Pension funds defend second pillar against Kostadinov’s claims

The Bulgarian Association of Supplementary Voluntary Pension Insurance Companies rejected claims by Vazrazhdane party leader Kostadin Kostadinov that the second pension pillar operates as a fraudulent scheme. Member organizations stated that mandatory pension funds represent secure personal savings that generate returns and transfer to heirs rather than functioning as pyramids.

Professional fund managers earned approximately 5 billion leva for account holders during the past three years alone, bringing total accumulated assets to nearly 30 billion leva since the system’s inception. State regulators and custodian banks conduct daily oversight of these investments under transparent rules, according to the association’s statement. Eliminating the second pillar would constitute nationalization comparable to seizing bank deposits and would mirror authoritarian practices from Bulgaria’s past rather than democratic market economics.

Disbanding capital funds would fail to address first-pillar deficits while depriving workers and beneficiaries of future income, the industry group argued. Current pension payouts remain modest because accounts have operated only halfway through their intended 40-year lifecycle, and contributions remained at 5 percent instead of the originally planned 7 percent rate. The association opposed creating divisions between solidarity-based and capital-based pension systems designed to complement each other for retirees’ benefit.