shall be reduced with the pension reserve formed in accordance with art. 192, para 2, as well as with its investment return.
Deduction of Individual Contributions from Taxable Income
Article 161. Individual contributions for supplementary mandatory pension insurance in a universal pension fund by individuals shall be deductible from their income before taxation in the order, manner and to the extent determined under the Individual Income Tax Act.
Recognition of Contributions as Expense
Article 162. Employer contributions for supplementary mandatory pension insurance shall be recognized as operational expenses in accordance with the Corporate Income Tax Act.
97 CHAPTER THIRTEEN
RIGHTS OF THE INSURED PERSONS
Restrictions on Pension Fund Membership
Article 163. Insured persons shall have the right to be members of only one occupational and/or one universal pension fund.
Non-responsibility for Liabilities
Article 164. Insured persons and the pension fund shall not be responsible for any liabilities of the pension insurance company, which has established it and is managing it.
Rights of the Insured Persons
Art. 165. (amend. – SG 67/2003) /1/ Persons insured in a universal pension fund shall have the right to a supplementary lifelong old age pension, and persons insured in an occupational fund – to a limited period occupational early retirement pension. /2/ Pensions under para 1 shall be personal.
Types of Pensions
Article 166. Repealed – SG 67/2003.
Eligibility for Supplementary Lifelong Old Age Pension
Art. 167. (amend. – SG 67/2003) /1/ Eligibility for supplementary lifetime old age pension shall occur when the insured person becomes eligible for old age and length of participation pension under the conditions of Part One of this Code. /2/ If the insured person wishes so, the supplementary mandatory pension fund may pay a supplementary old age pension for life five years prior to the eligibility for old age and length of participation pension under art. 68. para. 1 - 3, provided that the amount accrued in the individual account allows granting of a pension, which is not smaller than the minimum pension for old age and length of participation under art. 68, para 1 – 3.
98 Eligibility for Occupational Pension
Article 168. /1/ Workers under labor categories I and II shall be eligible for an occupational early retirement pension when the following conditions are met: 1. (amend. – SG 67/2003) not less than 10 years of service under labor category I and 8 years lower age than the age required for eligibility for old age and length of service pension under Part I; 2. (amend. – SG 67/2003) not less than 15 years of service under labor category II and 3 years lower age than the age required for eligibility for old age and length of service pension under Part I. /2/ (amend. – SG 67/2003) Occupational pension for early retirement shall be received until the moment the person becomes eligible for old age and length of service pension under Part I.
Determining the Amount of Benefit
Art. 169. (amend. – SG 67/2003) /1/ The amount of supplementary lifelong pension for old age shall be determined on the basis of: 1. the accumulations in the individual account; 2. the biometric tables approved by the deputy Chairperson of the Commission; 3. the technical interest rate approved by the deputy Chairperson of the Commission; /2/ The amount of the limited period occupational early retirement pension shall be determined on the basis of: 1. the accumulations in the individual account; 2. the term of payment; 3. the technical interest rate approved by the deputy Chairperson of the Commission.
Pension Contract
Art. 169a (new – SG 67/2003) /1/ A pension contract shall be concluded between the pension company and the pensioner upon eligibility for pension under the conditions of this Title. /2/ The pension contract shall contain: 1. the name, head office, address of management, court registration, number and date of pension license, BULSTAT and tax number of the pension company; 2. name and personal data of pensioner; 3. type and amount of the pension and the manner for its recalculation;
99 4. the term of the pension; 5. the terms and procedures for payment of the pension; 6. the rights of the pensioner’s survivors; 7. the terms and procedures for disclosure of information to a pensioner; 8. costs on the payment of pension; 9. conditions for termination of the contract.
Rights of the Dependents
Article 170. (amend. – SG 67/2003) /1/ In case of death of the insured person, the amount accrued in his/her individual account shall be paid to his/her survivors – surviving spouse, descending and ascending relatives, as a lump sum or as a deferred payment, by observing the terms for inheritance and the amount of the estate shares under the Inheritance Act. /2/ In case of death of a pensioner of a universal or occupational fund, survivors under para 1 shall be paid the remaining amount in his/her individual account. /3/ When the insured person or pensioner has no survivors under para 1, the amount accrued in the individual account in a universal fund shall be transferred to the pension reserve, and in an occupational fund – to the state budget.
Right to Switch
Art. 171. (amend. – Sg 67/2003) /1/ The insured person shall have the right to switch participation in a supplementary mandatory pension fund and to transfer the individual account accumulations from one fund to another fund of the respective type, administered by a different pension company following the completion of two years as of the conclusion of the first social insurance contract or the formal distribution after the occurrence of his/her social insurance obligation. /2/ Apart from cases under para 1, participation in a supplementary mandatory pension fund could be changed after the expiry of one year from the conclusion of the social insurance contract for participation in this fund. /3/ There are no limits as to the switching of participation in the fund on the part of the insured persons in case of disagreement with amendments that have been introduced to its Rules of operation, if they file an application to this end within three months from the notification under art. 144, para 2, unless those amendments derive from amendments in the legislation.
100 /4/ Denial by the pension company to switch the participation of the insured person or to transfer his/her individual account accumulations from one fund to another of the respective type, that is being administered by another pension company shall be appealed before the Commission. /5/ The terms and procedures for switching participation and transferring the individual account accumulations of an insured person from one supplementary mandatory pension fund to another respective fund, administered by a different pension company, shall be determined in a regulation by the Commission.
Right of Withdrawal of Accrued Amount
Article 172. The insured person shall have the right, upon retirement, to withdraw as a lump sum or to transfer the amount accrued in the individual account from the occupational fund to a universal fund, if he/she does not meet the requirements under art. 168 for eligibility for occupational pension.
Right to Free Information
Article 173. /1/. Insured persons shall have the right to free information with respect to funds accrued in their individual accounts, with respect to the return from their management and the pension rights arising thereof, once in one calendar year in the manner determined in the rules of the pension insurance company. /2/ In case of death of the insured person, the right under para 1 shall be acquired by the persons under art. 170, para 1.
Whistle-blowing Function
Article 174. /1/ (amended SG 8/2003, 67/2003) The insured person and persons under art. 170, para 1, shall have the right to inform the Board of Trustees and the Commission about any violations in the activity of the pension insurance company. /2/ (amended SG 8/2003, 67/2003) The Board of Trustees, the Commission, respectively, shall be obliged to reply in writing to each appeal within two months following the date of receipt.
CHAPTER FOURTEEN ASSETS AND INVESTMENT
Investment Principles
101 Article 175. Assets of a universal and occupational pension fund shall be invested in observance with the principles of reliability, liquidity, profitability, and diversification.
Investment
Article 176. (amend. – SG 67/2003) /1/ Pension fund assets may only be invested in: 1. securities issued or guaranteed by the Government; 2. securities registered for trading at organized security markets; 3. municipal bonds; 4. bank deposits; 5. (amend. – SG 67/2003) mortgage bonds issued by local banks pursuant to the Mortgage Bonds Act; 6. (new – SG 67/2003) derivatives of securities – put options of indexes and bonds, traded on regulated security markets only for the purposes of reducing the investment risk; 7. (new – SG 67/2003) investment estate. /2/ (amend. – SG 67/2003) Not less than 50 per cent of the pension fund assets shall be invested in securities issued or guaranteed by the government. /3/ (amend. – SG 67/2003) Not more than 5 per cent of the pension fund assets may be invested on investment estate but their utilization for the needs of the pension company or related parties thereto shall not be permitted.
Investment Prohibition
Article 177. /1/ (previous text of art. 177 – SG 67/2003) Occupational and universal pension fund assets may not be invested in: 1. securities which are not fully paid up; 2. securities issued by the pension insurance company which manages the fund or by persons related to it. 3. (new – SG 67/2003) securities issued by the custodian bank, by entities under art. 123c, para 1, or parties related thereto. 4. (new – SG 67/2003) securities or investment estate that are property of the pension company, which administers it or parties related thereto. /2/ (new – SG 67/2003) The pension company or related parties thereto shall not acquire securities or investment estate, possessed by a supplementary mandatory pension fund administered by it.
102 Investment Restrictions
Article 178. /1/ The pension insurance company may invest up to 5 per cent of the occupational and universal pension fund assets in securities issued by one company. /2/ (amended SG 8/2003, 67/2003) The deputy Chairperson of the Commission may permit a pension company to invest up to 10 percent of the universal or occupational fund assets in securities issued by one company. The deputy Chairperson of the Commission shall issue or deny issuance of a permit in writing within seven days as of the receipt of application. /3/ The pension insurance company and the occupational and universal pension fund may not acquire more than 10 per cent of the shares of one issuer or to acquire participation through which to appoint directly or indirectly more than half of the members of the managing body, or in another way to exercise decisive influence on decision- making related to the activity of the issuer. /4/ (new – SG 67/2003) Not more than 25 percent of the supplementary mandatory pension fund’s assets may be invested in bank deposits, where the investments in one bank may not exceed 10 percent of the fund assets. /5/ (new – SG 67/2003) The deputy Chairperson of the Commission may permit a pension company to invest up to 35 percent of the universal or the occupational pension fund assets in bank deposits for the term of one month. The deputy Chairperson of the Commission shall issue or refuse to issue a permit in writing within three days as of the receipt of the application. /6/ (new – SG 67/2003) Not more than 30 percent of the supplementary mandatory pension fund assets may be invested in mortgage bonds, where the investments in mortgage bonds issued by one bank may not exceed 10 percent of the fund’s assets. /7/ (new – SG 67/2003) Not more than 10 percent of the supplementary mandatory pension fund assets may be invested in municipal bonds, where the investments in municipal bonds issued by one municipality may not exceed 5 percent of the fund’s assets. /8/ (new – SG 67/2003) Not more than 10 percent of the supplementary mandatory pension fund assets may be invested in shares issued by Bulgarian issuers and traded on regulated markets. /9/ (new – SG 67/2003) Not more than 20 percent of the supplementary mandatory pension fund assets may be invested in corporate bonds issued by Bulgarian issuers and traded on regulated markets.
103 /10/ (new – SG 67/2003) Not more than 2.5 per cent of the supplementary mandatory pension fund assets may be invested in derivatives of securities – put options of indexes and bonds, traded at regulated securities markets, only for the purposes of reducing the investment risk.
Loan Prohibition
Article 179. The pension insurance company may not give loans or become a guarantor to third parties with the occupational and universal pension fund assets.
Investment Abroad
Article 180. (amend. – SG 67/2003) /1/ The pension company may invest not more than 15 percent of the supplementary mandatory pension fund assets in foreign securities. /2/ The types of foreign securities, the requirements to them and to the regulated markets on which they are traded, as well as the terms and conditions for performing investments under paragraph 1, shall be determined in a regulation by the Minister of Finance in coordination with the governor of the Bulgarian National Bank.
Violation of Limitations
180а. (new – SG 67/2003) /1/ The pension company shall notify the deputy Chairperson of the Commission within three days in case of violation of the investment limits under art. 176, art. 178 and art. 180 as a result of: 1. changes in market prices of assets; 2. change in the value of pension fund assets; 3. acquisition of rights in case of increase of capital of a certain issuer; 4. reduction of capital through cancellation of shares. /2/ In cases under para 1, the deputy Chairperson of the Commission may provide to the company a term of up to six months to bring the fund assets in compliance with the provisions of art. 176, art. 178 and art. 180.
Asset Valuation
Article 181. (amended SG 8/2003, 67/2003) The terms and procedures for valuation of assets and liabilities of supplementary pension funds and the
104 pension company, the net asset value of the fund and the calculation and announcement of the unit value, as well as the requirements to the keeping of individual accounts shall be determined with a regulation by the Commission.
Contract with an Investment Intermediary
Article 182. Repealed – SG 67/2003.
Contract with a Depository Bank
Article 183. Amended – SG 8/2003, repealed – SG 67/2003.
Actuarial Services
Article 184. Amended – SG 8/2003, repealed – SG 67/2003.
CHAPTER FIFTEEN ACCOUNTING AND REPORTING
Accounting Requirements to Pension Insurance Companies and Pension Funds
Art. 185. (amend. – SG 67/2003) /1/ The pension company shall organize and carry out its accounting and prepare its financial statements and the financial statements of supplementary mandatory pension funds under its management, in compliance with the provisions of the Accountancy Act, the generally accepted accounting principles, and the provisions of this Code. /2/ The deputy Chairperson of the Commission shall determine the type, the format and the content of statements and appendices to them, which shall be presented to the Commission by supplementary pension companies.
Pension Fund Accounting
Article 186. (amend – SG 67/2003) The pension company shall keep separately the accounting of each supplementary mandatory pension fund managed by it and shall prepare separate financial statements for each of them.
Monthly Reports
105 Art. 186a. (new – SG 67/2003) /1/ The company shall be obliged to submit to the deputy Chairperson of the Commission monthly reports of the supplementary mandatory pension funds under its management within 20 days following the end of each month. /2/ The monthly report shall be comprised of financial statements with content pursuant to art. 26, para 1 of the Accountancy Act and notes.
Annual Financial Statements
Article 187. (amend. – SG 67/2003) /1/ Annual financial statements of the pension company and the pension funds managed by it shall be audited and certified by two certified public accountants or by a specialized audit enterprise as selected by the General Meeting of the company. /2/ Certified public accountants and specialized auditing companies shall perform a conscientious and impartial audit and shall keep the official secret.
Activity Report
Article 188. (amend. – SG 67/2003) The activity report and the annual financial statement of the pension fund shall be adopted by the General Meeting of the pension company.
Promulgation of the Statement
Article 189. (amend. – SG 67/2003) Annual financial statements of the pension insurance company and of the pension funds managed by it, adopted by the General Meeting, shall be promulgated simultaneously in the State Gazette.
Obligation for Presentation of Statements
Article 190. /1/ (amended SG 8/2003, 67/2003) The pension insurance company shall present its adopted annual financial statements to the Commission. /2/ (amended SG 8/2003, 67/2003) Pension insurance companies shall be obliged to present to the Commission, upon request, financial statements representing their financial condition, as well as the condition of the pension funds managed by them.
CHAPTER SIXTEEN
106 PENSION RESERVES
Guarantees for Fulfillment of Obligations
Article 191. The pension insurance company managing an occupational and/or universal pension fund shall guarantee with its assets the fulfillment of the obligations to the persons insured in the fund.
Reserves of the Pension Insurance Company
Article 192. /1/ The pension insurance company shall be obliged to establish general reserves in accordance with the Commercial Act. /2/ (amended SG 8/2003, 67/2003) The pension insurance company managing a universal pension fund shall necessarily establish a pension reserve under the terms and conditions determined in a regulation of the Commission. /3/ The pension reserve shall cover the payment of pensions to individuals who have lived longer than the preliminary actuarial projections. /4/ Pension insurance companies may not distribute dividends to their shareholders before the formation of a pension reserve.
Minimum Rate of Return
Art. 193. (amend. – SG 67/2003) /1/ Pension insurance companies shall be obliged to achieve a minimum rate of return in the management of supplementary mandatory pension fund assets. /2/ The minimum rate of return shall be determined by the deputy Chairperson of the Commission as of the end of each quarter, as a percentage, separately for universal and occupational pension funds, on the basis of the return achieved by management of the assets of all funds of the respective type for the past 24-month period. /3/ The minimum rate of return for the respective types of pension funds shall represent 60% of the average achieved return or 3 percentage points lower than the average - whichever is smaller. /4/ The minimum rate of return shall be announced by the deputy Chairperson of the Commission by the end of each month, following the reporting quarter. /5/ When a supplementary mandatory pension fund achieves return that is lower than the minimum, the pension company administering the fund shall, within ten days from its announcement, cover the difference up to the minimum from reserves that have been created specially for this purpose.
107 /6/ In order to guarantee the minimum return, reserves shall be created in the pension fund and in the pension company. /7/ When the return achieved by a universal or an occupational pension fund is over 40 % higher than the average achieved return for the respective type of pension fund or it exceeds the average by three percentage points – whichever of the two numbers is bigger, the amounts from the return above this percentage shall be appropriated to a reserve within the respective fund. /8/ The pension company shall form, out of its own resources, a reserve for every supplementary mandatory pension fund that it administers, the amount of which shall not be smaller than 1% and shall not exceed 3 % of the assets of the respective fund. /9/ If the return achieved by the universal and the occupational pension fund is under the guaranteed minimum, the difference shall be covered from the reserve within the fund. When the resources in the reserve within the fund are not sufficient, the pension company shall cover the shortage from the money in the reserve under para. 8. /10/ Resources of reserves under para. 7 and 8 shall be invested in compliance with the provisions of art. 175 - 180. /11/ Allocations for establishing the reserve under para. 8 shall be a deductible expense of the pension company and shall not be taxed under the procedures of the Corporate Income Tax Act. /12/ The ways and manner for determining the minimum rate of return, for covering of the difference up to the minimum return and for the formation and the utilization of the reserves under para. 7 and 8, shall be provided for by a regulation of the Commission.
CHAPTER SEVENTEEN (repealed – SG 67/2003)
TRANSFORMATION, TERMINATION, LIQUIDATION, AND BANKRUPTCY OF SUPPLEMENTARY MANDATORY PENSION FUNDS
Transformation of the Pension Fund Article 194. (amended SG 8/2003, repealed 67/2003)
Bankruptcy Proceedings Article 195. (amended SG 8/2003, repealed 67/2003)
Rights of the Assignee in Bankruptcy Article 196. (repealed 67/2003)
108 Rights of the Insured Person Article 197. (repealed 67/2003)
Obligations of the Deputy Chairperson, Head of the Social Insurance Supervision Division of the Financial Supervision Commission Article 198. (repealed 67/2003)
Terms for Application of the Rights of the Insured Persons Article 199. (repealed 67/2003)
Applicability of the Supplementary Voluntary Pension Insurance Act Article 200. (repealed 67/2003)
CHAPTER EIGHTEEN FEES AND DEDUCTIONS
Mandatory Fees
Article 201. /1/ For performance of their activities related to supplementary mandatory pension insurance and for management of the pension funds, the following fees and deductions shall be introduced to the benefit of pension insurance companies: 1. a percentage of each social insurance contribution in a way and to the extent established in the Rules of Operation and Organization of the pension fund; the maximum amount shall not exceed 5 per cent of the amount paid to the pension fund; 2. (amend. SG 67/2003) investment fee amounting to up to 1 percent per year on the net asset value depending on the period, during which they have been managed by the pension company. /2/ (amended SG 8/2003, 67/2003) The deduction under para. 1, item 2 shall be allocated under terms and procedures determined by the Commission.
Additional Fee
Article 202. (amend. – SG 67/2003) /1/ The pension company may charge an additional fee amounting up to 20 BGN for every transfer of individual account accumulations from one fund to another. Such fee shall be paid by the insured person. /2/ The fee under para. 1 shall not be paid for switching due to disagreement with amendments to the Rules of the supplementary mandatory pension fund.
109 Legal Grounds for Fees
Article 203. Pension insurance companies may not collect other fees and deductions except those indicated in this Chapter.
CHAPTER NINETEEN (Repealed – SG 67/2003)
ADMINISTRATIVE PENAL RESPONSIBILITY
Section I Responsibility for Violations of the Provisions of the Public Social Insurance Legislation
Grounds Article 204. (am. SG 64/2000, repealed 67/2003)
Determining Violations Article 205. (repealed – SG 67/2003)
Section II Responsibility for Violations of the Provisions of Supplementary Mandatory Pension Insurance Legislation
Liability for Performance without Pension License Article 206. (repealed – SG 67/2003)
Liability for Violations and Failure to Comply with Prescriptions Art. 206a. (new SG 8/2003, repealed 67/2003)
Establishment of Violations Article 207. (Amended – SG 8/2003, repealed 67/2003)
Enforcement of Administrative Measures Art. 208. (new SG 8/2003, repealed 67/2003)
TITLE THREE (new – SG 67/2003)
SUPPLEMENTARY VOLUNTARY PENSION INSURANCE
110 Chapter Twenty GENERAL PROVISIONS
Principles
Art. 209. /1/ Supplementary voluntary pension insurance shall be carried out in observance of the following principles: 1. voluntary participation; 2. legal independence of the pension company and the supplementary voluntary pension fund; 3. transparency, separation and exclusivity of the operations; 4. permission regime and state regulation; 5. mandatory periodic reporting and information disclosure; 6. loyal competition among pension companies; /2/ Supplementary voluntary pension insurance shall be carried out on a fully-funded principle on the basis of social insurance contributions determined in advance in the contract with the pension company. /3/ Supplementary voluntary pension fund assets shall be managed with the care of the prudent person and in observance of the principles of security, liquidity, profitability, and diversification in the interest of the insured persons.
Insured Persons
Art. 210. /1/ Every individual, who has completed 16 years of age, may voluntarily insure him/herself or be insured in a supplementary voluntary pension fund on the basis of a contract with the pension company under the terms and conditions of this Title. /2/ Supplementary voluntary pension insurance shall be personal. Every person insured with a supplementary voluntary pension fund shall have an individual social insurance number and an individual account.
Participation in a Supplementary Voluntary Pension Fund
Art. 211. Participation in a supplementary voluntary pension fund shall begin with the conclusion of a social insurance contract.
Rights Deriving from Participation in a Supplementary Voluntary Pension Fund
Art. 212. Participation in a supplementary voluntary pension fund shall give the right to: 1. individual pension – for old age or for disability;
111 2. survivor pension – in case of death of the insured person or a person who receives a pension under this Title; 3. lump sum or deferred payment of the amount accrued in the individual account; 4. lump sum or deferred payments to survivors of a deceased insured person or pensioner.
Reserves of the Pension Company
Art. 213. /1/ The pension company shall be obliged to form general reserves in accordance with the Commercial Act, and pension reserves. /2/ A pension company, which manages a supplementary voluntary pension fund and pays lifelong pensions, shall be obliged to form a pension reserve in accordance with procedures determined by the Commission. /3/ The pension reserve under para. 2 shall be used to cover the payment of pensions to persons who have lived longer than the period determined in the preliminary actuarial projections. /4/ Pension companies may not distribute dividends to their shareholders prior to the formation of the reserves.
Chapter Twenty-One SUPPLEMENTARY VOLUNTARY PENSION FUNDS
Definition
Art. 214. /1/ Supplementary voluntary pension insurance shall be carried out through participation in supplementary voluntary pension funds, which shall be established and managed by licensed pension companies. /2/ The supplementary voluntary pension fund shall be established by decision of the General Meeting of the pension company, which shall also adopt the Rules for the Organization and Operation of the supplementary voluntary pension fund. /3/ A pension company may establish and manage only one supplementary voluntary pension fund. /4/ The supplementary voluntary pension fund shall be managed and represented by the managing bodies of the pension company. /5/ The pension company and the supplementary voluntary pension fund shall be separate legal entities. /6/ Supplementary voluntary pension funds shall be established for an unlimited period of time.
112 /7/ The head office and the address of management of the supplementary voluntary pension fund shall coincide with the head office and address of management of the pension company.
Liability of the Pension Company
Art. 215. /1/ The pension company shall be held liable to the pension fund members with its property for any losses incurred as a result of imprudent performance of its obligations with respect to management and representation of the respective supplementary voluntary pension fund. /2/ The pension company shall guarantee with its assets the fulfillment of its obligations to the insured persons and pensioners. /3/ The supplementary voluntary pension fund shall not be held liable for any obligations and losses of the pension company managing and representing it.
Name
Art. 216 /1/ The name of the supplementary voluntary pension fund shall necessarily contain in combination the name of the pension company and the words ‘pension’, ‘voluntary’ and ‘fund’ or their derivatives. /2/ Only a fund registered in accordance with this Code shall be allowed to use in its name a combination of the words under para. 1 or their equivalents in Bulgarian or any other language.
Prohibition for Acquisition by Prescription
Art. 217. Supplementary voluntary pension fund assets may not be acquired by means of prescription.
Permit for Management of a Supplementary Voluntary Pension Fund
Art. 218. /1/ The permit for management of a supplementary voluntary pension fund shall be issued by the deputy Chairperson of the Commission. In order to receive a permit, the licensed pension company shall file a written application to the Commission with the following attachments: 1. the decision of the General Meeting of the licensed pension company for establishment of a supplementary voluntary pension fund; 2. the Rules for the Organization and Activity of the fund; 3. actuarial projections for offered pension schemes and names and personal data of the actuary;
113 4. samples of social insurance and pension contracts; 5. preliminary contract with a custodian bank and a broker dealer; 6. financial statement of the company as of the final day of the previous month; 7. information about the software and hardware of the fund’s IT system; 8. information on the organizational structure of the company and its staff; 9. current status certificate of the pension company; /2/ In addition to the documents under para 1, the deputy Chairperson of the Commission shall be able to request other data and additional information in relation to the documents under items 1 - 9 and shall determine a deadline for their submission.
Term for Reviewing of the Application for Permit for Management of a Supplementary Voluntary Pension Fund
Art. 219. /1/ The deputy Chairperson of the Commission shall deliver a judgment within one month following the receipt of the application under art. 218, and in the event that additional information and documents are required – within one month following their receipt. /2/ When a request has been accepted for issuance of a permit with missing or incorrect documents, within 14 days the deputy Chairperson of the Commission shall notify the pension company of the irregularities and shall determine a deadline for their rectification. /3/ The deputy Chairperson of the Commission shall notify in writing the applicant company of the decision under para. 1 within seven days following its adoption.
Denial of Issuance of a Permit for Management of a Supplementary Voluntary Pension Fund
Art. 220. /1/ The deputy Chairperson of the Commission shall deny issuance of a permit when: 1. the term under art. 219, para 1 and 2 has expired and the additional documents or information have not been presented or the irregularities have not been rectified; 2. the requirements of this Code have not been complied with; 3. the pension company does not have the necessary financial, staff, and information resources.
114 /2/ In case of denial, the pension company may file a new application for permit for management of a supplementary voluntary pension fund not earlier than six months following the date of denial.
Court Registration
Art. 221 /1/ The respective district court by head office of the supplementary voluntary pension fund shall enter in its register the fund if the pension company has filed an application for entry within six months following the receipt of the decision of the deputy Chairperson of the Commission. /2/ The court entry application shall contain the following: 1. name, head office, and address of management of the pension company; 2. name of the pension fund; 3. full name and EGN of persons who manage and represent the pension company. /3/ The following documents shall be attached to the application under para. 2: 1. certified copy of the pension company license to perform activity related to supplementary pension insurance; 2. the Articles of Incorporation of the pension company; 3. current status certificate of the pension company; 4. the decision of the General Meeting of the pension company for establishment of a supplementary voluntary pension fund; 5. the Rules for the Organization and the Operation of the supplementary voluntary pension fund; 6. the permit of the deputy Chairperson of the Commission for supplementary voluntary pension fund management. /4/ The name of the supplementary voluntary pension fund, the name, head office, and management address of the pension company that has established the fund and the ways of representation of the pension company shall be entered in the register of the district court. /5/ The supplementary voluntary pension fund shall materialize as a legal entity as of the date of court registration.
Deadline for Court Ruling
Art. 222. The court shall review the application for registration of a supplementary voluntary pension fund within 14 days as of the date of its submission.
Submission of a Copy of Court Ruling
115 Art. 223. The pension company shall be obliged to submit to the Commission a certified copy of the court decision for registration of a supplementary voluntary pension fund within seven days following its receipt.
Liability for Registration Expenses
Art. 224. All expenditures for establishment, obtaining a permit for management and for registration of the supplementary voluntary pension fund shall be paid by the pension company.
Revocation of the Permit for Management of a Fund
Art. 225. /1/The deputy Chairperson of the Commission shall revoke the permit for management of a supplementary voluntary pension fund in the following cases: 1. the documents, which served as basis for issuance of the permit contain incorrect data; 2. failure to file an application for court registration within six months following the receipt of a permit for supplementary voluntary pension fund management; 3. transformation of the pension company when the management of the fund is transferred to another pension company; 4. termination of the fund through a merger or acquisition by another supplementary voluntary pension fund; 5. existence of a real and imminent danger for the interests of the insured persons; 6. revocation of the pension license of the pension company managing the fund.
Obligations of the Pension Company after Revocation of the Permit for Management of a Supplementary Voluntary Pension Fund
Art. 226. /1/ After revocation of the permit for management of a supplementary voluntary pension fund, the pension company may not enter into new contracts or offer new conditions for supplementary voluntary pension insurance, nor may it amend the conditions, including the term and amount of contributions under concluded social insurance contracts. /2/ Revocation of the permit does not exempt the pension company from its obligations under existing contracts.
116 Obligations of the Deputy Chairperson of the Commission after Revocation of a Permit for Management of a Supplementary Voluntary Pension Fund
Art. 227. The deputy Chairperson of the Commission shall send a notification for revocation of the permit for management of a supplementary voluntary pension fund to the court that performed the registration, and shall promulgate the notification in the State Gazette and in at least two central daily newspapers.
Rules for Organization and Operation of the Supplementary Voluntary Pension Fund
Art. 228. /1/ The Rules for Organization and Operation of a supplementary voluntary pension fund shall be adopted by the General Meeting of shareholders of the pension company. /2/ The Rules for Organization and Operation of the pension fund shall contain: 1. the name of the fund; 2. the name, head office, and management address of the managing pension company; 3. the conditions for supplementary voluntary pension insurance; 4. the terms and conditions for concluding social insurance or pension contacts, as well as the terms for introducing amendments to these and the conditions for their termination; 5. the types of pension schemes and their description; 6. the terms for collection of social insurance contributions; 7. the persons, who are entitled to a survivor pension; 8. the terms and conditions for keeping individual accounts and for presentation of account statements to insured person; 9. the period and manner of distribution of investment return as well as the main objectives and limitations of the fund’s investment policy; 10. the amount of fees and deductions charged by the pension company; 11. the terms, conditions, and deadlines for payment of pensions and for making lump sum and deferred payments; 12. the procedures, conditions and deadlines for transferring individual account accumulations; 13. the terms and conditions for introducing amendments to the Rules; 14. the explicit terms and conditions for making announcements related to the activity of the pension fund; 15. the methodology and periodicity of the fund’s asset valuation; 16. the rights and obligations of the pension company, the insured persons, employers and other insurers.
117 Amendments and Supplements to the Rules of a Supplementary Voluntary Pension Fund
Art. 229. /1/ Amendments and supplements to the Rules under art. 228, para 2 shall be approved by the deputy Chairperson of the Commission. The deputy Chairperson of the Commission shall make a statement within one month following the receipt of the application. Within seven days, the applicant shall be informed in writing of any decision made thereon. /2/ The pension company shall notify the insured persons of the specific changes introduced to the Rules for Organization and Operation of the pension fund, in person or by means of a publication in two central daily newspapers, within one week following the receipt of the permit by the deputy Chairperson of the Commission.
Chapter Twenty-Two CONTRIBUTIONS AND INDIVIDUAL ACCOUNT
Social Insurance Contributions
Art. 230. /1/ Social insurance in a supplementary voluntary pension fund shall be performed with social insurance contributions. /2/ Contributions under paragraph 1 shall be in cash and may be monthly, for another period, or lump sum. /3/ Contributions under paragraph 1 may be paid by: 1. individuals, at their own expense; 2. employers who are insurers – for their workers and employees; 3. organizations in the position of insurers for: a) government employees; b) judges, prosecutors, investigators, bailiffs, recordation judges and judicial officials; c) military staff under the Defense and Armed Forces of the Republic of Bulgaria Act, government employees – officers and sergeants and civil persons under the Ministry of Interior Act, and government employees – officers, sergeants and civil persons under the Penalty Enforcement Act; d) assignors who are insurers to persons who have concluded a contract for management or control; 4. other insurers – individuals or legal entities, to the benefit of third parties.
118 /4/ Contributions by insurers shall be paid to the person’s individual account and shall be reported separately from the personal contributions and the contributions by a third party insurer. /5/ Payment of social insurance contributions by insurers shall not obligate the insured person to pay contributions at his/her expense.
Prohibition of Discrimination
Art. 231. No insurer may refuse supplementary voluntary pension insurance to his/her workers and employees on the basis of nationality, ethnicity, origin, sex, sexual orientation, race, skin color, age, political or other opinions, religion or beliefs, membership in trade unions and other public organizations and movements, family, social and financial status, physical disabilities, and mental disorders.
Collective Bargaining
Art. 232. Supplementary voluntary pension insurance paid by the employer may be subject to collective bargaining.
Obligation for Payment of Pension Contributions
Art. 233. Insurers shall be obliged, upon request by the insured person, to deduct the contribution at his/ her expense for the respective month from his/her salary and shall transfer it to the respective supplementary voluntary pension fund.
Individual Account
Art. 234. /1/ Supplementary voluntary pension contributions and amounts transferred from another supplementary voluntary pension fund shall be registered and accrued to the insured person’s individual accounts as at the date of their receipt in the fund’s account. /2/ Every insured person shall have only one individual account in a supplementary voluntary pension fund. Paid contributions, transferred amounts and deductions shall be recorded in the individual account. /3/ The individual account shall be kept in BGN and in unit values. Supplementary voluntary pension contributions and amounts transferred from another fund shall be accounted in unit values and in fractions of unit values. /4/ Deductions as a percentage of every social insurance contribution shall be made before their reporting in unit values under para. 3.
119 /5/ Every unit value shall represent a proportional part of the fund’s net assets. Unit values of a fund shall be equal in value, which shall be determined and declared in accordance with para. 9. /6/ The value of all units and fractions of units in the fund shall be equal to the value of the fund’s net assets. /7/ The investment return of the moneys of the fund shall be included in the determination of the value of one unit, in accordance with para 5. /8/ No reallocation of moneys and units between individual accounts shall be permitted. /9/ The ways and procedures for calculation and declaration of the value of a unit, as well as the requirements for keeping of the individual account shall be determined with a regulation by the Commission. /10/ On the day of payment of the first contribution to a supplementary voluntary pension fund or on the day of the first reporting of the accrued amounts in the individual accounts in unit values, the value of one unit shall be equal to BGN 1. /11 Amounts accrued in the individual accounts of the insured persons shall not be subject to enforcement. /12/ During the accumulation of amounts in the insured persons’ individual accounts, no other deductions apart from the ones indicated in this Code can be made.
Chapter Twenty-Three CONTRACTS
Conclusion of a Social Insurance Contract
Art. 235. (1) The supplementary voluntary pension insurance contract shall regulate supplementary voluntary pension insurance relations and shall be concluded between the pension company, on the one hand, and the insured person or insurer, on the other hand. /2/ When the social insurance contract is concluded between an insurer and a pension company, it shall be to the benefit of the insured persons. /3/ In cases under para 2, the written consent of the beneficiary of the contract shall be requested upon signing of the contract.
Restrictions on the Rights of Insured Persons
Art. 236. /1/ The social insurance contract may restrict the right of the insured person:
120 1. to withdraw or transfer the amounts for supplementary voluntary pension insurance paid to his/her benefit by another insurer; 2. to transfer the amounts for voluntary pension insurance paid to his/her benefit by an employer or persons under art. 230, para 3, item 3. / 2/ Restrictions under para 1, item 2 shall not be applied when: 1. the social insurance contract has been terminated; 2. the labor relationship, the official legal relationship or the contract for management or control have been terminated.
Contents of the Insurance Contract
Art. 237. The social insurance contract shall contain: 1. names and addresses of the parties to the contract, court registration, and BULSTAT identifier of the supplementary voluntary pension fund, the pension license and court registration of the pension company managing the supplementary voluntary pension fund, tax number and BULSTAT; 2. subject and scope of social insurance; 3. contribution rate; 4. conditions, terms and procedures for payment of the social insurance contribution and the supplementary pension by the fund; 5. date of conclusion and effect of the social insurance contract; 6. conditions for termination of the contract; 7. rates of fees and deductions.
Term
Art. 238. The social insurance contract shall be not have a specific term and shall be signed in as many copies as there are parties to it.
Obligations for Presentation of Fund’s Rules
Art. 239. Upon conclusion of the contract for voluntary pension insurance, the insured person, insurer or another insurer, shall receive, upon request, a certified copy of the Rules of operation of the voluntary pension fund, effective at the date of signing of the contract.
Termination of Contract
121 Art. 240. (1) The social insurance contract may not be terminated unilaterally by the pension insurance company with the exception of cases provided for in this Code. (2) It shall be mandatory to terminate the social insurance contract in the following cases: 1. death of the insured person; 2. when the insured person by his own will transfers out to join another pension insurance company; 3. in case of lump sum withdrawal of the entire amount accrued in the individual account.
Pension Contract
Art. 241. (1) (1) A pension contract shall be signed with the pension insurance company upon occurrence of eligibility for pension under the conditions of this Section. (2) The pension contract shall contain the items under art. 169a, para 2.
Consultative Board
Art. 242. (1) The interests of supplementary voluntary pension fund members shall be represented by a Consultative Board. (2) The requirements to the composition, rights and obligations of the Consultative Board shall be established in a regulation by the Council of Ministers upon proposal of the Commission.
Chapter Twenty-Four RIGHTS OF THE INSURED PERSONS
Individual Old Age Pension
Art. 243. (1) Eligibility for individual old age pension shall occur upon eligibility for old age and length of participation pension under Section One. (2) By desire of the insured person, the supplementary voluntary pension fund may start paying an individual pension for old age five years earlier than the age for eligibility for old age and length of participation pension under art. 68, para 1 - 3. (3) The individual old age pension may be for life or for a limited period by choice of the insured person.
Individual Disability Pension
122 Art. 244. (1) Eligibility for individual disability pension shall occur as of the date of disability indicated in the decision of the regional medical board of experts or the national medical board of experts. (2) The individual disability pension may be for life or for a limited period depending on the decision of the bodies under paragraph 1.
Rights of the Survivors
Art. 245. (1) Persons who are entitled to survivor pension under this Section shall be determined in the Rules of the fund and shall be indicated in the social insurance contract. (2) In case of death of the insured person and when there are no survivors under para 1, the amounts accrued in the individual account shall be owed to the statutory dependents. (3) When there are no persons under para 1 and no statutory dependents, the amounts accrued in the individual account shall be transferred to the reserve for payment of life pensions. (4) In case of death of a pensioner and when there are no persons under para 1, the remainder in his/her individual account shall be paid to his/her statutory dependents. (5) When there are no persons under para 1 and no dependents of a deceased pensioner, the amounts due shall remain in the pension reserve.
Benefit Rate
Art. 246. (1) The rate of lifetime pension under this Section shall be determined on the basis of: 1. individual account accumulations; 2. biometric tables approved by the deputy Chairperson of the Commission; 3. the technical interest rate approved by the deputy Chairperson of the Commission. (2) The rate of limited period pension under this Title shall be determined on the basis of: 1. individual account accumulations; 2. the period over which the pension will be paid; 3. the technical interest rate, approved by the deputy Chairperson of the Commission.
Right to Transfer
123 Art. 247. (1) The insured person shall have the right to transfer his/her individual account accumulations or parts thereof from one supplementary voluntary pension fund to another, established and administered by a different pension company not more than once per calendar year. (2) Apart from cases under para 1, the insured person shall be entitled to transfer his/her individual account accumulations to another fund administered by a different pension company, in case of disagreement with amendments introduced to the Rules for the structure and operations of the fund, if they file an application to this end within three months from the notification under art. 229, para 2. (3) Not more than once within a calendar year, the insured person shall have the right to transfer his/her individual account accumulations accrued from personal contributions, or a part thereof, to the individual account of a spouse or to direct relatives up to the second degree in the same or in another supplementary voluntary pension fund. (4) The conditions, terms and procedures for transferring individual account accumulations from one supplementary voluntary pension fund to another shall be determined in the regulation under art. 171, para 5.
Right to Withdraw Individual Account Accumulations
Art. 248. The insured person shall have the right to withdraw amounts accrued in the individual account from personal contributions at any time. (2) Amounts accrued in the individual account from contributions paid by the insurer may be withdrawn by the person only upon eligibility for old age or disability pension. (3) Upon eligibility for individual old age or disability pension, the insured person shall have the right to choose between the respective type of pension under the conditions of this Section and lump-sum or programmed withdrawal of the individual account accumulations.
Chapter Twenty-Five INVESTMENTS
Manner of Investment
Art. 249. Investments of supplementary voluntary pension funds shall be subject to the provisions of Chapter Fourteen, inasmuch as the present Chapter does not provide otherwise.
Investment of Assets
124 Art. 250. The requirements for minimum rate of return shall not apply to investment of supplementary voluntary pension fund assets.
Investment Limits
Art. 251. (1) Not less than 30 per cent of supplementary voluntary pension fund assets shall be invested in securities issued or guaranteed by the government. (2) Not more than 10 per cent of supplementary voluntary pension fund assets may be invested in investment estate in the country. Investment in buildings for the needs of the companies and the needs of entities related to them shall be prohibited. (3) Not more than 2.5 per cent of supplementary voluntary pension fund assets may be invested in derivatives – put options of indexes and bonds traded at regulated securities markets, only for the purposes of hedging the investment risks. (4) Not more than 20 per cent of supplementary voluntary pension fund assets may be invested in foreign securities.
Chapter Twenty-Six
ACCOUNTING AND REPORTING
Reporting of Supplementary Voluntary Pension Fund
Art. 252. The pension insurance company shall organize and perform the accounting and shall prepare financial statements of the supplementary voluntary pension fund under its management in accordance with the provisions of Chapter Fifteen.
Chapter Twenty-Seven TAX INCENTIVES
Tax Exemption
Art. 253. (1) The income of the supplementary voluntary pension fund shall not be subject to taxation under the Corporate Income Tax Act. (2) The return on investment of supplementary voluntary pension fund assets, as distributed to the individual accounts of the insured persons, shall not be taxable under the Individual Income Tax Act. (3) Services related to supplementary voluntary pension insurance shall not be subject to taxation under the Value Added Tax Act.
125 (4) The financial result of the pension insurance company shall be reduced by: 1. the part of equity capital of the pension company used to cover the shortage in the pension reserves; 2. the return on the investment of pension reserves.
Deducting Individual Contributions from Taxable Income
Art. 254. Personal contributions for supplementary voluntary pension insurance made by the individuals shall be tax deductible pursuant to terms, conditions and in accordance to rates determined under the Individual Income Tax Act.
Cost Deduction
Art. 255. Employer contributions for supplementary voluntary pension insurance shall be tax deductible pursuant to terms, conditions and in rates determined under the Corporate Income Tax Act.
Chapter Twenty-Eight FEES AND DEDUCTIONS
Statutory Fees and Deductions
Art. 256. The pension company shall charge fees and deductions for the management of supplementary voluntary pension funds as follows: 1. one-off membership fee for establishment of an individual account – not higher than BGN 10; 2. deductions as a percentage on each contribution - not more than 7 percent; 3. investment fee of up to 10 percent on the return realized on the investment of assets.
Additional Fees
Art. 257. (1) The pension insurance company shall be allowed to charge additional fees in the following cases: 1. for each transfer of individual account accumulations to another supplementary voluntary pension fund of the respective type, managed by a different pension insurance company;
126 2. for every instance of (complete or partial) withdrawal of the amounts accumulated in the individual account prior to the occurrence of an insured event; 3. when the insured person requests information on the individual account balance more than once a year. (2) Fees under para 1, item 1 and 2 shall not be charged in the following cases: 1. when the person transfers or withdraws the individual account accumulations due to disagreement with amendments introduced to the Rules of Operation of the supplementary voluntary pension fund; 2. in case of transformation or termination of the pension company or the supplementary voluntary pension fund; 3. no fees shall be charged to survivors of a deceased insured person or pensioner.
Rate of Fees and Deductions
Art. 258. (1) The specific rate of the fees and deductions under this chapter shall be determined in the Rules of the supplementary voluntary pension fund. (2) The rate of fees under art. 257, para 1, may not exceed BGN 20.
Legitimacy of Fees
Art. 259. Pension insurance companies may not charge fees and deductions other than the ones specified in this chapter. (New – SG issue 67 from 2003)
Section Four SUPPLEMENTARY VOLUNTARY UNEMPLOYMENT AND VOCATIONAL TRAINING INSURANCE
Chapter Twenty-Nine GENERAL PROVISIONS
General Principles
Art. 260. (1) Supplementary voluntary insurance for unemployment and/or vocational training shall be executed in conformity with the following principles: 1. voluntary participation;
127 2. separate legal status of the unemployment or vocational training insurance company and the supplementary voluntary unemployment or vocational training funds; 3. transparency, separation and exclusivity of operations; 4. permission regime and state regulation; 5. mandatory periodic reporting and disclosure; 6. fair competition between social insurance companies. (2) Supplementary voluntary insurance for unemployment and/or vocational training shall be performed on a fully-funded basis by means of paying contributions as defined in advance in the contract with the social insurance company.
Management of Resources of Supplementary Voluntary Insurance Funds for Unemployment or Vocational Training
Art. 261. Resources of supplementary voluntary unemployment or vocational training funds shall be managed in accordance with the prudent person approach in observance of the principles of security, liquidity, profitability, and diversification, in the interest of insured persons.
Insured Persons
Art. 262. (1) The following individuals shall have the right to voluntarily take up social insurance or to be insured by another party in supplementary voluntary unemployment or vocational training funds: 1. workers; 2. government employees; 3. judges, prosecutors, investigators, bailiffs, recordation judges and judicial officers; 4. permanent military staff employed under the Defense and Armed Forces of the Republic of Bulgaria Act, government employees – officers, sergeants and civil persons under the Ministry of Interior Act and government employees – officers, sergeants and civil persons under the Penalty Enforcement Act; 5. contractors under contracts for management and control over commercial companies; 6. persons registered as freelance professionals, craftsmen, or farmers; 7. individuals working as sole traders, commercial company owners or partners; 8. individuals working abroad by assignment of a Bulgarian intermediary;
128 9. persons performing other types of activity without contractual labor relations. (2) Individuals under para 1 shall sign a contract for social insurance with an unemployment and/or professional training insurance company pursuant to the terms and conditions of this Section.
Participation in a Supplementary Voluntary Insurance Fund for Unemployment or Vocational Training
Art. 263. Participation in a supplementary voluntary fund for unemployment or vocational training shall commence as of the moment of signing of the social insurance contract.
Rights Deriving from Participation in a Supplementary Voluntary Unemployment or Vocational Training Fund
Art. 264. (1) Participation in a supplementary voluntary insurance fund for unemployment shall provide the right to cash unemployment benefit. (2) Participation in a supplementary voluntary vocational training fund shall provide the right to receive payments for training in case of need for training certified by the insured person or the insurer – either separately or collectively. (3) Insured persons shall have the right to dispose with the funds accrued in their individual account in accordance with the terms and conditions of this Section, the rules of the funds and the insurance contracts. (4) Insurers shall have the right to dispose with the funds accrued in the insurer’s account in accordance with the terms and conditions of this Section, the Rules of the funds and the social insurance contracts.
Chapter Thirty FUNDS FOR SUPPLEMENTARY VOLUNTARY INSURANCE FOR UNEMPLOYMENT OR VOCATIONAL TRAINING
Establishment, Management and Representation Art. 265. (1) Supplementary voluntary insurance for unemployment and/or vocational training shall be performed through participation in funds for supplementary voluntary insurance for unemployment or professional training, which shall be established and
129 managed by licensed social insurance companies for unemployment and/or vocational training. (2) The fund for supplementary voluntary insurance for unemployment or vocational training shall be established following a decision of the General Meeting of the unemployment and/or vocational training insurance company, which shall also adopt the Rules of the fund. (3) An unemployment and/or vocational training insurance company may establish and manage only one supplementary voluntary unemployment insurance fund and one supplementary voluntary vocational training fund. (4) The supplementary voluntary unemployment or vocational training insurance fund shall be managed and represented by the managing bodies of the social insurance company. (5) The unemployment and/or vocational training insurance company and the supplementary voluntary fund for unemployment or the supplementary voluntary fund for vocational training shall be separate legal entities. (6) Supplementary voluntary unemployment or vocational training insurance funds shall be established for an unlimited period of time. (7) The head office and management address of the supplementary voluntary insurance fund for unemployment or vocational training shall coincide with the head office and management address of the pension company.
Liability of the Unemployment and/or Vocational Training Insurance Company
Art. 266. (1) The unemployment and/or vocational training insurance company shall be held liable with its property before the insured persons for any losses incurred as a result of imprudent performance of the company’s obligations with respect to management and representation of the respective supplementary voluntary funds for unemployment or vocational training. (2) The social insurance company under para 1 shall guarantee with its assets the fulfillment of its obligations to the insured persons. (3) The supplementary voluntary insurance fund for unemployment or vocational training shall not be held liable for any obligations and losses of the pension insurance company managing and representing it.
Name of the Unemployment and Vocational Training Funds
130 Art. 267. (1) The name of the unemployment or vocational training fund shall necessarily contain a combination of the words ‘supplementary’, ‘voluntary’, ‘insurance’ ‘for unemployment’, ‘for vocational training’ and fund’ or their derivatives, as well as an indication of the type of fund. (2) Only a fund registered under this Code shall be allowed to use in its name the words under para 1 in combination or their equivalents in Bulgarian or a foreign language.
Prohibition for Acquisition by Prescription
Art. 268. Assets of the supplementary voluntary unemployment or vocational training insurance fund may not be acquired by means of prescription.
Permit for Management of a Supplementary Voluntary Insurance Fund for Unemployment and or Vocational Training
Art. 269. (1) The permit for management of a supplementary voluntary unemployment or vocational training insurance fund shall be issued by the deputy Chairperson of the Commission. In order to receive a permit, the licensed unemployment and/or vocational training insurance company shall file a written application with the following attachments: 1. the decision of the general meeting of the licensed unemployment or vocational training insurance company for establishment of a supplementary voluntary unemployment or vocational training insurance fund; 2. the Rules of the structure and operations of the fund; 3. samples of the social insurance contracts; 4. preliminary contract with a custodian bank and a broker dealer; 5. information about the software and hardware of the fund’s IT system; 6. financial statement of the company through the last day of the previous month; 7. information on the organizational structure of the company and its staff; 8. current status certificate of the social insurance company. (2) The Deputy Chairperson of the Commission shall be able to request other data and information in relation to the documents under para 1 and establish a deadline for their submission.
131 Deadline for Reviewal of Application for Permit for Management of a Supplementary Voluntary Unemployment or Vocational Training Insurance Fund Art. 270. (1) The Deputy Chairperson of the Commission shall issue or refuse issuance of a permit within one month following the receipt of the application under art. 269, and in the event that additional information and documents were required – within one month following their receipt. (2) When an application for issuance of a permit has been accepted with missing or incorrect documents, the Deputy Chairperson of the Commission shall notify the social insurance company of the irregularities within 14 days and shall determine a deadline for their rectification. (3) The Deputy Chairperson of the Commission shall notify the applicant company of his/her decision under para 1 in writing within seven days following its adoption.
Denial of Issuance of Permit for Management of a Supplementary Voluntary Insurance Fund for Unemployment or Vocational Training
Art. 271. (1) The Deputy Chairperson of the Commission shall deny issuance of a permit in the following cases: 1. if after expiration of the term under art. 270, para 1 and 2, the additional documents or information have not been presented or the irregularities have not been rectified; 2. the requirements of this Code have not been complied with; 3. the company does not have the necessary financial, human and information resources. (2) In case of denial, the social insurance company may file a new application for permit for management of a supplementary voluntary unemployment or vocational training insurance fund not earlier than six months following the date of denial.
Court Registration
Art. 272. (1) The respective district court by head office of the supplementary voluntary unemployment or vocational training insurance fund shall enter in its register the fund if the social insurance company has filed an application for registration within six months following the receipt of the decision by the Deputy Chairperson of the Commission. (2) The court registration application shall contain the following: 1. name, head office and address of management of the company;
132 2. name of the unemployment or vocational training insurance fund; 3. full name and EGN of persons who manage and represent the company. (3) The following documents shall be attached to the application: 1. a certified copy of the license of the unemployment and/or professional training insurance company; 2. the Statute of the unemployment and/or vocational training insurance company; 3. current status certificate of the unemployment and/or vocational training insurance company; 4. the decision of the general meeting of the company for the establishment of a supplementary voluntary unemployment or vocational training insurance fund; 5. the Rules of the supplementary voluntary unemployment or vocational training insurance fund; 6. the permit by the deputy Chairperson of the Commission for management of a supplementary voluntary unemployment or vocational training insurance fund. (4) The following shall be entered into the register of the district court: name of the supplementary voluntary unemployment or professional training insurance fund; name, head office and address of management of the company, which established the fund; the manner of representation of the company. (5) The supplementary voluntary unemployment or vocational training insurance fund shall materialize as a legal entity as of the date of its court registration.
Deadline for Court Ruling
Art. 273. The court shall review the application for court registration of a supplementary voluntary unemployment or vocational training insurance fund within 14 days following its submission.
Submission of a Copy of Court Ruling
Art. 274. The unemployment and/or vocational training insurance company shall be obliged to submit to the Commission a certified copy of the court ruling for registration of a supplementary voluntary unemployment or vocational training insurance fund within 7 days following its receipt.
133 Registration Costs
Art. 275. All costs related to establishment of the fund, granting of a permit for court registration and for management of a supplementary voluntary unemployment or vocational training insurance fund shall be covered by the unemployment and/or vocational training insurance company.
Termination of Permit for Fund Management
Art. 276. The deputy Chairperson of the Commission shall terminate the permit for management of a supplementary voluntary unemployment or vocational training insurance fund in the following cases: 1. if it is established that the documents used as basis for issuance of the permit contain incorrect data; 2. failure to file an application for court registration within six months following the receipt of a permit for management of a supplementary voluntary unemployment or professional training insurance fund; 3. transformation of the social insurance company when the management of the fund is transferred to another social insurance company; 4. termination of the fund through a merger or acquisition by another supplementary voluntary unemployment or vocational training insurance fund; 5. existence of a real and imminent danger for the interests of the insured persons; 6. termination of the license of the social insurance company managing the fund.
Obligations of the Social Insurance Company after Termination of Permit for Management of a Supplementary Voluntary Unemployment or Vocational Training Insurance Fund
Art. 277. (1) After termination of the permit for management of a supplementary voluntary unemployment or professional training insurance fund, the unemployment and/or professional training insurance company may not enter into new contracts or offer new conditions for supplementary voluntary unemployment or vocational training insurance, nor may it amend the conditions, including the term and amount of contributions under concluded contracts. (2) Termination of the permit does not exempt the social insurance company from its obligations under the existing contracts.
134 Obligations of the Deputy Chairperson of the Commission after Termination of the Permit for Management of a Supplementary Voluntary Unemployment or Vocational Training Insurance Fund
Art. 278. The Deputy Chairperson of the Commission shall send a notification of the termination of the permit for management of a supplementary voluntary unemployment or vocational training insurance fund to the court that made the registration, and shall promulgate the notification in the State Gazette and publish it in at least two national daily newspapers.
Rules on the Structure and Operations of the Supplementary Voluntary Unemployment or Vocational Training Insurance Fund
Art. 279 (1) The Rules on the structure and operations of a supplementary voluntary unemployment or vocational training insurance fund shall be adopted by the General Meeting of shareholders of the unemployment and/or vocational training insurance company. (2) The Rules on the structure and operations of the fund shall contain: 1. the name of the fund; 2. the name, head office, and management address of the managing social insurance company; 3. the terms and conditions for signing social insurance contacts, as well as the terms for introducing amendments to these and for their termination; 4. the terms and conditions for maintaining individual accounts of persons insured for unemployment and/or vocational training and insurer accounts for vocational training, and for presentation of account balance statements; 5. the period and manner of distribution of investment return and the main principles and limitations of the fund’s investment policy; 6. the rate of fees and deductions charged by the social insurance company; 7. the terms, conditions and deadlines for paying out unemployment benefits and funds for training; 8. the procedures, conditions and deadlines for transferring individual account and insurer account accumulations; 9. the terms and conditions for introducing amendments and supplements to the Rules; 10. the explicit terms and conditions for making announcements related to the activity of the fund;
135 11. the methodology and periodicity of the fund’s asset valuation; 12. the rights and obligations of the social insurance company, the insured persons and insurers.
Amendments to the Rules of a Supplementary Voluntary Unemployment or Vocational Training Insurance Fund
Art. 280. (1) Amendments to the Rules under art. 279, para 2 shall be approved by the Deputy Chairperson of the Commission. The Deputy Chairperson shall issue a decision within one month following the receipt of the application. The applicant shall be informed in writing of any decision made thereon within seven days. (2) The unemployment and/or vocational training insurance company shall notify the insured persons of amendments introduced to the Rules on the structure and operations of the fund in person or through a publication in two central daily newspapers within seven days following the receipt of the permit by the deputy Chairperson of the Commission.
Chapter Thirty-One SOCIAL INSURANCE CONTRIBUTIONS AND ACCOUNTS
Type and Rate of Social Insurance Contributions
Art. 281. (1) Social insurance contributions shall be paid by the insured person and/or his/her insurer for the purpose of participation in a supplementary voluntary insurance fund for unemployment or vocational training. (2) Insurance contributions under para. 1 shall be paid in cash and may be paid monthly, with a different periodicity or as a lump-sum.
Insurance Contributions
Art. 282. (1) Contributions under art. 281 may be paid by: 1. individuals – at their own expense; 2. employers – who are in the position of insurers for their workers and employees; 3. institutions which are in the position of insurers for the following: a) government employees; b) judges, prosecutors, investigators, bailiffs, recordation judges and judicial officers; c) permanent military staff employed under the Defense and Armed Forces of the Republic of Bulgaria Act, government employees -
136 officers, sergeants and civil persons under the Ministry of Interior Act and government employees – officers, sergeants and civil persons under the Penalty Enforcement Act; d) assignors which are in the position of insurers for persons contracted for management and control functions e) assignors which are insurers for persons with whom a contract has been concluded for the execution of another type of labor activity without contractual labor relationship. (2) The fact that the insurer pays contributions shall not place an obligation for the insured person to make contributions at his/her expense.
Prohibition of Discrimination
Art. 283. The insurer may not refuse to pay for supplementary voluntary insurance for unemployment and/or professional training of workers and employees because of their nationality, origin, sex, sexual preferences, race, skin color, age, political or other affiliations, religion or belief, political affiliation, membership in trade unions and other public organizations and movements, marital status, social status, and any mental or physical disorders.
Collective Bargaining
Art. 284. Supplementary voluntary insurance for unemployment and/or vocational training paid by the insurer, with or without the participation of the worker or employee, may be subject to collective bargaining.
Obligation for Payment of Social Insurance Contribution
Art. 285. When insurance contributions are made simultaneously by both the insured person and the insurer, or by the insured person only, depending on his/her wish, the insurer shall deduct the social insurance contribution, which is at the expense of the employee, from his/her wage for the respective month and shall transfer it to the unemployment and/or vocational training insurance fund.
Individual Account and Insurer Account
Art.286. (1) Personal contributions by the insured person and contributions by the insurer for supplementary voluntary insurance for
137 unemployment shall be accrued in an individual account of the insured person and shall be reported in separate sub-accounts. (2) Personal contributions for supplementary voluntary insurance for vocational training shall be accrued in an individual account of the insured person. (3) Insurer contributions for professional training shall be accrued in the insurer account.
Chapter Thirty-Two
RIGHTS OF THE INSURED INDIVIDUAL’S AND INSURER’S
Section I Rights of Persons Insured for Unemployment
Cash Benefit
Art. 286. (1) A person insured with a voluntary unemployment fund shall be entitled to a cash benefit for unemployment for a period not longer than 12 months in an amount up to the amount accrued in the individual account from personal contributions and insurer contributions and the return on their investment, reduced by the fees and deductions under this Section. (2) In case of termination of the contractual relation with the employer by will or with the consent or due to a guilty behavior of the insured person, pursuant to art. 325, item 1 and 2, art. 326 and 330 of the Labor Code, art. 103, para 1, item 1, 2 and 5, art. 105 and 107 of the Civil Servant Act, art. 128, items 1, 7 and 8, art. 128a and art. 128c, item 2 of the Defense and Armed Forces of the Republic of Bulgaria Act and art. 253, para. 1, item 4, 7 and 8 of the Ministry of Interior Act, art. 131, para. 1, item 2, 3 and 6 and art. 152, para. 1, item 2, 3 and 4 of the Judicial System Act, the unemployment benefit shall be determined at a rate up to the amount accrued in the individual account from personal contributions, the return on their investment as reduced by the fees and deductions under this Section, and 10 per cent of the amount accrued from insurer contributions and the return on their investment as reduced with the fees and deductions under this Section, for a period not longer than 12 months. (3) By desire of the insured person, the benefit under para 1 or 2 may be paid to him/her as a lump sum.
Eligibility for Cash Benefit
138 Art. 288. Eligibility for cash unemployment benefit of persons under art. 262, para 1, items 1–5 and item 9, shall commence on the date of termination of the contractual employment relation, and for persons under art. 262, para 1, items 6 – 8 – on the date of termination of the activity.
Survivor Rights in Case of Death of the Insured Person
Art. 289. (1) In case of death of the insured person, the funds accrued in his/her individual account from personal contributions and from insurer contributions shall be paid as a lump sum to the person’s legal survivors. (2) In case there are no survivors under para 1, the funds accrued in the individual account shall be transferred to the state budget.
Right to Transfer from One Supplementary Voluntary Unemployment Fund to Another
Art. 290. The person insured for unemployment shall have the right to transfer the accumulations from his/her individual account accrued from personal contributions, or a part thereof, from one supplementary voluntary unemployment fund to another supplementary voluntary unemployment fund established and managed by a different unemployment and/or vocational training insurance company provided that one year has elapsed following the conclusion of the contract.
Transfer of Accumulations to a Spouse or Direct Descendants
Art. 291. The insured person shall have the right to transfer funds accrued in his/her individual account from individual contributions, or a part thereof, to his/her spouse, or direct descendants up to the second degree, not more than once per calendar year, in an individual account in the same fund or in another supplementary voluntary unemployment fund.
Withdrawal of Amounts Accrued in the Individual Account
Art. 292. A person insured for unemployment shall have the right to withdraw the funds accrued from individual contributions in his/her individual account at any time.
Redistribution of Funds
139 Art. 293. In cases under art. 287, para 2, the remainder of the amount accrued in the individual account of the insured person from insurer contributions shall be redistributed to the accounts of the other persons insured by this insurer in accordance with a procedure determined in the social insurance contract.
Section II Rights of Persons Insured for Vocational Training
Amounts for Training
Art. 294. (1) A person insured in a supplementary voluntary vocational training insurance fund shall be entitled to funds for training for: 1. initial vocational training for persons who do not have any; 2. supplementary training; 3. retraining; 4. obtaining higher educational degree.
Entitlement to and Amount of Payment for Training
Art. 295. (1) Entitlement to use funds for training from the insured person’s individual account in a supplementary voluntary fund for vocational training shall arise upon declared need on behalf of the insured person for acquiring initial vocational training, additional training, retraining or a higher degree of education. (2) Payments under para 1 shall be up to the amount accrued in the insured person’s individual account from contributions and return on their investment as reduced by the fees and deductions under this Section, and shall be allotted on the basis of documents justifying the expense and issued by the training organization. (3) The entitlement to use funds for training from the insurer account in a supplementary voluntary fund for vocational training shall arise upon declaration by the insurer of the need of acquiring initial vocational training, additional training, retraining or higher degree of education with the written consent of the insured person. (4) The size of payments under para 3 shall be up to the amount accrued in the insurer account from contributions and return on their investment as reduced by the fees and deductions under this Section and shall be allotted on the basis of documents justifying the expense and issued by the training organization.
140 (5) The maximum amount of sums under para 4 paid for one individual may not exceed 5 times the amount accrued for the insured person from contributions by this insurer.
Survivor Rights in Case of Death of the Insured Person
Art. 296. (1) In case of death of the person insured for vocational training, the funds accrued in his/her individual account from personal contributions shall be paid as a lump sum to the person’s legal survivors. (2) If there are no survivors under paragraph 1, the funds accrued in the individual account shall be transferred to the state budget.
Right to Transfer from one Supplementary Voluntary Vocational Training Insurance Fund to Another
Art. 297. The insured person shall have the right to transfer the amounts accrued in his/her individual account, or a part thereof, from one supplementary voluntary vocational training insurance fund to another fund of the same type, established and managed by a different unemployment and/or vocational training insurance company provided that one year has elapsed after the conclusion of the social insurance contract.
Right to Transfer Funds to a Spouse or Direct Descendants
Art. 298. The insured person shall have the right to transfer the funds accrued in his/her individual account from individual contributions, or parts thereof, to an individual account of his/her spouse, or direct descendants up to the second degree, in the same fund or in another fund for supplementary voluntary vocational training insurance not more than once per calendar year.
Right to Withdraw Individual Account Accumulations
Art. 299. A person insured for vocational training shall have the right to withdraw the funds accrued from individual contributions in his/her individual account at any time.
Section III Insurer Rights
141 Redistribution of Funds from the Insurer Account
Art. 300. (1) In case of termination of vocational training insurance, the amounts accrued in the insurer account and the return on their investment as reduced by the fees and deductions under this Section shall be distributed among the individual accounts of the insured persons in accordance with a procedure determined by the insurer. (2) In cases when the insured person does not have an individual account, the social insurance company shall open one. (3) The social insurance company shall notify the insurer and the insured persons of the transfer under para 1 or of the opening of an individual account under para 2.
Right to Transfer Accumulations to Another Supplementary Voluntary Vocational Training Insurance Fund
Art. 301. The insurer shall have the right to transfer the amounts accrued in the insurer account from contributions for the insured persons, or parts thereof, from one supplementary voluntary unemployment or vocational training fund to another fund of the same type established and managed by a different unemployment and/or vocational training insurance company, not more than once per calendar year.
Switching Procedures
Art. 302. The manner for transferring amounts under art. 290, art. 297 and art. 301 shall be determined in a regulation by the Commission.
Right to Receive Information
Art. 303. The insurer shall have the right to receive free of charge information with respect to funds accrued in the insurer account, the return on their investment and the insurance rights arising thereof, upon his/her written request, once per year.
CHAPTER THIRTY-THREE CONTRACTS
Conclusion of Social Insurance Contracts
142 Art. 304. (1) The contract for supplementary voluntary insurance for unemployment and/or vocational training shall be concluded in writing and shall settle supplementary voluntary unemployment and/or vocational training insurance relations between the unemployment and/or vocational training insurance company on the one hand, and the insured person or insurer, on the other hand. (2) In case the social insurance contract is concluded between the insurer and the unemployment and/or vocational training insurance company, it shall be to the benefit of insured persons. (3) The contract beneficiary’s written consent shall be required in advance for the purposes of conclusion of a contract under para 2. (4) The contract for supplementary voluntary insurance for unemployment and/or vocational training shall be for an unlimited period of time.
Contents of the Insurance Contract
Art. 305. The social insurance contract shall contain the following: 1. name and address of the parties to the contract, court registration, and BULSTAT identifier of the supplementary voluntary insurance fund for unemployment or vocational training, the license and court registration of the social insurance company managing the supplementary voluntary insurance fund for unemployment or vocational training, the tax number and BULSTAT; 2. subject and scope of social insurance; 3. contribution rate; 4. conditions and terms of payment of social insurance contributions, cash benefits for unemployment, funds for training and redistribution of funds under art. 293 and art. 300; 5. date of signing and effect of the social insurance contract; 6. terms and conditions for termination of the contract; 7. rates of fees and deductions.
Chapter Thirty-Four INVESTMENTS
Manner of Investment
Art. 306. (1) Inasmuch as this Chapter does not provide otherwise, the provisions of Chapter Fourteen shall apply to investments of the voluntary fund for unemployment or vocational training insurance.
143 (2) The requirements for minimum return shall not apply to the investment of assets of voluntary funds for unemployment or vocational training insurance.
Investment of Assets
Art. 307. Assets of the supplementary voluntary fund for unemployment or vocational training insurance may only be invested in: 1. securities issued or guaranteed by the government; 2. securities listed for trading on regulated securities markets; 3. bank deposits; 4. mortgage bonds issued by domestic banks in accordance with the Mortgage Bonds Act; 5. municipal bonds.
Investment Limits
Art. 308. (1) Not more than 80 per cent of the assets of the supplementary voluntary fund for unemployment or vocational training insurance may be invested in securities issued or guaranteed by the government. (2) Not more than 60 per cent of the assets of the supplementary voluntary fund for unemployment or vocational training insurance may be invested in bank deposits, and not more than 10 per cent in one bank. (3) Not more than 30 per cent of the assets of the supplementary voluntary fund for unemployment or vocational training insurance may be invested in mortgage bonds and not more than 10% in bonds issued by one bank. (4) Not more than 10 per cent of the assets of the supplementary voluntary fund for unemployment or vocational training insurance may be invested in municipal bonds and not more than 5% in municipal bonds issued by one municipality. (5) Not more than 10 per cent of the assets of the supplementary voluntary fund for unemployment or vocational training insurance may be invested in shares issued by Bulgarian issuers and traded at regulated markets. (6) Not more than 20 per cent of the assets of the supplementary voluntary fund for unemployment or vocational training insurance may be invested in corporate bonds issued by Bulgarian issuers and traded on regulated markets.
Chapter Thirty-Five ACCOUNTING AND REPORTING
144 Accounting of a Supplementary Voluntary Fund for Unemployment or Vocational Training Insurance
Art. 309. The unemployment and/or vocational training insurance company shall organize and keep its accounting and draw up its financial statements and the financial statements of the supplementary voluntary insurance funds for unemployment or vocational training under its management in accordance with the provisions of Chapter Fifteen.
Chapter Thirty-Six TAX INCENTIVES
Tax Exemption
Art. 310. (1) Income of the supplementary voluntary insurance fund for unemployment or vocational training insurance shall be exempt from tax under the Corporate Income Tax Act. (2) Income from investment of assets of the supplementary voluntary fund for unemployment or vocational training insurance, distributed to insured persons’ individual accounts, shall be exempt from tax under the Individual Income Tax Act. (3) Services related to supplementary voluntary insurance for unemployment and/or vocational training shall be exempt from tax under the Value Added Tax Act.
Deduction of Individual Contributions from the Taxable Income
Art. 311. Individual contributions for supplementary voluntary insurance for unemployment and/or vocational training paid by individuals shall be deductible from their income before taxation in accordance with terms and conditions, and in amounts determined by the Individual Income Tax Act.
Deduction of Costs
Art. 312. Insurer contributions for supplementary voluntary insurance for unemployment and/or vocational training shall be recognized as an expense in accordance with terms and conditions, and in amounts determined under the Corporate Income Tax Act.
145 Chapter Thirty-Seven
FEES AND DEDUCTIONS
Fees and Deductions Established by Law
Art. 313. The unemployment and/or vocational training company shall charge fees and deductions for the management of the supplementary voluntary pension funds for unemployment or vocational training insurance, as follows: 1. initial membership fee for each insured person – not more than 10 leva; 2. deduction as a percentage from each contribution – up to 5 per cent for each separate fund; 3. investment fee amounting to up to 10 per cent of the income realized from investment of the supplementary voluntary fund for unemployment or vocational training insurance.
Additional Fees
Art. 314. (1) The unemployment and/or vocational training insurance company shall be allowed to charge additional fees in the following cases: 1. for each transfer of individual account accumulations to another supplementary voluntary unemployment or vocational training insurance fund managed by a different social insurance company; 2. for every case of (complete or partial) withdrawal of amounts accumulated in the individual account. (2) Fees under para 1 shall not be charged in case of transfer as a result of disagreement with amendments to the Rules of the supplementary voluntary unemployment or vocational training insurance fund, transformation or termination of the social insurance company or the supplementary voluntary unemployment or vocational training insurance fund.
Rate of Fees and Deductions
Art. 315. (1) The specific rate of the fees and deductions under this chapter shall be determined in the Rules of the supplementary voluntary unemployment or vocational training insurance fund. (2) Fees under art. 314, paragraph 1 shall amount to up to BGN 20.
146 Legitimacy of Fees
Art. 316. Unemployment and/or vocational training insurance companies may not charge fees other than the ones listed under this Chapter.
SECTION FIVE TRANSFORMATION, TERMINATION AND BANKRUPTCY OF SUPPLEMENTARY SOCIAL INSURANCE COMPANIES AND FUNDS
CHAPTER THIRTY-EIGHT TRANSFORMATION, TERMINATION AND BANKRUPTCY
Conditions for Transformation of a Supplementary Social Insurance Company
Art. 317. (1) The transformation of a supplementary social insurance company shall be carried out with the prior permission of the Commission under the conditions listed below: 1. proved solvency after the transformation; 2. retaining of the rights of the insured persons and pensioners. (2) In the event of merger or acquisition of supplementary social insurance companies, prior permission by the Competition Protection Commission shall be required. (3) When a decision for transformation has been made by the General Meeting of the shareholders, the company shall notify the deputy Chairperson of the Commission within seven days following the date of the decision.
Transformation of Supplementary Social Insurance Companies
Art. 318. (1) Supplementary social insurance companies may be transformed through merger, acquisition, spin-off and split-up. (2) In case of transformation through merger, split-up or spin-off, the newly formed legal entities shall be joint stock companies whose scope of activity shall be supplementary pension insurance, respectively unemployment and/or professional training insurance. (3) In the event of merger and acquisition of supplementary social insurance companies, the supplementary social insurance funds managed by them shall merge with or be acquired by the respective type of fund. If the managed funds are of different type, the operations related to their
147 management shall be carried out by the acquiring company in case of acquisition and the newly formed company in case of merger. (4) In the event of spin-offs or split-ups of supplementary social insurance companies, the supplementary social insurance funds shall not be transformed, and their management shall be performed by one of the companies, or each company shall manage funds of specific types.
Requirements for Pension Reserves in Case of Transformation of Pension Insurance Companies
Art. 319. In case of transformation of pension insurance companies, the established pension reserves: 1. shall not be appropriated for a different purpose in the company to which they are transferred; 2. may not be split up and no other reserve fund may be formed out of them; 3. may be merged with other reserves set up for the same purpose.
Transformation of Supplementary Social Insurance Funds
Art. 320. (1) The supplementary social insurance fund may be transformed only through merger or acquisition, provided that the rights of the fund members and pensioners are retained. (2) The supplementary social insurance fund may not be split up and no other pension funds may spin off it, it may not be transformed into a commercial company, a non-profit organization or a cooperative. (3) In cases of merger and acquisition of supplementary social insurance funds, the acquiring fund or the merging fund shall become successor of the terminated funds. (4) If the supplementary social insurance company is not transformed, a supplementary social insurance fund under its management may only be transformed through acquisition by a relevant fund managed by another supplementary social insurance company following a permit by the Competition Protection Commission.
Permit for Transformation of a Supplementary Social Insurance Company
Art. 321. (1) In order to obtain permission for transformation, the supplementary social insurance company shall file an application to the Commission containing the following attachments: 1. decision of the General Meeting;
148 2. decision of the Competition Protection Commission 3. transformation plan 4. other required documents. (2) The application under para 1 shall be filed not later than three months following the date of the decision of the General Meeting of the shareholders for transformation of the company. (3) The companies established after the transformation shall be licensed in accordance with art. art. 122a – 122d. (4) When as a result of the transformation of companies it is necessary to grant permission for management of a supplementary social insurance fund, the provisions of art. 218 and art. 269 shall apply. (5) In cases under para 3 and 4, the application documents for licensing and permit for fund management shall be filed together with the application for permission of transformation.
Procedures of Issuance of Permit for Transformation of a Supplementary Social Insurance Company
Art. 322. (1) Within two months following the receipt of the application under art. 321, para 1, the Deputy Chairperson of the Commission shall submit to the Commission a proposal for granting or denial of transformation permit and proposals for issuance of licenses in the cases under art. 321, para 3. (2) In case the Deputy Chairperson of the Commission has required additional information and documents, or has issued instructions for rectification of inconsistencies with the law, the term under para 1 may be extended by one month. (3) The Commission shall come up with a decision and justification for it for issuance or denial of issuance of transformation permit within one month as of the submission of the proposal under para 1. (4) The Commission shall deny issuance of a permit for transformation when: 1. not all necessary documents are submitted or there are inconsistencies in them; 2. the requirements of this Code and the regulations on its implementation are not complied with. (5) Together with the permit under para 3, the Commission shall issue licenses to the newly established companies. (6) Within one week following the decision under para 3, the deputy Chairperson of the Commission shall: 1. issue a permit for management of the newly established supplementary social insurance funds;
149 2. terminate the issued permits of terminated funds. (7) The pension insurance company shall observe the transformation plan and may not introduce any changes to it.
Procedure for Issuance of a Permit for Transformation of a Supplementary Social Insurance Fund
Art. 323. (1) Transformation of a supplementary social insurance fund under art. 320, para 4 shall be performed following the issuance of a permit by the Deputy Chairperson of the Commission. (2) In order to obtain a permit under para 1, the company, following a decision of its competent bodies, shall file an application to the deputy Chairperson of the Commission together with a fund transformation plan, a permit by the Competition Protection Commission and other required documents. (3) The Deputy Chairperson of the Commission shall come up with a decision within one month following the filing of the application under para 2, and in case additional information and documents have been requested – within one month following their receipt.
Termination of a Supplementary Social Insurance Company
Art. 324. A supplementary social insurance company shall be terminated: 1. voluntarily - by decision of the General Meeting of shareholders; 2. by compulsion - following termination of the pension license or the license for supplementary voluntary insurance for unemployment and/or vocational training; 3. upon declaration of insolvency.
Termination of a Supplementary Social Insurance Company following a Decision by the General Meeting
Art. 325. (1) Pursuant to art. 324, item 1, the supplementary social insurance company shall be terminated through liquidation and the supplementary social insurance funds managed by it - through merger with funds managed by other supplementary social insurance companies. (2) In case of termination under para 1, the established pension reserves shall retain their purpose, may not be separated and shall be merged with reserves having the same purpose in other pension insurance companies.
150 Conditions for Voluntary Termination
Art. 326. (1) Voluntary termination of supplementary social insurance companies shall take place following a permit by the Commission under the following conditions: 1. proved solvency; 2. retaining the rights of the insured persons and pensioners. (2) After the General Meeting of shareholders has made a decision for termination, the company shall notify the Deputy Chairperson of the Commission within seven days following the date of the decision.
Permit for Voluntary Termination
Art. 327. (1) In order to be granted a permit for termination, the supplementary social insurance company shall file an application to the Commission, together with the following documents: 1. decision by the General Meeting; 2. permit by the Competition Protection Commission; 3. liquidation plan; 4. other required documents. (2) The supplementary social insurance company liquidation plan shall also contain an attachment, which determines the conditions, the terms and manner for merging of pension reserves, for transfer of funds in insured persons’ individual accounts and guarantees for pensioners. (3) The application under para 1 shall be filed not later than two months following the date of the decision of the General Meeting of shareholders for termination of the company.
Procedure for Permit Issuance
Art. 328. (1) Within two months following the receipt of the application, the Deputy Chairperson of the Commission shall submit to the Commission a proposal for issuance or denial of a permit for voluntary termination. (2) In case the Deputy Chairperson of the Commission has requested additional information and documents, the term under para 1 may be extended by one month. (3) Within one month following the submission of the proposal under para 1, the Commission shall come up with a motivated decision for issuance or denial of issuance of a permit for voluntary termination. (4) The Commission shall deny issuance of a permit when:
151 1. not all necessary documents are submitted or there are inconsistencies in them; 2. the requirements of this Code and the regulations on its implementation are not complied with. (5) Together with the issuance of the permit, the Commission shall revoke the license of the terminated company. (6) Within one week following the issuance of the permit under para 3, the Deputy Chairperson of the Commission shall withdraw the permits for fund management.
Court Ruling
Art. 329. The supplementary social insurance company shall submit all required documents at the regional court by its head office immediately after receipt of the decisions under art. 289, para 3 and 6, for termination of the company, for initiation of liquidation proceedings and exclusion of the funds under its management from the Register and shall also present certified copies of the decisions.
Monthly Reports
Art. 330. The liquidator shall notify the Commission of the progress of proceedings and shall present to it a financial statement and operations report on a monthly basis, not later than the 15th day of each month.
Enforced Termination
Art. 331. (1) Enforced termination proceedings shall be initiated for each supplementary social insurance company whose supplementary social insurance license has been terminated pursuant to Art. 122f, para 1, item 2 and 6, and para 2. (2) After termination of the pension license, the Commission shall appoint a queastor until appointment of a liquidator. (3) Proceedings shall be initiated by the regional court by head office of the company upon request of the Commission. The request shall only indicate the grounds for revocation of the license and a certified copy of the decision for revocation of the license shall be attached to it. (4) If the request meets the requirements of para 1, the Court shall initiate proceedings for liquidation of the supplementary social insurance company and shall appoint a liquidator.
152 (5) Within three months following his/her appointment, the liquidator shall prepare and present to the Social Insurance Supervision Division a liquidation plan together with the attachment under art. 327, para 2 and shall conclude contracts with other supplementary social insurance companies for: 1. merger of the respective funds of the company under liquidation with funds managed by them; 2. transfer of funds in insured persons’ individual accounts to the respective funds managed by the supplementary social insurance companies under the conditions, terms and procedures determined by a regulation of the Commission. (6) Within one month following the receipt of the liquidation plan, the Deputy Chairperson of the Commission shall come up with a decision for approval of the terms and conditions for satisfaction of the insured persons and pensioners, contained in it and in the attachment, or shall impose other terms and conditions. (7) In case of termination of the permit for management of a supplementary social insurance fund, the provisions of paragraphs 2 - 6 shall apply.
Retaining the Purpose of Pension Reserves
Art. 332. Upon termination of the pension insurance company under art. 331, the established pension reserves shall retain their purpose and shall be merged with reserves with the same purpose established in the respective pension insurance companies, in accordance with the plan and the contracts under art. 331, para 5.
Bankruptcy of a Supplementary Social Insurance Company
Art. 333. (1) Proceedings for bankruptcy of a supplementary social insurance company shall be initiated when the supplementary social insurance license has been terminated on the grounds of art. 122f, para 1, item 5. (2) The supplementary social insurance company shall be bankrupt when: 1. it has not covered a claimable cash liability for more than seven days; 2. the total value of its liabilities exceeds the total value of its assets.
153 (3) The Commission shall be the only entity, which shall be entitled to initiate proceedings for bankruptcy of a supplementary social insurance company. (4) The request of the Commission shall only indicate the grounds for termination of the license. A certified copy of the decision for termination of the pension license shall be attached to the request. (5) A rehabilitation plan may not be proposed during the insolvency proceedings of a supplementary social insurance company. (6) The Commission shall appoint a quaestor until the appointment of a liquidator by the court.
Bankruptcy Proceedings
Art. 334. (1) The court shall institute legal proceedings on the day of receipt of the Commission’s request under art. 333, para 3 and shall set up hearing not later than ten days following the instituting of the proceedings. (2) The Court shall hear the request in the presence of a prosecutor in a closed doors session and shall summon the Commission and the supplementary social insurance company. (3) With its ruling the Court shall: 1. announce the company’s bankruptcy and determine its initial date; 2. initiate bankruptcy proceedings; 3. declare the supplementary social insurance company bankrupt; 4. terminate the powers of the company’s bodies; 5. rule a general hold and lien; 6. withdraw the company’s right to manage and dispose with the property included in the bankruptcy mass; 8. rule for cashing of the property included in the bankruptcy mass and distribution of the cashed property; 9. appoint a syndic.
Limitations for the Syndic
Art. 335. A person who is a temporary syndic or a syndic of another trader may not be a syndic of a supplementary social insurance company. Such circumstance shall be established through a declaration filed by the syndic upon appointment by the court.
Obligations of the Syndic
154 Art. 336. (1) Within three months following his/her appointment, the syndic shall prepare and present to the Deputy Chairperson of the Commission a plan on: 1. the acquisitions of the supplementary social insurance funds of the company in bankruptcy by respective funds managed by other supplementary social insurance companies; 2. transfer of the funds in the insured persons and pensioners’ individual accounts in funds managed by the company in bankruptcy to other respective supplementary social insurance funds under terms and conditions determined in a regulation by the Commission. (2) Within one month following the receipt of the syndic’s plan, the Deputy Chairperson of the Commission shall come up with a decision for approval of the conditions, terms and procedures for satisfaction of the insured persons and pensioners, included in it, or shall impose other conditions, terms and procedures. (3) In case of bankruptcy of a pension insurance company, the established pension reserves shall retain their purpose and shall be merged with reserves having the same purpose in the respective pension insurance companies in accordance with the plan under para 1. (4) The syndic shall present an activity report to the court and to the Commission every month by the 20th day of the month, and upon request - immediately. The deputy Chairperson of the Commission may carry out on-site examinations to certify the accuracy of the reports.
Control over Actions of the Syndic
Art. 337. /1/ The Deputy Chairperson of the Commission may control the actions of the syndic related to the management of the supplementary social insurance company property and check the accounting books and content of the cash in hand. (2) In case of violations, the Deputy Chairperson of the Commission may make proposals to the court to discharge the syndic and appoint a new one.
Sale of the Company as a Going Concern
Art. 338. (1) At the request of the syndic or the Commission, the Court may allow the sale of the supplementary social insurance company as a going concern. (2) The Court may allow the transaction under paragraph one provided that there is an affirmative decision in writing issued by the Commission. The Commission shall issue a position within 30 days following the receipt of the claim by the court.
155 (3) The court shall check whether the transaction is in compliance with the law and whether it does not harm the interests of the insured persons and pensioners of the funds managed by the company. (4) Transfer of ownership prior to the payment in full of the determined price shall not be allowed. (5) The going concern of the supplementary social insurance company in bankruptcy may be sold only to another licensed supplementary social insurance company. (6) The transaction shall be allowed also in case a joint stock company is set up for this exact purpose and only if it is granted a license by the Commission to provide supplementary social insurance. In this case, the Court shall approve the transaction following the issuance of the license. (7) If the company under paragraph 6 complies with the requirements, the Commission shall issue a license which shall give the right to provide supplementary social insurance. The license shall be issued only in case the applicant company has sufficient capital, which will allow it to provide supplementary social insurance pursuant to the statutory requirements once the company has serviced the receivables of the creditors under the conditions of the transaction. (8) The buyer shall only be responsible to fulfill the obligations it has undertaken in accordance with the conditions of the transaction approved by the Court. The rest of the receivables and non-exercised rights shall be redeemed. (9) Once the transaction is executed, the Court shall terminate the bankruptcy proceedings. (10) Court rulings under paragraphs 1 - 9 shall not be subject to appeal.
Termination of Bankruptcy Proceedings
Art. 339. (1) Bankruptcy proceedings shall be terminated by a Court ruling once the property of the supplementary social insurance company has been distributed. (2) With its ruling under para 1, the Court shall order the exclusion of the company from the Commercial Register.
Rights of Insured Persons and Pensioners in Case of Transformation or Termination
Art. 340. (1) Upon transformation or termination of a supplementary social insurance company or a supplementary social insurance fund, the company to whose fund the individual account of the
156 insured person has been transferred, shall be obliged to notify the person of the transfer and of his/ her rights within one month following the transaction. (2) Pensioners and insurers paying contributions at their own expense shall also be notified pursuant to the provisions of paragraph 1. (3) In cases under para 1, the insured persons shall have the right within one month following the notification to: 1. transfer their accumulations to an account in another fund of the same type – for supplementary mandatory insurance; 2. transfer their individual account to another supplementary voluntary social insurance fund or withdraw as a lump sum the individual account accumulations accrued from personal contributions – for supplementary voluntary social insurance. (4) In cases under para 1, within one month following the notification, insurers shall have the right to transfer the accumulations in the insurer account to another voluntary unemployment or vocational training insurance fund. (5) Persons who have not exercised their rights under para 3 within the one-month period shall be considered to have given their tacit consent for participation in the respective supplementary social insurance fund into which their account has been transferred following the transformation or termination. (6) In cases under para 3, the restrictions for switching shall not apply.
Application of the Commercial Act
Art. 341. Insofar as the present Chapter does not provide otherwise with respect to transformation, termination and bankruptcy of supplementary social insurance companies, the provisions of the Commercial Act shall apply.
Record-keeping
Art. 342. (1) Upon transformation of the supplementary social insurance fund or company, the governing body shall be responsible for handing the records of the company and the funds managed by it to the new company within six months following the transformation. (2) Upon liquidation of a supplementary social insurance company within six months following the date of liquidation, documents that are subject to permanent record keeping shall be transferred to the respective state archive together with:
157 1. minutes and decisions of the governing bodies; 2. files of the insured persons, pensioners, sales agents and employees of the company; 3. contracts under art. 123, 123b and 123c; 4. bank, cash and accounting documentation.
Definition of Requirements
Art. 343. The Commission shall determine in a regulation the requirements to the contents of: 1. the plan for transformation of the supplementary social insurance company and funds; 2. appendices to the supplementary social insurance company’s liquidation plan; 3. the plan of the syndic in case of bankruptcy of the supplementary social insurance company; 4. documents under art. 321, para 1, item 4, art. 323, para 2, and art. 327, paragraph 1, item 4.
PART THREE (new SG 67/2003)
ADMINISTRATIVE ENFORCEMENT MEASURES AND ADMINISTRATIVE PENAL LIABILITY
Chapter Thirty-Nine ADMINISTRATIVE ENFORCEMENT MEASURES
Types
Art. 344. (1) For the purpose of prevention and termination of violations under Part Two of this Code and the regulations on its implementation, for prevention and elimination of harmful consequences from them, as well as in the event that supervisory activities are hampered, incorrect or fraudulent data have been reported, or the interests of persons insured in supplementary social insurance funds and of pensioners, are threatened, the Deputy Chairperson of the Commission shall implement the following enforcement measures: 1. issue mandatory prescriptions for the implementation of concrete measures with concrete deadlines; 2. issue mandatory prescriptions for introduction of necessary changes to the Rules of supplementary social insurance funds;
158 3. prohibit the conclusion of new insurance contracts for a certain period of time; 4. convene the General Meeting of shareholders or appoint a meeting of the managing or supervisory board (board of directors) for undertaking of necessary measures; 5. impose a written obligation on the pension insurance company to increase its capital within a certain deadline; 6. prohibit temporarily the distribution of dividends; 7. ban a shareholder from voting, in case the requirements of art. 121g, para 1 and 2 have been breached; 8. issue a written order to a shareholder to transfer the shares held by them within a deadline determined by the Commission, in case the requirements of art. 121g, para 1 and 2 have been breached; 9. oblige the supplementary social insurance company to terminate its contractual relation with the custodian bank, investment or insurance intermediary in the event that they do not meet the requirements under this Code; 10. terminate the implementation of a decision or order by the governing bodies of the supplementary social insurance company which relates to the process of provision of supplementary social insurance in case this decision represents a breach to the legal provisions regulating supplementary social insurance; 11. terminate the use and circulation of documents which have not been approved in the statutory manner; 12. terminate the circulation of advertising and information materials, as well as any lottery games, provided they are not in compliance with the provisions of art. 123i. 13.appoint an external auditor at the expense of the supplementary social insurance company; 14.terminate the permit to manage a supplementary social insurance fund. (2) The Commission, at the proposal of the Deputy Chairperson, may impose the following administrative enforcement measures: 1. appoint a quaestor in the cases provided for by this Code; 2. issue a written order for the dismissal of one or more individuals who have been authorized to manage and represent the supplementary social insurance company; 3. terminate the supplementary social insurance license. (3) The Commission may inform the public of the measures implemented pursuant to para 1 and 2 or of any activity representing a hazard for the interests of the insured persons or pensioners. (4) Measures under para 1 and 2 shall be applicable with respect to entities subject to supervision by the Commission, their employees, the
159 management of the company or persons authorized to conclude social insurance contracts and to receive participation applications, as well as persons holding 10 percent or more of the company’s capital. (5) In case of systematic breaches to this Code and the regulations on its implementation by the custodian bank, the Commission may put forward a proposal to the Bulgarian National Bank for implementation of measures under art.65, para 2 of the Banking Law. (6) For the purpose of implementing administrative enforcement measures under para 1 and 2, the provisions of art. 7, para 2 and art. 11, para 1 of the Administrative Proceedings Act relating to explanations and objection on behalf of the interested parties, shall not apply.
Proceedings
Art. 345. (1) Administrative enforcement measures under art. 344, para 1 shall be implemented following issuance of an executive order with justifications to it on behalf of the Deputy-Chairperson of the Commission. The interested party shall be informed within seven days following the issuance of the order. (2) Administrative enforcement measures under art. 344, para 2, shall be implemented following the issuance of a decision and justification to it on behalf of the Commission. The interested party shall be informed of this decision within seven days.
Appeal
Art. 346. (1) Executive order under art. 345, para 1 may be appealed only in an administrative manner before the Commission pursuant to the Administrative Proceedings Act. (2) The decision under art. 345, para 2 shall be subject to immediate implementation and may not be appealed before the Court.
Chapter Forty QUAESTOR
Quaestor
Art. 347. (1) The quaestor shall be an individual. (2) The quaestor shall meet the requirements of art. 121e, para 2; s/he shall also: 1. not have any relations with a supplementary social insurance company or its debtor which may be a reason for serious doubts as to his/ her unbiased judgment;
160 2. not be spouse or direct or indirect relative up to the sixth degree or an in-law to any member of the governing or supervisory body of any supplementary social insurance company whose authorities have been terminated with the act of appointment of the quaestor; 3. not be a bankrupt debtor whose rights have not been reconstituted. (3) The quaestor shall declare in writing the compliance with the conditions under para 2 before the Commission. S/he shall inform the Commission immediately of any changes to these conditions.
Rights and Obligations of the Quaestor
Art. 348. (1) Authorities of the supervisory and government body of the company, respectively of the managing board of the supplementary social insurance company, shall be terminated with the appointment of the quaestor and shall be transferred to the quaestor insofar as the act for his/ her appointment does not provide for any restrictions. (2) Actions and transactions performed on behalf, and at the expense, of the supplementary social insurance company without prior notification of the quaestor, shall be void. (3) The quaestor shall have unrestricted access to the premises of the supplementary social insurance company, to the accounting and other documentation as well as to its property. (4) Employees of the supplementary social security company shall be obliged to cooperate with the quaestor for the implementation of his/ her duties. (5) The quaestor shall implement his/ her duties with the prudent man approach and shall take all necessary measures to protect the interests of the insured persons. The quaestor shall be held responsible for all damages intentionally caused by him/ her. (6) The quaestors shall report only to the Commission and upon request shall present reports immediately. (7) The quaestor shall receive compensation for his/ her work. The size of this compensation shall be determined by the Commission and it shall be paid at the expense of the supplementary social insurance company. (8) Authorities of the quaestors shall be terminated following the appointment of a liquidator or of a syndic. (9) The commission shall have the right to terminate the authorities of the quaestor at any time and to appoint a new quaestor. (10) The Commission shall issue prescriptions as to the actions of the quaestor.
161 CHAPTER FORTY-ONE
PENAL ADMINISTRATIVE LIABILITY
Section I Responsibility for Violation of Legislation Regulating Public Social Security
Grounds
Art. 349. (1) A person who violates the provisions of Part One of this Code or fails to comply with a mandatory prescription of a supervisory body shall be punishable by a fine ranging from BGN 50 to 1,000, provided they are not subject to a graver punishment. (2) Any official who allows payment of salaries without payment of contributions due on them shall be subject to fine in the amount of the unpaid contributions but not more than BGN 20,000. (3) A person who draws a document with fraudulent contents or presents incorrect data under art. 5, para 4 and 5 with the objective to evade payments to public social security or health insurance, and / or supplementary mandatory pension insurance, shall be punishable by a penalty payment of BGN 500 for each separate instance of violation, provided they are not subject to graver punishment. (4) For any repeated violation under para 1 and 3, the penalty payment will range from BGN 500 to 2,000.
Establishment of Violations
Art. 350. (1) Violations under art. 349 shall be established with audit acts prepared by the controlling bodies of the NSSI. (2) Penal ordinances shall be issued by the director of the NSSI regional offices or an official authorized by him/ her. (3) Establishment of violations, issuance and appeal of penal ordinances shall be carried out pursuant to the Administrative Violations and Penalties Act.
Section II
Liability for Breaching of Supplementary Social Insurance Provisions
162 Liability for Breaches of the Regulatory Framework
Art. 351. (1) A person who violates or allows violation under Part Two of this Code shall be punishable by a fine of BGN 200 to 10,000, provided that they are not subject to a graver punishment. (2) For violations under para 1, legal entities shall be subject to a property sanction amounting from BGN 10,000 to BGN 50,000. (3) In case of a repeated breach under para 1, the perpetrator shall be punishable by a fine amounting from BGN 500 to BGN 20,000, and for breach under para 2 – property sanction amounting from BGN 20,000 to BGN 100,000. (4) Income earned as a result of illegitimate operations shall become property of the state in case it may not be restituted to the individuals to whom damage has been caused.
Liability in Case on Non-compliance with Penal Administrative Measures Art. 352. (1) A person who fails to comply with an imposed penal administrative measure by the Commission or the Deputy Chairperson of the Commission shall be punishable by a penalty payment ranging from BGN 1,000 to BGN 10,000. (2) For violations under para 1, a legal entity shall be subject to a property sanction amounting from BGN 10,000 to BGN 50,000.
Liability for Operating without a License Art. 353. (1) A legal entity providing supplementary pension insurance without holding a license and/or permit for management of supplementary social funds shall be punishable by a fine from BGN 10,000 to BGN 100,000. (2) Any person who intentionally creates conditions for signing of social insurance contracts with a legal entity not holding a license and/ or permit for management of supplementary social insurance funds shall be punishable by a fine amounting from BGN 1,000 to BGN 20,000.
Penalty Determination Acts, Penal Ordinances and their Appeal
Art. 354. (1) Violations under this Code shall be established through penalty determination acts drafted by officials authorized by the Deputy Chairman of the Commission. (2) Penal ordinances shall be issued by the Deputy Chairperson of the Commission or by an official authorized by him/ her
163 (3) Establishment of violations, issuance, appeal and implementation of penal ordinances shall be performed pursuant to the Administrative Violations and Punishments Act.
ADDITIONAL PROVISION
“§ 1. (1) Pursuant to Part One of this Code: 1. "Enterprise" shall be each facility where labor is performed by hired workers. 2. "Net remuneration" shall be the remuneration received following deduction of statutory mandatory social contributions at the expense of the individuals and taxes due pursuant to the Personal Income Tax Act. 3. The consolidated budget of the Public Social Security System shall contain the budget of the Pensions Fund, the Maternity and General Sickness Fund, the Work Injury and Occupational Sickness Fund, the Unemployment Fund, the Non-Labor Related Pensions Fund and the budget of the National Social Security Institute. 4. "Farmers" shall be individuals who produce agricultural produce for the purposes of trading with it and who are registered under the established terms. 5. “Related parties”shall be: а) entities one of which participates in the management of the other or of its subsidiary; b) entities in case one and the same legal or physical entity participates in the managing and supervisory bodies of both, incl. cases when the legal entity participating in the bodies of both entities represents another legal entity; c) company or individual owning more than 5 percent of the shares or interest with a voting right in the company; d) entities whose operations are controlled by a third entity or its subsidiary; e) entities who jointly control a third entity or its subsidiary; f) partners, incl. in companies under art. 357 of the Contracts and Obligations Act. 6. ”Control” under item 5 shall be cases when the controlling entity: а) possesses, incl. through its subsidiaries or by virtue of an agreement with another entity, over 50 percent of the votes in the General Meeting of shareholders of a company or another legal entity, or b) may nominate, either directly or indirectly, more than half of the members of the managing body of a legal entity. 7. “Contributions with significant size” shall be contributions exceeding BGN 3,000.
164 (2) Pursuant to Part Two of this Code: 1. ”Pension scheme” shall be the concrete financial mechanism for determining pension obligations and payments calculated using statistical (actuarial) methods; 2. ”Statistical (actuarial) methods” shall be the set of statistical methods and rules applied for the purpose of determining the expected revenues from future contributions and investments as well as for determining the amounts due for payment of future pension benefits from the pension insurance company; 3. ”Related parties” shall be: а) entities one of which controls the other or its subsidiary; b) entities whose operations are controlled by a third entity; c) entities that jointly control a third entity; d) spouses, direct relatives without restrictions, indirect relatives up to the third degree, incl. in-laws up to the third degree. 4. ”Control” under item 3 shall be the instance when the controlling entity: а) owns, incl. through a subsidiary or by virtue of an agreement with another entity, over 50 percent of the votes in the general meetings of shareholders in a company or another legal entity; or b) may nominate, either directly or indirectly, more than half of the members of the managing body of a legal entity. 6. ”Protective services” shall be the type of commercial activities providing protection of individuals and legal entities or their property by illegal attempts at them. 6. ”Activities similar to protective services” shall be this type of activities for which there is good grounds to conclude that they are similar or identical with the protective services. 7. ”Technical interest rate” shall be the interest rate used for calculation of the size of pension benefits and reserves. 8. ”Put-option” shall be the contract granting rights to sell at a specified price a specific number of shares by or on a certain date. 9. ”Systematic violations” shall be three or more violations of the provisions of this Code and the regulations on its implementation within one calendar year. 10. ”Third party insurer” shall be an individual or legal entity paying contributions to a supplementary voluntary pension fund to the benefit of an individual with whom the former does not have employment relations or with which the former has not signed a contract for assigning control or management. 11. ”Insured person” shall be an individual at whose name and into whose account supplementary pension contributions are paid to a supplementary pension fund pursuant to the conditions determined by
165 law, the rules on the structure and operations of the fund and the social insurance contract. 12. ”Pensioner” shall be an individual who receives individual or survivor pension from a supplementary pension fund. 13. “Supplementary pension” shall be an unlimited or limited period monthly benefit paid out of a supplementary pension fund to a pensioner, survivors of an insured person, or survivors of a pensioner. (3) Pursuant to Part Three of this Code: 1. ”Repeated violation” shall be a violation performed within one year following the effect of the penal ordinance with which the perpetrator has been punished for a violation of the same type.
TRANSITION AND FINAL PROVISIONS
§ 2. /1/Individuals whose employment has been terminated before December 31, 1999 and who have become eligible for pension under the repealed Pensions Law, may, until June 30, 2000, retire under the terms and conditions of the repealed law if this is more favorable for them. /2/ Cash benefits to individuals who are on leave for temporary incapacity or maternity on January 1, 2000, shall be paid in the amount and in the terms under the repealed Part III of the Labor Code of 1951, if this is more favorable for them. /3/ (Amended – SG issue 74, 2002) When calculating cash benefits for temporary incapacity or maternity of persons insured under art. 4, para 1, item 3, the compensation taken into consideration shall be that received for the respective position through December 31, 1999 included.
§ 3. (1) (Former text of § 3 - SG, issue 64 from 2000) Until December 31, 2003, included, individuals under art. 6 and 7 of the repealed Pensions Law may retire under the conditions of these repealed articles. (2) (New - SG, issue 64 from 2000) Officers and sergeants under art. 7 of the repealed Pension Law deprived of their rank and who are ascribed the status of civil servants – civilians in accordance with art. 89, paragraph 1 of the Transition and Final Provisions of the Act on the Amendment of the Ministry of Interior Act (State Gazette, issue 29, 2000) may retire under the conditions and time of paragraph 1. At retirement, the length of service of those persons shall be considered service for the rank of an officer or sergeant. (3) (New - SG, issue 67 from 2003) Officers and sergeants from the Ministry of Interior who have covered the length of service necessary for pension by December 31, 2003 incl., shall be eligible for pension
166 under art. 7 of the repealed Pension Law and this eligibility shall be valid until December 31, 2005. Pension shall be granted pursuant to the provisions of art. 94 as of the date of dismissal. § 4. (1) (Amended - SG, issue 64 from 2000) Until December 31, 2009, included, individuals, who have worked 10 years under labor category I or 15 years under category II, may retire if they meet the requirements for length of participation and age under art. 68 but not earlier than 47 years for women and 52 years for men working under labor category I, and 52 years for women and 57 years for men working under labor category II. (2) (Amended - SG, issue 64 from 2000) Until December 31, 2009, inclusive, individuals with 10 years of service under the conditions of art. 104, para 3, may retire earlier than the age under art. 68 in case the sum total of their age and length of participation equals 90 and they have reached 52 years of age for men and 47 years for women. (3) (New - SG, issue 64 from 2000) Until December 31, 2004, included, if the labor contract of a person working under to the provisions of art. 104, para 3 is terminated in accordance with art. 328, para 1, items 1 and 2 of the Labor Code, the individual may retire not earlier than the completion of 45 years of age provided that s/he complies with the provisions of para 2. (4) (Former paragraph 3 - SG, issue 64 from 2000, amended – SG issue 1 from 2002 ) In the event that individuals under paragraphs 1, 2 and 3 have used up their rights, the funds accrued in the occupational pension fund shall be transferred to the public social security Pensions Fund. § 5. (1) (Amended - SG, issue 67 from 2003) Until December 31, 2009, included, teachers shall be eligible for pension for old age and length of service with service as a teacher 30 years for men and 25 years for women and 3 years earlier than the age under art. 68, paragraphs 1 and 2. (2) (Amended – SG issue 1 from 2002, issue 67 from 2003) Individuals under paragraph 1 shall be paid a limited period early retirement pension from the Teachers’ Pension Fund, at a rate determined under art. 70 and reduced by 0.3 per cent for each month before the person’s completion of the age under art. 68, para 1 and 2. (3) (Amended - SG, issue 64 from 2000) Teachers who have become eligible for pension under para 1 and retire under art. 68, para 1 - 3, shall be paid a pension for old age and length of service from the Pensions Fund and a supplement from the Teachers’ Pension Fund amounting to 0.1 per cent of the pension for each month for which a contribution has been paid to the fund after completion of the age under para 1.
167 (4) (New - SG, issue 67 from 2003) Teachers who have length of service of 30 years as teachers for men and 25 years for women and take retirement following the completion of the age under art. 68, para 1 and 2, shall receive a benefit from the Teacher’s Pension Fund until the fulfillment of the conditions for eligibility for pension under art. 68, paragraphs 1 - 3, but not later than the completion of 65 years of age. Following the completion of 65 years of age, pension shall be paid out of Pensions Fund. (5) (Former paragraph 4 - SG, issue 67 from 2003) The rate of the insurance contribution to the Teachers’ Pension Fund shall be determined on an annual basis by the Public Social Security Budget Act. § 5а. (New - SG, issue 64 from 2000, in effect as of 1.08.2000, amended – SG issue 1 from 2002) Until December 31, 2005, the contributions of private farmers, who perform only agricultural activities, shall be paid on the basis of insured income not smaller than 25 percent of the minimum monthly insured income. § 6. (1) Until December 31, 2003, inclusive, the amount of pensions - one or more, to which the person is entitled, without the supplements to them, may not exceed four times the social pension for old age. (2) The supplement under art. 84 shall be calculated from the amount as limited under para 1. (3) Paragraphs 1 and 2 shall not apply to individuals who have served as President and Vice President of the Republic of Bulgaria, Chairman of the National Assembly, Prime Minister and judge at the Constitutional Court. (4) (New - SG, issue 64 from 2000, amended – SG issue 1 from 2002) Until December 31, 2003, special merit pensions shall be paid out in the amount of four social pensions. (5) (New – SG issue 64 from 2000) Paragraphs 1 and 2 shall be applied for wartime disabled upon completion of the age under art. 68. (6) (New – SG issue 1 from 2002) Until December 31, 2003, inclusive, the size of pensions – one or more, which persons under art. 69, para 3 receive, without the supplements to them, may not exceed five times the size of the social old age pension. § 7. (1) Pensions granted through December 31, 1999, incl., shall be recalculated in accordance with the provisions of this Code without changing the individual coefficient. (2) Recalculations shall be made provided that this is more favorable for the pensioner. (3) (New - SG, issue 35 from 2001) The individual coefficient of persons whose pensions have been granted under the repealed Pensions Act and encompass the insured income following December 31, 1996,
168 shall be recalculated and the average monthly insured income of the person for the period after December 31, 1996 shall be linked to the average monthly insured income for the country for the same period. (4) (New – SG issue 35 from 2001) Pensions of persons under para 3 shall be recalculated administratively as of July 1, 2001 pursuant to art. 70, para 1 of this Code. § 8. Payment of pension benefits and supplements to them received through December 31, 1999, granted under repealed laws, shall continue. § 9. (1) The time recognized as length of service and length of service necessary for retirement through December 31, 1999 shall be considered length of participation under this Code. (2) The period of education of university graduates shall be considered length of participation at retirement if by the year 2005 they have paid social insurance contributions calculated on the basis of a minimum salary through the date of payment of contributions. The period for which contributions were paid shall be recognized as length of participation; however, it may not be longer than the period of standard education under the respective curriculum. (3) Persons who started their university course of education earlier than and during 1999/2000 academic year, may use their rights under para 2, provided that they pay the respective social insurance contributions within five years after the completion of their period of education. (4) Social insurance contribution rates under para 2 and 3 shall be the same as those determined for the Pensions Fund. § 10. (repealed – SG issue 1 from 2002). § 10а. (New - SG, issue 45 from 2002) Articles 117а and 118а shall apply also with respect to unresolved disputes before the manager of the regional National Social Security Office and before the courts. Request for termination of implementation may be filed by the liable persons within 14 days following the effect of the amendments to this Code adopted on April 23, 2002. § 11. (Repealed – SG issue 1 from 2002). § 12. This Code shall repeal: 1. Part III of the Labor Code of 1951 Prom., issue. 91 of 13.11.1951, am., issue 93, 20.11.1951 г., am. and suppl., issue 91 of 12.11.1957, issue 92 of 15.11.1957, SG, issue 24 of 2.04.1963, enacted 1.04.1963, issue 36 of 7.05.1963, issue 92 of 26.11.1963, issue 1 of 5.01.1965, issue 61 of 3.08.1965, issue 90 of 16.11.1965, issue 99 of 17.12.1965, enacted 1.1.1966, issue 15 of 23.02.1968, enacted 1.01.1968, amended, issue 333 of 26.04.1968, am. and suppl., issue 68 of 28.08.1970, issue 53 of 6.07.1973, issue 81 of 12.10.1973, issue 27 of 4.04. 1975, issue 63 of 6.08.1976, issue 32 of 22.04.1977, issue 57 of
169 21.07.1981, issue 44 of 05.06.1984, issue 26 of 1.04.1986, issue 27 of 4.04. 1986, issue 46 of 16.06.1989, issue 52 of 26.06.1992, am., issue 100 of 10.12.1992, issue 104 of 28.11.1995, am. and suppl., issue 28 of 2.04.1996, am., issue 155 of 29.12.1998. 2. Pensions Law (Prom., SG., issue 91 of 12.11.1957, enacted 1.01.1958, am., issue 92 of 15.11.1957, am. and suppl., issue 104 of 29.12.1959, enacted 1.01.1960, issue 51 of 27.06.1961, issue 105 of 28.12.1962, enacted 1.01.1963, SG, issue 103 of 29.12.1964, enacted 1.01. 1965, issue 92 of 23.11.1965, enacted 1.01. 1966, issue 25 of 29.03.1966, enacted 1.04.1966, issue 101 of 27.12.1966, enacted 1.01.1967, issue 102 of 29.12.1967 г., enacted 29.12.1967, suppl, issue 59 of 29.06.1969, enacted 1.08.1969, am., issue 97 of 16.12.1969, am. and suppl., issue 48 of 19.06.1970, suppl., issue 63 of 11.08.1970, am. and suppl., issue 3 of 12.01.1971, enacted 1.01.1971, am., issue 61 of 3.08.1971, enacted 1.08.1971, issue 36 of 9.05 1972, enacted 1.05.1972, am. and suppl., issue 65 of 18.08.1972, enacted 1.07.1972, suppl. issue 53 of 6.07.1973, enacted 1.09.1973, am. and suppl. issue 34 of 30.04.1974, enacted 1.06. 1974, issue 3 of 10.01.1975, enacted 1.01.1975, issue 36 of 13.05.1975, issue 53 of 11.07.1975, enacted 1.07.1975, suppl., issue 2 of 6.01.1976, enacted 1.01.1976, am., issue 63 of 6.08.1976, am. and suppl., issue 80 of 9.10.1979, issue 90 of 21.11.1980, enacted 1.01.1981, am. issue 9 of 0.01.1981, enacted 1.01.1981, issue 28 of 8.04.1983, enacted 1.09.1983, am. and suppl. issue 44 of 5.06.1984, issue 69 of 31.08.1984, enacted 1.09.1984, am., issue 70 of 6.09.1985, am. and suppl., issue 81 of 18.10.1985, am. issue 6 of 20.01.1989, enacted 1.01.1989, am. and suppl., issue 46 of 16.06.1989, am., issue 61 of 8.08.1989, am. issue 99 of 22.12.1989, issue 6 of 19.01.1990, am. and suppl., issue 30 of 13.04.1990, issue 81 of 9.10.1990, enacted 1.11.1990, am., issue 12 of 12.02.1991, am. and suppl., issue 52 of 26. 06.1992, Ruling № 11 of the Constitutional Court of Republic of Bulgaria of 29.07.1992. issue 64 of 7.08.1992; am. and suppl., issue 85 of 20.10.1992, issue 102 of 3.12.1993, am., issue 49 of 17.06.1994, enacted 1.07.1994, am. issue 68 of 1.08.1995, enacted 1.09.1995, am. and suppl., issue 104 of 28.11.1995, issue 22 of 15.03.1996, enacted 1.04.1996, issue 67 of 6.08.1996, enacted 1.04.1996, am., issue 46 of 10.06.1997, enacted 1.07.1997, Ruling № 12 of the Constitutional Court of Republic of Bulgaria of 25.09.1997, issue 89 of 7.10.1997, am. and suppl. issue 123 of 22.12.1997, am. issue 153 of 23.12.1998, enacted 1.01.1999, issue 155 of 29.12.1998, enacted 1.07.1999, issue 57 and 69 of 1999. 3. The Law on Denying Pensions to Persons Who Have Been Involved in Fascist Activities (prom. SG. issue 9 of 1948, am. issue 176 of 1949, issue 71 of 1964).
170 § 13. (1) Decree 256 for Mutual Social Insurance of Cooperative Members (Prom., SG., issue 63 of 7.08.1953, am., issue 82 of 13.10.1953, am., issue 17 of 1.03.1955, issue 69 of 28.08.1956, issue 62 of 5.08.1958, am. issue 82 of 14.10.1958, am. issue 68 of 23.08.1960, issue 38 of 11.05.1962, suppl. SG, issue 500 of 28.06.1963, issue 21 of 13.03.1964, am. issue 32 of 23.04.1968, issue 26 and 26 of 1986) shall be repealed. (2) The activity of public social insurance of the Council for Mutual Social Insurance of Cooperative Members, as well as its assets and liabilities for receivables of social insurance contributions and benefit payments shall be transferred to the public social security. (3) The remaining assets and liabilities of the Council for Mutual Social Insurance of Cooperative Members shall be transferred to the Central Council of Cooperatives. (4) The period during which the persons have been insured under the Decree for Mutual Social Insurance of Cooperative Members shall be recognized as length of participation regardless of its duration.
§ 14. (1) The Social Security Fund Act (Prom. SG, issue 104 of 28.11.1995, am. and suppl. issue 55 from 11.07.1997, issue 123 of 22.12.1997, am. issue 59 of 26.05.1998, am. and suppl., issue 155 of 29.12.1998, enacted 1.01.1999, am. issue 12 of 12.02.1999) shall be repealed. (2) Disposal with property under § 5, para 2 of the repealed Social Security Fund Act shall be performed by the Supervisory Board of the National Social Security Institute. § 15. The following amendments shall be made to the Labor Code (prom. SG, issue 26 and 27 of 1986 and issue, am. and suppl. issue 6 of 22.01.1988, issue 21 of 13.03.1990, issue 30 of 13.04.1990, enacted 13.04. 1990 issue 94 of 23.11.1990, issue 27 of 5.04.1991, enacted 5.04.1991, issue 32 of 23.04.1991, issue 104 of 17.12.1991, suppl., issue 23 of 19.03.1992, am. and suppl., issue 26 of 31.03.1992, suppl., issue 88 of 30.10.1992, am. and suppl., issue 100 of 10.12.1992, enacted 1.01.1993; Ruling № 12 of the Constitutional Court of Republic of Bulgaria of 20.07.1995 – issue 69 of 4.08.1995; suppl., issue 87 of 29.09.1995, am. and suppl., issue 2 of 5.01.1996, am. issue 12 of 9.02.1996, am. and suppl., issue 28 of 2.04.1996, am., issue 124 of 23.12.1997, am. and suppl., issue 22 of 24.02.1998; Ruling № 11 of the Constitutional Court of Republic of Bulgaria of 30.04.1998 - issue 52 of 8.05.1998; suppl., issue 56 of 19.05.1998, issue 83 of 21.07.1998, issue 83 of 21.07.1998, issue 108 of 15.09.1998, am. and suppl., issue 133 of 11.11. 1998, issue 51 and 67 of 4.06.1999): 1. Art. 114 shall be repealed.
171 2. Art. 163, paragraph 1 shall be amended as follows: “Art. 163. /1/ Female workers shall be entitled to 135 days of maternity leave for each child; 45 days of this leave shall be taken prior to birth giving. 3. In art. 333, para 1 and 3, the words “art. 330, para 2, item 5” shall be replaced with “art. 330, para 2, item 6”.
§ 16. The Act on Unemployment Protection and Employment Promotion (prom. - SG issue 120 from 1997, amended issue 155 from 1998, issues 26, 50, 65, 67, 68 and 84 from 1999) shall be amended as follows: 1. In art. 20, para 2, first sentence, the words “ratio 7:1” shall be replaced with “the following ratio: a) for 2000 – 2001 – 80:20; b) for 2002 – 75:25; c) for 2003 – 70:30; d) for 2004 – 65:35; e) for 2005 – 60:40; f) for 2006 – 55:45; g) for 2007 and all consecutive years – 50:50.” 2. Art. 109 shall be repealed. § 17. In the Supplementary Voluntary Pension Insurance Act (prom. SG, issue 65 of 1999), in art. 109 the word “fine” shall be replaced with “property sanction”. § 18. The following amendments and supplements shall be made to the Health Insurance Act (prom. SG, issue 70 of 1998; am. and suppl. issue 93 and 153 of 1998, issue 62, 65, 67, and 69 of 1999): 1. In art. 6: a) para 2 shall be amended as follows: “/2/ The National Health Insurance Fund shall consist of a head office, regional health insurance funds and their municipal branches with offices in accordance with a list approved by the Council of Ministers.” b) in para 3 the word “central” shall be deleted 2. In art. 23, para 2, the word “temporary” shall be deleted and the phrase “off-budget accounts and funds” shall be replaced with “credits from other institutions”. 3. In art. 29 a) in para 2, the words “Public Social Security Fund” shall be replaced by “the public social security budget”; b/ new para 4 shall be added: “/4/ In case the draft National Health Insurance Fund Act is not passed by the Parliament by the beginning of the budget year, social insurance
172 revenues shall be collected and social insurance expenditures shall be made in accordance with the adopted budget for the previous year. Operational expenditures of the National Health Insurance Fund shall amount monthly to 1/12 of the expenditures stipulated in the budget for the preceding year.”
4. Art. 33 shall be amended as follows: “Article 33. The following individuals shall be obliged to be insured in the National Health Insurance Fund: 1. all Bulgarian citizens, who are not residents of other countries as well; 2. Bulgarian citizens, who are also residents of other countries and live permanently on the territory of the Republic of Bulgaria; 3. foreign citizens or individuals without citizenship, who have been granted permission for long-term sojourn in the Republic of Bulgaria, unless there is a different international agreement to which Bulgaria is a signatory; 4. individuals who have been granted status of refugees or have been granted an asylum; 5. Art. 39 shall be amended as follows: “Art. 39. /1/ Individuals who are obliged by law to make social insurance contributions shall be obliged, from the occurrence of grounds for health insurance, to provide information about the insured persons to the territorial offices of the National Social Security Institute on a monthly basis by filing declarations approved by the National Social Security Institute and the National Health Insurance Fund. /2/ Individuals insuring their family members under this law shall provide information about them in declarations approved by the National Social Security Institute and the National Health Insurance Fund. /3/ In cases when individuals pay advance contributions under this law, they shall complete a declaration for the period approved by the national Social Security Institute and the National Health Insurance Fund. /4/ Foreign individuals sojourning in Bulgaria for a short period of time, as well as individuals with dual Bulgarian and foreign citizenship, who are not insured under this law, shall pay the cost for medical services they have received, unless there is an effective international agreement to which the Republic of Bulgaria is a signatory.”
6. Art. 40 shall be amended as follows: a) para 1 shall be amended as follows: “/1/ The health insurance contribution of the insured person, determined under art. 29, para 3, shall be determined on the following income and shall be paid as follows:
173 1. for individuals receiving income from employment or official relations, or from relations based on special laws – the taxable income under the Individual Income Tax Law: a) the contribution for individuals working under labor relations shall be paid by the employer or by the agency and the insured person in the following ratio: a) for 2000 – 2001 – 80:20; b) for 2002 – 75:25; c) for 2003 – 70:30; d) for 2004 – 65:35; e) for 2005 – 60:40; f) for 2006 – 55:45; g) for 2007 and all consecutive years – 50:50. b) the contribution for individuals working under official relations and relations based on special laws shall be paid by the employer and shall be at the account of the republican budget; c) the employer or agency shall pay the contributions simultaneously with the payment of wages; when paying wages the employer or agency shall deduct the contributions owed by the insured persons and the contributions for the family members insured by them; 2. sole traders, individuals who have established a limited liability company, partners in commercial partnerships and individuals registered as freelance professionals or craftsmen by registration, shall be insured on a declared monthly income which may not be smaller than two times the minimum wage established for the country, and annually on the taxable income in accordance with the information in their tax return: a) contributions shall be paid by the tenth day of the month following the month for which they are due; b) the monthly insured income, with respect to the calculation of the annual amount of the contribution, shall be determined by dividing the annual taxable income by the period during which the respective activity is performed; c) in case of annual taxation, contributions shall be paid in the terms determined for paying taxes under the Individual Income Tax Act;
174 3. contributions for individuals who do not declare any income under item 2 and who work without a labor relation under a contract with an assignor – enterprise or another organization, shall be paid every month on the taxable income from the enterprise or organization by deducting the, from the compensation of the person; contributions shall be paid by the enterprise or organization by the tenth day of the month following the month for which they are due; the income of these individuals shall be equalized annually in accordance with item 2, “b” and “c”; 4. for pensioners – the amount of pension or sum of pensions, without the supplements to them; contributions shall be at the account of the republican budget and shall be paid by the tenth day of the month following the month for which they are due; 5. for pensioners receiving pensions under international agreements, entirely at the account of a foreign social insurance institute – two times the minimum wage established for the country; contributions shall be at the account of the person and shall be paid by the tenth day of the month following the month for which they are due; 6. for individuals receiving benefits for temporary incapacity due to sickness, pregnancy, birth-giving or child raising – the amount of the benefit; contributions shall be at the account of the employer or the agency and shall be equal to the part of the contribution owed by them, payable upon payment of benefits; when the person is insured at his/her account, contributions shall be paid by the tenth day of the month following the month for which they are due; 7. for individuals receiving income on different grounds, indicated in items 1, 2, 3, 4, 5 and 6 - contributions shall be paid on the sum of insured incomes; 8. for individuals receiving unemployment benefits – the amount of the benefit; contributions shall be at the account of the Professional Training and Unemployment Fund and shall be paid by the tenth day of the month following the month for which they are due; 9. for persons and family members entitled to social assistance as well as for children under age without parents, who are not subject to social insurance on other grounds – one minimum wage established for the
175 country; contributions shall be at the account of the municipal budgets and shall be paid by the tenth day of each month following the month for which they are due; 10.for soldiers in the military draft, for war veterans and military disabled persons, for disabled persons injured during or in relation with the defense of the country, during natural disasters and accidents and for Ministry of the Interior employees injured during performance of their official duties, who are not subject to other social insurance; for persons undergoing proceedings for receiving a refugee status or asylum, for detained or imprisoned individuals, for persons without income accommodated in orphanages, in homes for pre-school children and social service homes; for university students without income until completion of 26 years of age – one minimum wage established for the country; contributions shall be paid by the tenth day of the month following the month for which they are due, and shall be transferred through the respective agency at the account of the republican budget or the municipal budgets; 11.for persons on unpaid leave who are not subject to social insurance on other grounds – one minimum wage established for the country; contributions shall be at the account of the employer and shall be paid upon payment of wages by the respective enterprise or another organization; 12.for employees of the Bulgarian Orthodox Church and other religions legally recognized, who are not under labor relations – one minimum wage established for the country; contributions shall be paid by the tenth day of the month following the month for which they are due by the headquarters of the respective religion; 13.for family members who are not insured – five per cent of the contribution for each insured family member; contributions shall be at the account of the insured person; when the insured person receives income under items 1, 3 and 6, the contribution shall be deducted by the employer (enterprise), agency or organization upon payment of wages; for persons working under labor or official relation or relations based on special laws, contributions shall be deducted and paid by the employer or agency upon payment of wages or benefits; if the person is insured at his/her account, as well as for persons
176 insured under item 3, contributions shall be paid by the tenth day of the month following the month for which they are due; 14.persons who are not subject to social insurance under items 1 – 13 shall be insured on insured income declared by them, not smaller than two times the minimum wage established for the country; contributions shall be at their account and shall be paid by the tenth day of the month following the month for which they are due; if such persons are subject to annual taxation, there shall be annual equalization of contributions in accordance with item 2.” b) paragraph 3 shall be amended as follows: “/3/ For individuals under para 1, item 7, contributions shall be paid on the sum of the insured income in the manner determined for the respective type of income but on not more than ten times the minimum wage established for the country.”
7. Article 41 shall be amended as follows: "Art. 41. (1) Social insurance contributions under this law shall be paid to accounts for collection of health insurance contributions in territorial offices of the National Social Security Institute, and from there shall be transferred daily to the accumulation account for health insurance contributions of the National Social Security Institute headquarters. (2) Amounts collected at the National Social Security Institute from health contributions shall be transferred to the NHIF accumulation account by the end of each working day." 8. The following amendments shall be made to art. 42: a) para 1 shall be amended as follows: "(1) Insured income used for calculation of the contribution shall be established on the basis of payrolls and other documents for paid salaries, paid sick leave certificates, pension history files, unemployment benefits paid, and tax returns under the Individual Income Tax Act." b) para 3 shall be amended as follows: "(3) Individuals shall file a declaration to the payer of the income or to the relevant bodies for family members who are obliged to pay contributions. The annual return under the Individual Income Tax Act shall contain health contributions paid throughout the year and amounts due after annual equalization, if any." c) new para 4 shall be created as follows: "(4) Employers, tax offices, municipal authorities, institutions, assignors, and self-insured shall be obliged to present to the NSSI and to the NHIF the information required under art. 42, para 1 and 3."
177 9. Art. 43 shall be amended as follows: "Art. 43. Persons insured under art. 40, para 1, items 2, 5 and 14 may pay health contributions for themselves and for their family members in advance for a period selected by them." 10. Art. 44 shall be amended as follows: "Art. 44. Contributions shall be paid: 1. by bank transfer; 2. by postal order." 11. In art. 45, para 1, item 8, the word “and” shall be added after the word “dentist”. 12. In art. 55, para 6, the words "art. 32" shall be replaced with the words "art. 31, para 3". 13. Art. 63 shall be amended as follows: a) in item 1 the words "the quantity and types of medical aid received by the respective person and their price " shall be deleted; б) in item 2 the words "information on activities performed by him and amounts paid" shall be deleted; в) item 3 shall be amended as follows: "3. register of manufacturers, importers and distributors of medicines, and pharmacies which have a contract with the NHIF". 14. Art. 64 shall be amended as follows: "Art. 64. Every insured person shall be entitled to receive from the NHIF the information available on the medical aid used by him/her during the past five years and its price in accordance with a procedure approved by the NHIF." 15. Art. 69 shall be amended as follows: "Art. 69. The National Social Security Institute shall be obliged to provide information regarding insured persons and the amount of health contributions collected for them to the NHIF on a monthly basis." 16. In art. 73, para 1, item 1 shall be deleted. 17. Art. 73a shall be created: "Art. 73a. Financial control on NHIF revenue from health contributions and interest due shall be exercised by the controlling bodies of the National Social Security Institute pursuant to the provisions of the Mandatory Social Insurance Code." 18. In art. 77, after the words “and the National Social Security Institute” shall be added after the words “the controlling bodies of the NHIF”. 19. The following amendments shall be made in art. 104: а) in para 1, the words "50 to 100 leva for each unpaid contribution " shall be replaced with the words "500 to 1000 leva"; b) in para 2, the words "monthly 200 leva for each unpaid contribution" shall be replaced with the words "2000 leva".
178 20. The following amendments shall be made in art. 105: а) in para 1, the words "financial inspectors of the National Social Security Institute” shall be replaced with the words "controlling bodies of the National Social Security Institute and the NHIF"; b) para 2 shall be amended as follows: "(2) Penal ordinances shall be issued by the governor of the National Social Security Institute, by the director of the NHIF or by the director of the respective regional health insurance fund and by the director of the respective territorial office of the National Social Security Institute." 21. Art. 107 shall be amended as follows: “Art. 107. Imposition of a penalty under art. 103 and 104 does not preclude the obligation for payment of contributions due together with the legal interest for the period." 22. Art. 109 shall be amended as follows: "Art. 109. (1) Insured persons required to pay contributions for themselves and for their family members, who have not paid more than three contributions due, shall pay the medical services they receive to service providers. When the insured person pays to the National Social Security Institute all contributions due, his/her rights shall be reinstalled from the date of payment of the contributions die; amounts paid for medical services shall not be reimbursed. (2) Non-payment of contributions, which is not the fault of the insured persons, shall not deprive them of their social insurance rights. Amounts paid by such persons for medical services in such cases shall be subject to refund." 23. In art. 110, the words "six months " shall be replaced with the words "one month". 24. The following amendments shall be made in § 1 of the additional provisions: а) item 3 shall be amended as follows: "3. "Family members " shall be husband, wife, children up to 18 years of age, or up to 26 years of age if they are still students, and if they are inactive or permanently incapable – regardless of their age"; б) new item 8 shall be created: "8. "Enterprise" shall be all legal entities, sole traders and non- personified companies, exercising trade activities." 25. The following amendments shall be made to § 19 of the transition and final provisions: а) the current text shall become para 1; b) new para 2 shall be created:
179 "(2) The Council of Ministers, at the proposal of the National Social Security Institute and the NHIF, shall adopt a regulation on the implementation of art. 39 and Section V of the law." § 19. In the Corporate Income Tax Act (prom., SG, issue 115 of 1997; amended, issue 19 of 1998 г.; amended issue 21 and 153 of 1998, issue 12, 50, 51, 64, 81 and 103 of 1999), items 16 and 17 shall be created in art. 23, para 3: "16. funds in a separate account established in accordance with art. 139, para 2 of the Mandatory Social Insurance Code – by licensed pension insurance companies; 17. income generated from investment of funds under item 16" § 20. The following amendments and supplements shall be made to the Ministry of Interior Act (prom., SG, issue 122 of 1997; issue 29 of 1998 - Decision № 3 of the Constitutional Court of 1998; amended, issue 70, 73 and 153 of 1998, issue 30 of 1999): 1. In art. 229: а) in para 1, items 3 and 4 shall be deleted; b) para 3 shall be amended as follows: "(3) Officers and sergeants shall receive their gross salary for the time of paid leave, in accordance with the amount of the salary as at the time of taking the leave." 2. Art. 230 shall be amended as follows: "Art. 230. Officers and sergeants shall be entitled to a leave for working under harmful conditions when performing social and civil obligations; for temporary incapacity due to pregnancy, birth giving and adoption, for raising a small child, for breast-feeding and feeding of small child, in case of death or serious illness of a parent, for two or more living children, for an admission examination for an educational institution, as well as to non-paid leave in accordance with the terms and conditions under the Labor Code." § 21. The following amendments shall be made to the Foreign Investment Act (prom., SG, issue 97 of 1997; amended, issue 99 of 1997; amended, issue 29 and 153 of 1998): 1. Art. 30 shall be amended as follows: "Art. 30. Workers and employees – foreign individuals, shall be insured in accordance with the provisions of the Bulgarian legislation." 2. Art. 32 shall be amended as follows: "Art. 32. The Bulgarian legislation shall apply to all issues regarding labor relations with an employer under art. 29, which are not regulated in the labor contract." § 22. (1) The Teachers Pension Fund established under the repealed Social Security Fund Act shall continue its existence until its transformation into a universal pension fund after 2009.
180 (2) The Supervisory Board of the National Social Security Institute, at the proposal by the Governor, shall approve the off-budget account of the Teachers Pension Fund. (3) Funds accrued in the Teachers Pension Fund shall be spent for payment of pensions and supplements in accordance with § 5, para 2 and 3. (4) Free funds of the Teachers Pension Fund may be used for purchase of government securities and municipal bonds and invested in deposit accounts in banks determined under art. 29. (5) The governor of the National Social Security Institute shall be the primary administrator of the funds of the Teachers Pension Fund, and the directors of territorial offices of the National Social Security Institute shall be secondary administrators. (6) The provisions of Section One of this Code regarding management, control and disputes, as well as administrative penal responsibility, shall also apply to the collection and spending of funds of the Teachers Pension Fund. § 22а. (New - SG, issue 120 of 2002) Contributions due for public social security, health insurance, Teachers Pension Fund, and supplementary mandatory pension insurance, by budget enterprises under § 1, item 1 of the additional provisions of the Accountancy Act, shall be charged, paid and reported in 2003 in accordance with the Act on the 2003 State Budget of the Republic of Bulgaria. § 23. This Code shall come into effect on January 1, 2000, with the exception of: 1. art. 20, para 3, coming into effect on January 1, 2001; 2. art. 64, para 3 and 4, coming into effect on January 1, 2004; 3. art. 127, para 1, coming into effect on January 1, 2002; 4. paragraph 15, item 3, coming into effect on the date of promulgation in the State Gazette ".
TRANSITION AND FINAL PROVISIONS to the Act on Amendment and Supplement to the Mandatory Social Insurance Code (SG, issue 64 of 2000, amended, issue 1 of 2001) § 39. Litigations through December 31, 1999, regarding claims for establishment of work injuries or occupational sicknesses, shall be reviewed by the courts in accordance with the provisions of the Civil Proceedings Code...... § 42. (Amended - SG, issue 1 of 2001) For 2001, the term under art. 140, para 3 shall be January 31, 2001......
181 TRANSITION AND FINAL PROVISIONS to the Act on Amendment and Supplement to the Mandatory Social Insurance Code (SG, issue 1 of 2002, in force from 1.01.2002, amended, issue 119 of 2002, in force from 1.01.2003) § 83. Art. 110, para 11 shall also apply to amounts collected pursuant to deficiency acts drawn up before January 1, 2000. § 84. (1) Claims and obligations for payment of benefits and unemployment assistance and for excess contributions to the Occupational Training and Unemployment Fund shall be transferred to the Unemployment Fund. (2) Cash benefits and unemployment assistance, granted through December 31, 2001, shall be paid in the amount and within the terms under the repealed Chapter Four, Section III of the Act on Unemployment Protection and Promotion of Employment. (3) (Amended - SG, issue 74 of 2002) Unemployment insurance for persons under art. 4, para 1, item 4, shall commence on January 1, 2003. § 85. (1) By December 31, 2003, inclusive, cash unemployment benefits under Chapter Four “a” shall be granted and paid by the Employment Agency. (2) By December 31, 2003, inclusive, cash unemployment benefits shall be granted, modified, refused, suspended, terminated, renewed, and re-granted by decision of the director of the territorial office of the Employment Agency. (3) By December 31, 2003, inclusive, cash unemployment benefits received in the cases under art. 54f and art. 54g, para 2, shall be reimbursed by decision of the director of the territorial office of the Employment Agency. (4) Decisions under para 2 and 3 shall be appealed in court in accordance with the provisions of the Administrative Proceedings Act. (5) Territorial offices of the Employment Agency shall be obliged to present to the respective territorial offices of the National Social Security Institute the entire information regarding persons receiving unemployment benefits and data regarding the amount of such benefits on a monthly basis. (6) Territorial offices of the National Social Security Institute shall verify the data and shall transfer the amounts due for payment of unemployment benefits and mailing fees to the respective territorial offices of the Employment Agency. (7) Territorial offices of the Employment Agency shall report to the respective territorial offices of the National Social Security Institute for payments made by the end of each month.
182 (8) By December 31, 2003, violations under Chapter Four “a”, committed by persons receiving unemployment benefits, shall be established by acts drawn up by officials designated by the director of the respective territorial office of the Employment Agency or by a person authorized by him/her, in accordance with the Administrative Violations and Penalties Act. § 86. The Minister of Labor and Social Policy and the Governor of the National Social Security Institute shall determine the scope and procedure for transferring of facilities and human resources from the Employment Agency to the National Social Security Institute, together with the respective maintenance. § 87. (Amended - SG, issue 119 of 2002) (1) By December 31, 2004, contributions to the Pensions Fund shall be paid on the cash benefit for the periods of temporary incapacity or pregnancy and birth-giving, which shall be recognized as length of service. In such cases, the contribution shall be equal to the portion due by the employer and shall be paid only by the employer. The same amount of contribution shall apply to persons paying contributions at their own account. Supplementary mandatory pension contributions shall not be paid on cash benefits for temporary incapacity or for pregnancy and birth giving. (2) For the period from January 1, 2000, to December 31, 2004, periods of temporary incapacity and pregnancy and birth giving covered by cash benefits and contributions due or paid under para 1, shall be recognized as length of participation in the system. (3) Upon granting of pension, if the period January 1, 2000 – December 31, 2004 is included, and the persons have received cash benefits for temporary incapacity and for pregnancy and birth-giving, the amount taken into consideration shall be the benefit on which contributions have been paid or are due. § 88. Amounts as per orders issued pursuant to § 10 and 11, shall be owed for the period until December 31, 2001. § 89. Pensions of teachers, paid from the Teachers’ Pension Fund and granted by December 31, 2001, shall be recalculated in accordance with § 5, para 2 of the transition and final provisions of the law. § 90. By December 31, 2002, the National Social Security Institute shall perform the activity under art. 123 for regular duty military staff, for government employees – officers, sergeants and civil persons under the Ministry of Interior Act, for persons under § 19 of the transition and final provisions of the Act on Amendment and Supplement of the Act on Implementation of Penalties (SG, issue 73 of 1998) and for employees of the National Intelligence Service......
183 § 95. By March 31, 2002, granting and payment of pensions may be performed against passports issued pursuant to the repealed Decree № 2772 on passports and address registration of citizens of the Republic of Bulgaria (prom., SG, issue 100 of 1980; amended issue 11 of 1998)......
TRANSITION AND FINAL PROVISIONS to the Financial Supervision Commission Act (SG, issue 8 of 2003, in force from 1.03.2003) ...... § 5. Regulations adopted for the implementation of the Public Offering of Securities Act, the Insurance Act, the Mandatory Social Insurance Code, the Supplementary Voluntary Pension Insurance Act, the Health Insurance Act, and the Act on Unemployment Protection and Employment Promotion, shall continue being into effect inasmuch as they do not contradict it...... § 10. The following amendments and supplements shall be made to the Mandatory Social Insurance Code (promulgated SG, issue 110 of 1999, issue 55 of 2000 – Decision № 5 of the Constitutional Court of 2000; amended, issue 64 of 2000, issue 1, 35 and 41 of 2001, issue 1, 10, 45, 74 and 112 of 2002): ...... 3. Everywhere in the Code, with the exception of the language of items 1 and 2, the name “State Insurance Supervision Agency” and the words “the Agency” and “the chairman of the State Insurance Supervision Agency” shall be replaced with “deputy-chairman responsible for Social Insurance Supervision Division of the Financial Supervision Commission "......
TRANSITION AND FINAL PROVISIONS to the Act on Amendment and Supplement to the Mandatory Social Insurance Code (SG, issue 67 of 2003)
§ 108. (1) Licenses issued by the State Insurance Supervision Agency to pension insurance companies and to actuaries for supplementary pension insurance prior to the coming into force of this law shall remain in effect. (2) Approvals issued for court entry of supplementary mandatory pension funds shall remain in force until official issuance of a permit for management of a pension fund.
184 (3) Proceedings before the Commission or the deputy-chairman of the Commission that have commenced prior to the coming into effect of this law shall continue under the conditions and in accordance with the provisions of this law. § 109. Within three months following the coming into effect of this law, the deputy-chairman of the Commission shall officially issue permits under art. 145 and 217 to companies under § 108 for the supplementary pension funds managed by them, without requiring the payment of a fee. § 110. (1) Companies under § 108 shall be obliged, within nine months following the coming into effect of this law, to bring their activity in compliance with its provisions and to present all the necessary documents to the Financial Supervision Commission. (2) Companies that fail to fulfill their obligation under para 1, shall be deprived of their license and proceedings for their enforced termination shall be initiated under art. 331. (3) The deputy-chairman of the Commission shall withhold the official license issued under § 109 from companies that fail to bring the activity of a supplementary pension fund under their management in conformity with this law. § 111. Companies under § 108 shall be obliged, within one year following the coming into effect of this law, to bring their capital in conformity with the requirements under art. 121c, para 2 and 4. By the expiration of this term, equity capital (capital base) under art. 121c, para 4 may not be less than BGN 1,500,000. § 112. The amount of the reserve under art. 193, para 8 shall be determined as a percentage of the assets of the supplementary pension funds managed by the company, and may not be smaller than: 1. for 2003 - 0,2 per cent; 2. for 2004 - 0,4 per cent; 3. for 2005 - 0,6 per cent; 4. for 2006 - 0,8 per cent; 5. for 2007 and after - 1 per cent. § 113. (1) Reporting of accrued amounts in insured persons’ individual accounts in units shall commence on July 1, 2004. (2) By July 1, 2004, insured persons’ individual accounts shall be maintained, and return shall be distributed, in the manner and in accordance with the procedure established prior to the coming into effect of this law. § 114. (1) From the coming into effect of this law, pension insurance companies managing supplementary voluntary pension funds, shall be obliged to terminate the implementation of pension schemes, which ensure coverage exceeding the amount accrued in the individual
185 account upon granting of disability and survivor pensions, by means of forming pooled accounts. (2) Pensions under pensions schemes under para 1, granted by the time of coming into effect of this law, shall continue being paid. (3) In cases when, according to the rules of operation of the pension insurance company, disability or survivor pensions are paid from pooled accounts under para 1, the current value of liabilities to pensioners, assumed through the time of coming into effect of this law, shall be set aside in a separate account. The pooled account shall be reduced by the amount of funds set aside. (4) The remaining amount after deduction of amounts under para 3, shall be distributed in the individual accounts of persons participating in the respective scheme, in proportion with the amount of contributions paid to the pooled accounts during the period of participation, under the condition that their social insurance contracts with the respective pension insurance company have not been interrupted as at the time of coming into effect of this law. (5) The mortality table, disability table, technical interest rate and other actuarial assumptions for the respective pension scheme, approved by the State Insurance Supervision Agency prior to the coming into effect of this law, shall be used for determining the amount of current value of liabilities to pensioners under para 3. § 115. Supplementary mandatory pension contributions paid in 2002 for persons under art. 4, para 1, item 4, shall remain as revenue to the public social security budget. § 116. Persons who have become eligible for old age and length of participation pension under art. 69, with the exception of persons under art. 127, para 5, shall become eligible for supplementary life pension from a universal pension fund upon completion of the age for eligibility for old age and length of participation under art. 68, para 1 - 3. § 117. Persons who have been granted disability pensions by December 31, 1999, and who have no length of participation after that date, may request recalculation of their pension in accordance with art. 75 - 77 and art. 79, if that is more favorable for them. The pension shall be determined from the date of application. § 118. Deferred liabilities by December 31, 2003, under art. 116 shall be collected with the legal interest. § 119. (1) By December 31, 2004, the Financial Supervision Commission shall adopt the regulations provided for under the Code. (2) Until the adoption of regulations under para 1, the regulations on the implementation of the Mandatory Social Insurance Code and the Supplementary Voluntary Pension Insurance Act shall remain in force inasmuch as they do not contradict this law.
186 ...... § 126. (1) Paragraphs 7, 8, 9 and 22 shall come into effect on January 1, 2003. (2) Paragraphs 18, 20, 21, 27 and item 2 of § 45 shall come into effect on January 1, 2004. (3) Paragraph 125 shall come into effect on July 1, 2003.
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