A seminar with a target group of persons supervised by the FSC is forthcoming, and the topics are related to the application of the LMML, the LMFT and the acts on their implementation.

The Financial Supervision Commission (FSC) plans to organize and conduct an online training seminar for entities supervised by the FSC on topics related to the implementation of measures to prevent money laundering and terrorist financing provided for in the Law on Measures against Money Laundering (LMML), the Law on Measures against Financing of Terrorism (LMFT) and the acts on their implementation, as well as the identified risks of money laundering and terrorist financing, published in the National AML/CFT Risk Assessment published on 19.01.2020 in the Republic of Bulgaria. Issues related to the forthcoming evaluation visit related to the evaluation of the Republic of Bulgaria within the Fifth Evaluation Round of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism at the Council of Europe (MONEYVAL) will also be discussed.

The seminar will be opened by Boyko Atanasov, Chairman of the FSC and will be held on 26 August 2021 /Thursday/, from 10:00 to 15:30, through the Microsoft Teams platform, for the following supervised persons:

 investment intermediaries (obligated persons under Art. 4, item 8 of the LMML);

 collective investment schemes and other collective investment undertakings (obligated persons under Art. 4, item 9 of the LMML);

 management companies and persons managing alternative investment funds (obligated persons under Art. 4, item 10 of the LMML);

 pension insurance companies (obligated persons under Art. 4, item 11 of the LMML);

 insurers and insurance intermediaries based in the Republic of Bulgaria who have received a license under the terms and conditions of the Insurance Code when operating in one or more of the classes of insurance under Section I of Appendix No. 1 to the Insurance Code (obligated persons under Art. 4, item 5 of the LMML);

 insurers and insurance intermediaries licensed in another Member State operating on the territory of the Republic of Bulgaria when operating under one or more of the classes of insurance under Section I of Appendix No. 1 to the Insurance Code (obligated persons under Art. 4, item 5 of the LMML);

 insurers based in countries other than a Member State licensed by the Financial Supervision Commission to operate in the Republic of Bulgaria through a branch when operating in one or more of the classes of insurance under Section I of Appendix No. 1 to the Insurance Code (obligated persons under Article 4, item 5 of the LMML).

You can confirm your participation by e-mail: lenkova_rd@fsc.bg, no later than 25.08.2021 /Wednesday/ until 12:00.

After confirming your participation you will receive a link to the event.

The Financial Supervision Commission considered and adopted at the first vote amendments to Ordinance No. 52 of 21.10.2016 on the procedure and manner of deducting the investment fee collected by pension insurance companies in the management of supplementary mandatory pension insurance funds They are dictated by adopted amendments to Art. 201, para. 1, item 3 and para. 2 of the Social Insurance Code (promulgated, SG, 19 /05.03.2021), which introduced a fee collected by the pension insurance companies in the management of the payment funds. The amendments to the ordinance are intended to regulate the procedure for deducting the fee calculated on the net asset value of the payment funds collected by the pension insurance companies in the management of these funds.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 22.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance amending Ordinance No. 63 of 8 November 2018 on the requirements for the content, periodicity of preparation and deadlines for submission of reports for supervisory purposes of pension insurance companies and the funds managed by them. The project aims to comply with the amendments made to the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021).

Art. 185 of the Social Insurance Code stipulates that the requirements for the content, periodicity of preparation and deadlines for submission of reports for supervisory purposes of the payment funds are regulated by an ordinance of the Financial Supervision Commission (FSC). In this regard, the draft ordinance provides for the creation of templates of monthly and annual reports for the payments funds of lifelong pensions and the payment funds, which are submitted to the FSC. The reports are expected to be submitted within the same deadlines as the reports for supervisory purposes of the pension insurance companies and the supplementary pension funds. The adopted approach is to present the reports to the supervisory body in electronic form, signed with a qualified electronic signature, through an electronic portal maintained by the FSC. In accordance with the amendments to the SIC, the current models of reports for supervisory purposes have been updated.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 29.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance to amend and supplement Ordinance No. 31 of 02.08.2006 on the terms and procedure for conducting an examination and for recognizing the legal capacity of a responsible actuary, for recognizing the legal capacity acquired outside the Republic of Bulgaria, for the form of the actuarial certification, the form and content of the actuarial report and the references under the Insurance Code which the responsible actuary certifies, as well as for the form and mandatory content of the annual actuarial report under the Social Insurance Code, in order to bring it in line with the changes made with the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021).

The ordinance updates the requirements to the annual actuarial report for each supplementary pension fund and its annexes in view of the changes in the legal level, providing for the payment of supplementary lifelong old-age pensions and deferred payments in case of acquired pension rights to be made by separate payment funds, not from universal pension funds. In connection with the establishment of the funds for payment of lifelong pensions and the funds for deferred payments, the obligatory content of the actuarial reports prepared for these funds is regulated. This provides the necessary information on the state of the payment funds and ensures their proper functioning to meet the obligations to pensioners, persons receiving deferred payments and their heirs and the supervision of this activity.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 29.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance on the requirements for payment funds.

The Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021) stipulates that the payment of pensions and deferred payments in case of acquired pension rights from universal pension funds is carried out by the funds for payment of lifelong pensions, respectively the funds for deferred payments (payment funds). The requirements for the formation and maintenance of the funds for payment of lifelong pensions and the funds for deferred payments, the calculation of the required amount in them and its excess, the supplementation of the funds and the release of funds from them are determined by an ordinance of the Financial Supervision Commission.

According to the Social Insurance Code, the main source for the formation of funds for payments are the funds in the individual accounts of the persons insured in a universal pension fund, with whom pension contracts, respectively contracts for deferred payment have been concluded. In view of the daily calculation of the value of one unit in the universal pension fund and in order to avoid a difference between the receipts in the payment funds and the obligations arising from the concluded pension contracts and deferred payment contracts, the ordinance stipulates that as a rule the accounts of the persons concluding such contracts shall be transferred to the payment funds on the day of concluding the respective contract. In order to provide sufficient time for the transfer of funds, it is possible to perform this action on the first working day after the conclusion of the contract by accruing the obligation on the day of the contract.

The law also gives the right to pensioners and persons with deferred payments to request recalculation of the received pension or deferred payment with contributions received after the conclusion of the respective contract, e.g. if the person has continued to work or as a result of the late transfer of contributions for previous months. In these cases, the transfer of funds from the accounts is made on the date provided by the legislator – the first day of the month following the month of submission of the request for recalculation, respectively on the first working day when it is a non-working day.

The ordinance regulates the required amount of the payment funds, amounting to the obligations to pensioners, the persons with deferred payments and their heirs, including the respective analytical account for the undistributed investment income of the funds received in the funds from individual accounts, intended for storage of the amount of payments in case of failure to achieve the expected return. According to the financial and economic nature and property nature of an analytical account provided for in the Social Insurance Code, the ordinance stipulates that a resource (funds) will be available for the amount / value reflected in the account, which should not be used for purposes other than updating of payments and which does not materialize financial legal relations with the pension insurance company. In other words, this account should be used to set aside funds that can be used specifically for the purpose of updating payments, and these funds do not have a functional link with the pension insurance company.

The ordinance also stipulates the deadlines for supplementing the funds for making payments, which is done from the reserves provided by law and, if necessary, with additional own funds of the pension insurance company, and the release of the excess from them. The procedure for release of funds regulated by the draft is in line with the procedure for the reserves for minimum profitability in the funds for supplementary mandatory pension insurance and the reserves for guaranteeing the gross amount of contributions to the universal pension funds.

The ordinance envisages changes in other current ordinances of the Financial Supervision Commission, which aim to harmonize and synchronize the regulations with the Social Insurance Code.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 24.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance No. 10 on the requirements for the solvency margin and own funds of the pension insurance company, its recovery program and the minimum liquid assets of the company and the funds managed by it.

With the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021) significant changes have been made in the regulation of the payment of pensions from the universal pension funds and the related requirements to the capital of the pension insurance companies, according to the law, a number of these requirements should be developed or fully regulated by an ordinance of the Financial Supervision Commission.

The draft ordinance regulates the structure and the elements of the own funds of the pension insurance companies according to their purpose for covering the solvency margin. The fact that these funds serve as an additional guarantee for the fulfilment of the obligations for the payment of additional lifelong old-age pensions and deferred payments implies that the elements that make them up include only the funds that are reflected in the financial statements and are fully available to the respective company for use without restrictions to cover operating losses. In view of the purpose of own funds covering the solvency margin, they are offset by intangible assets that cannot be used to meet liabilities, accumulated losses, expected costs, etc.

The technical requirements in connection with the calculation of the solvency margin, which according to the Social Insurance Code is determined on the basis of the capitalized value of pensions and deferred payments with assumed guarantees, are regulated in detail. According to actuarial science, this value is determined on the basis of the present value of the commitments for these payments. In order to take into account the most recent mortality data and investment performance expectations, the mortality table published by the National Statistical Institute and the technical interest rate set by the pension insurance company as of the date of the pension or deferred payment calculation are used to determine this value.

Given the purpose of own funds covering the solvency margin of the pension insurance company, the ordinance requires them to be invested by it with the care of a good trader in compliance with the principles of quality, reliability, liquidity, profitability and diversification. The diversification of investments is also ensured through specific quantitative restrictions on the respective categories of instruments and investments in one issuer, explicitly specified in the Social Insurance Code.

The ordinance develops the requirements for the liquid assets of the pension insurance company and the funds managed by it, so as to ensure its ability to meet its current and expected obligations. The changes in the payment of the funds from the universal pension funds have been taken into account where after concluding a pension contract or a deferred payment contract the payment is not made by the pension fund, and the funds in the individual account of the person are transferred to the payment fund. In view of this, with regard to universal pension funds, it is required to maintain liquid assets, which, in addition to current liabilities, also take into account the funds transferred to the payment funds in the previous month.

The ordinance also regulates the requirements to the recovery programs of the pension insurance companies on the basis of the current regulation, adapted in accordance with the changes at the legal level. In connection with the amendments to the Social Insurance Code, the ordinance also updates the provisions of Ordinance No. 17 of 7.07.2004 on the documents required for issuing a permit for transformation of a pension insurance company and a supplementary pension insurance fund and on the requirements to the plans under Art. 327, para. 1, item 3 and Art. 336, para. 1 of the Social Insurance Code.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 24.06.2021 inclusive.

The Financial Supervision Commission considered and adopted at the first vote a draft Ordinance amending Ordinance No. 9 of 19 November 2003 on the manner and procedure for assessing the assets and liabilities of the supplementary pension funds and the pension insurance company, the net asset value of the fund, for calculating and declaring the value of one unit, for calculating and comparing the return on investment property and for the requirements for keeping individual accounts in order to comply with the changes made by the Act to Amend and Supplement the Social Insurance Code (promulgated SG No. 19/2021).

The draft ordinance regulates the methods for valuation of financial instruments in which the funds of the payment funds may be invested, and provides for the valuation to be carried out in accordance with the principles adopted for valuation of the same types of instruments in which the supplementary pension insurance funds can invest.

The draft ordinance regulates how the net asset value of a payment fund is determined and introduces the requirements for keeping the analytical accounts of the persons in a deferred payment fund. The scope and structure of the information to be contained in these accounts, including the transactions to be reflected in it, have been determined.

Other changes to the ordinance have been proposed in order to bring it into line with the amendments to the Social Insurance Code.

The draft and the reasons for it are published on the website of the Financial Supervision Commission in the section Regulations, subsection Public Consultations, and the deadline for submitting comments and proposals on the draft is 14 days from its publication until 24.06.2021 inclusive.

The Financial Supervision Commission conducted the XIX edition of the educational program: The Non-Banking Financial Sector in Bulgaria in partnership with the Ministry of Education and Science (MES) and the Atanas Burov Foundation.

The program is specifically aimed at students and teachers in secondary schools of economics. For the second year, the event took place online in the form of three webinars on 8, 15 and 22 October. On the three consecutive Fridays in October, the following topics were presented: Social Insurance Market, Insurance Market and Capital Market. For the first time, students were introduced to several new topics, namely Consumer Protection, Fintech Business Models and Cybersecurity and Cryptocurrencies.

The educational program welcomed the presentations of experts from the FSC and experienced specialists from both the private and public sectors. Vladimir Tashkov – Executive Director of the Atanas Burov Foundation presented to the participants the activities of the Atanas Burov Foundation and the opportunity to apply for student scholarships. The Association of Bulgarian Insurers presented the essence of insurance, types of insurance and the insurance market in Bulgaria. The students also got acquainted with the activities of the Financial Supervision Commission which regulates the non-banking financial sector in Bulgaria.

The lecture was followed by a practical step in which the participants virtually visited a pension insurance and insurance company, an investment firm and the Bulgarian Stock Exchange, where they witnessed how the capital market works, understood the nature of insurance and why pension insurance is necessary.

During the opening of the educational program, Ms. Denitsa Kirova – Secretary General of the Financial Supervision Commission thanked all partners involved in the program. In her address to the participants, she noted that the implementation of this educational program is especially important for the Financial Supervision Commission, because it presents the functioning of sectors that are extremely important for the Bulgarian economy.

“I am addressing you – students, and I would urge you to be alert, to discover the world constantly and with curiosity, to constantly seek answers to the questions that concern you. „I believe that the educational program “Non-Banking Financial Sector in Bulgaria” will give you valuable knowledge and will answer many of your questions,” said Ms. Kirova.

Thirty students and twelve teachers from secondary vocational schools with economic and financial profile from the cities of Blagoevgrad, Burgas, Varna, Veliko Tarnovo, Vidin, Velingrad, Gorna Oryahovitsa, Gotse Delchev, Dryanovo, Kyustendil, Kardzhali, Montana, Pazardzhik, Petrich, Pernik, Plovdiv, Razgrad, Ruse, Svishtov, Silistra, Sliven, Smolyan, Sofia, Stara Zagora, Haskovo and Shumen took part in the XIX edition of the educational program.

The program „Non-Banking Financial Sector in Bulgaria“ is one of a kind for our country. It is one of the longest-standing initiatives of the Financial Supervision Commission, launched since its inception and has become a true tradition. The aim of the educational program is for students from secondary vocational schools in Bulgaria to get an excellent opportunity for career guidance in the non-banking financial sector, as well as to increase their knowledge and financial literacy, this is one of the strategic goals of the Commission – consumer protection through financial literacy.

The program ended on October 22, after the third webinar, with a virtual presentation of certificates to participants.