Decree No. 60 of 02.05.2018 on Requirements for Documents for Issuance of Pension License and Authorization to Manage a Pension Fund

DECREE NO. 60 OF 02.05.2018 ON THE REQUIREMENTS FOR THE DOCUMENTS UNDER ART. 122a, PARAGRAPH 1, ITEMS 6 AND 11, ART. 145, PARAGRAPH 1, ITEMS 4, 8, 9 AND 11, AND ART. 218, PARAGRAPH 2, ITEMS 3, 7, 8 AND 11 OF THE SOCIAL SECURITY CODE FOR THE ISSUANCE OF A PENSION LICENSE AND AN AUTHORIZATION TO MANAGE A PENSION FUND (Title amended - State Gazette, No. 60 of 2021) Published - State Gazette, No. 39 of 11.05.2018, effective from 19.11.2018; amended and supplemented, No. 60 of 20.07.2021; amended and supplemented, No. 70 of 20.08.2024; repealed, No. 71 of 07.08.2026, effective from 01.01.2027. Adopted with Decision No. 468-N of 02.05.2018 by the Commission for Financial Supervision

Art. 1. (Amended - State Gazette, No. 60 of 2021) This Decree determines the requirements for:

1. the business plan for the activities of a pension insurance company under Art. 122a, paragraph 1, item 6 of the Social Security Code (SSC);
2. the data on the information system of a pension insurance company under Art. 122a, paragraph 1, item 11 of the SSC;
3. (amended - State Gazette, No. 60 of 2021) the actuarial calculations for the proposed pension schemes from a supplementary pension insurance fund under Art. 145, paragraph 1, item 4 and Art. 218, paragraph 2, item 3 of the SSC;
4. (amended - State Gazette, No. 60 of 2021) the documents for the information system under Art. 145, paragraph 1, item 8 and Art. 218, paragraph 2, item 7 of the SSC;
5. (amended - State Gazette, No. 60 of 2021) the report on staff adequacy of a pension insurance company under Art. 145, paragraph 1, item 9 and Art. 218, paragraph 2, item 8 of the SSC;
6. (amended - State Gazette, No. 60 of 2021) the rules for the procedures for monitoring, measuring and managing the risk related to the investments of the funds managed by the pension insurance company under Art. 145, paragraph 1, item 11 and Art. 218, paragraph 2, item 11 of the SSC.

Art. 2. (Amended and supplemented - State Gazette, No. 60 of 2021; amended, No. 70 of 2024) The business plan for the activities of a pension insurance company is prepared for a three-year period and contains information regarding:

1. the company (name and general presentation);
2. the main goals of the company;
3. (supplemented - State Gazette, No. 60 of 2021) the supplementary pension insurance funds and the payment funds that the company intends to establish;
4. the market share that the company intends to cover with its services;
5. the proposed pension schemes and products;
6. (amended - State Gazette, No. 70 of 2024) the company's strategy for attracting clients;
7. the necessary financial, technical and other resources, as well as the company's ability to secure these resources;
8. the staffing of the activities for supplementary pension insurance;
9. the investment policy of the company;
10. the risks associated with the company's activities;
11. (amended - State Gazette, No. 60 of 2021) forecast data for a three-year period for the revenues and expenses of the company, for the number of persons in each of the funds planned for establishment and for the size of their net assets.

Art. 3. (1) The data on the information system of the pension insurance company under Art. 1, item 2 are presented in the form of a task for the development of an information system, a project for the development of an information system, a contract for the development of an information system with a detailed description of the subject matter of activity, or a description of a ready-made information system. (2) The task, project, contract or description must comply with Decree No. 47 of 2012 on the requirements for the information systems of pension insurance companies (State Gazette, No. 57 of 2012) (Decree No. 47 of 2012).

Art. 4. (Amended and supplemented - State Gazette, No. 60 of 2021; supplemented, No. 70 of 2024) (1) (New - State Gazette, No. 60 of 2021) The actuarial calculations under Art. 145, paragraph 1, item 4 of the SSC contain:

1. a description of the proposed pension schemes, including:
   a) the types of pensions and other payments from the respective pension scheme; b) the conditions for acquiring the right to a pension and other payments from the respective pension scheme; c) the procedure and method for calculating the amount of pensions and other payments under the respective pension scheme; d) the procedure and method for updating and recalculating pensions and other payments under the respective pension scheme;
2. a description of the accounting bases used in the actuarial calculations, which includes:
   a) the mortality table applied for determining the amount of life annuities; b) the technical interest rate used in the actuarial calculations, with justification for its determination;
3. expected size and structure (gender, age, insurance contributions according to the amount under Art. 157, paragraph 1 of the SSC) of the supplementary pension insurance fund for a period of three years and factors affecting its financial condition:
   a) forecasts for future insurance contributions and payments into the fund depending on the number and structure of insured persons and pensioners; b) assessment of future liabilities; c) risk analysis under different changes in economic and demographic factors;
4. procedure and method for determining the amount of minimum liquid assets of the supplementary pension insurance fund.
   (2) (Previous text of Art. 4, para. 1, amended and supplemented - State Gazette, No. 60 of 2021; supplemented, No. 70 of 2024) The actuarial calculations under Art. 218, paragraph 2, item 3 of the SSC contain:
5. a description of the proposed pension schemes, including:
   a) the types of pensions and other payments from the respective pension scheme; b) the conditions for acquiring the right to a pension and other payments from the respective pension scheme; c) the procedure and method for calculating the amount of pensions and other payments under the respective pension scheme; d) (new - State Gazette, No. 60 of 2021) the procedure and method for updating and recalculating pensions and other payments under the respective pension scheme; e) (new - State Gazette, No. 70 of 2024) all essential conditions from the agreement under Art. 246a, paragraph 1 of the SSC, including the amounts due to the insurer from the voluntary pension fund for PEPP, the risks covered by the insurer and the amounts due by it to the fund, PEPP beneficiaries and their heirs.
6. a description of the accounting bases used in the actuarial calculations, which includes:
   a) (supplemented - State Gazette, No. 70 of 2024) a description of the biometric mortality tables applied for determining the amount of life annuities for old age from a supplementary voluntary pension insurance fund, including:
   aa) a description of the population group on the basis of which the tables were developed (data from national-level observations, industry-level observations, own observations); bb) the toolset used for their development; cc) justification for their selection and suitability for actuarial calculations, and in case of using tables developed by other institutions, their name shall be indicated, as well as justification for the appropriateness of their application; b) (supplemented - State Gazette, No. 70 of 2024) a description in accordance with the requirements of letter "a" of the biometric mortality tables applied for determining the amount of life annuities for disability from a supplementary voluntary pension insurance fund, in cases where such pensions are provided for payment according to the regulations of the respective fund and the provisions of the SSC; c) the technical interest rate used in the actuarial calculations, with justification for its determination;
7. (supplemented - State Gazette, No. 70 of 2024) expected size and structure (gender, age, insurance contributions according to the insurer and periodicity) of the supplementary pension insurance fund for a period of three years and of each sub-fund under Art. 214a of the SSC, and factors affecting its financial condition:
   a) (amended - State Gazette, No. 70 of 2024) forecasts for future insurance contributions and payments into the fund depending on the number and structure of insured persons, persons insured under PEPP, pensioners and PEPP beneficiaries; b) assessment of future liabilities; c) risk analysis under different changes in economic and demographic factors;
8. (supplemented - State Gazette, No. 70 of 2024) procedure and method for determining the amount of minimum liquid assets of the supplementary pension insurance fund, respectively of each sub-fund under Art. 214a of the SSC.
   (2) (Amended - State Gazette, No. 70 of 2024) The biometric mortality tables under para. 1, item 2, letter "a" and para. 2, item 2, letters "a" and "b", are presented in separate appendices to the actuarial calculations separately for each fund from which the respective type of pension is paid, and are developed by individual ages, containing:
9. age in completed years;
10. order of survivors, order of deaths, order of survival probabilities, order of death probabilities;
11. average remaining life expectancy;
12. discounted and commutative numbers.
    [Note: The last paragraph of Art. 4 with current numbering two remains unaffected by the amendments introduced with State Gazette, No. 60 of 20.07.2021 with § 9 of the Transitional and Final Provisions of Decree No. 70 of 29.06.2021 on the requirements for payment funds]

Art. 5. The documents under Art. 1, item 4 contain a description of:

1. the installed hardware equipment - server systems, workstations, structured cabling, other technical means, such as fire alarm systems, security systems, power supply, climate installations, uninterruptible power supplies;
2. the available system and application software;
3. the main functionalities of the information system and the electronic services provided by it;
4. the software, hardware and other technical solutions used, including those listed in items 1 and 2, to ensure compliance with the requirements of the standard under Art. 3, paragraph 1 of Decree No. 47 of 2012;
5. the official email address for contacts and the IP address of the server through which the exchange of official correspondence of the pension insurance company is carried out;
6. the website of the pension insurance company and its compliance with the requirements of Art. 12 of Decree No. 47 of 2012;
7. other planned actions for the development of the information system and ensuring information security.

Art. 6. The report on staff adequacy of a pension insurance company contains information regarding:

1. the management system;
2. the established structural units, including territorial offices;
3. number of personnel, positions and qualifications according to the staffing schedule.

Art. 7. (Supplemented - State Gazette, No. 60 of 2021) The rules for the procedures for monitoring, measuring and managing the risk related to the investments of a supplementary pension insurance fund and a payment fund contain:

1. the identified investment risks;
2. the methods for measuring the identified risks, including models for quantitative measurement of at least interest rate risk, currency risk, price risk, credit risk, liquidity risk, concentration risk and risk in hedging transactions;
3. threshold values of monitored and measured risks;
4. the set of data for monitoring the risks under item 1 and applying the methods under item 2 and the periodicity of providing information about them to the risk management unit;
5. the procedures for identifying, measuring, analyzing and managing risks, including:
   a) the actions foreseen to avoid mechanical reliance on credit ratings; b) the actions taken when exceeding the threshold values under item 3 or upon establishing excessive exposure to risk; c) the use of transactions under Art. 179b, paragraph 1 of the SSC (hedging transactions), including:
   aa) objectives of use and level of hedging of investment risks; bb) the risks to be hedged and the risks associated with hedging transactions; cc) types of transactions and underlying assets of hedging instruments; dd) methodology used for measuring the risk associated with hedging instruments; ee) maximum size of risk exposure; ff) methods used for assessing the effectiveness of hedging and sources of information for this assessment; gg) periodicity of preparing analyses on the impact of hedging transactions on the risk profile of the fund portfolio;
6. the units or persons responsible for implementing the foreseen procedures and exercising control;
7. a system for documenting the followed procedures.

Final Provisions
§ 1. This Decree is issued on the basis of Art. 122a, paragraph 5, Art. 145, paragraph 4 and Art. 218, paragraph 5 of the SSC and was adopted with Decision No. 468-N of 2 May 2018 by the Commission for Financial Supervision.

§ 2. This Decree enters into force from 19.11.2018.

Chairman: Karina Karaivanova

Transitional and Final Provisions to DECREE NO. 70 OF 29.06.2021 ON THE REQUIREMENTS FOR PAYMENT FUNDS (State Gazette, No. 60 of 20.07.2021)

§ 9. In Decree No. 60 of 2.05.2018 on the requirements for the documents under Art. 122a, paragraph 1, items 6 and 11, Art. 145, paragraph 1, items 3, 7, 8 and 10 and Art. 218, paragraph 2, items 3, 7, 8 and 11 of the Social Security Code for the issuance of a pension license and an authorization to manage a pension fund (State Gazette, No. 39 of 2018) the following amendments and supplements are made:

1. In the title of the Decree the words "Art. 145, paragraph 1, items 3, 7, 8 and 10" are replaced with "Art. 145, paragraph 1, items 4, 8, 9 and 11".
2. In Art. 1:
   a) in item 3 the words "Art. 145, paragraph 1, item 3" are replaced with "Art. 145, paragraph 1, item 4"; b) in item 4 the words "Art. 145, paragraph 1, item 7" are replaced with "Art. 145, paragraph 1, item 8"; c) in item 5 the words "Art. 145, paragraph 1, item 8" are replaced with "Art. 145, paragraph 1, item 9"; d) in item 6 the words "supplementary pension insurance fund" are replaced with "funds managed by the pension insurance company", and the words "Art. 145, paragraph 1, item 10" are replaced with "Art. 145, paragraph 1, item 11".
3. In Art. 2:
   a) after the word "funds" in item 3, "for supplementary pension insurance and payment funds" is added; b) item 11 is amended as follows:
   "11. forecast data for a three-year period for the revenues and expenses of the company, for the number of persons in each of the funds planned for establishment and for the size of their net assets."
4. In Art. 4:
   a) para. 1 is created:
   "(1) The actuarial calculations under Art. 145, paragraph 1, item 4 of the SSC contain:
5. a description of the proposed pension schemes, including:
   a) the types of pensions and other payments from the respective pension scheme; b) the conditions for acquiring the right to a pension and other payments from the respective pension scheme; c) the procedure and method for calculating the amount of pensions and other payments under the respective pension scheme; d) the procedure and method for updating and recalculating pensions and other payments under the respective pension scheme;
6. a description of the accounting bases used in the actuarial calculations, which includes:
   a) the mortality table applied for determining the amount of life annuities; b) the technical interest rate used in the actuarial calculations, with justification for its determination;
7. expected size and structure (gender, age, insurance contributions according to the amount under Art. 157, paragraph 1 of the SSC) of the supplementary pension insurance fund for a period of three years and factors affecting its financial condition:
   a) forecasts for future insurance contributions and payments into the fund depending on the number and structure of insured persons and pensioners; b) assessment of future liabilities; c) risk analysis under different changes in economic and demographic factors;
8. procedure and method for determining the amount of minimum liquid assets of the supplementary pension insurance fund.";
   b) the existing text of Art. 4 becomes para. 2 and the following amendments and supplements are made therein:
   aa) in the main text the words "Art. 1, item 3" are replaced with "Art. 218, paragraph 2 of the SSC"; bb) letter "g" is created:
   "g) the procedure and method for updating and recalculating pensions and other payments under the respective pension scheme;".
9. In Art. 7 after the words "supplementary pension insurance fund" the words "and of a payment fund" are added.

Transitional and Final Provisions to Decree on Amendment and Supplement of Decree No. 63 of 8.11.2018 on the Requirements for the Content, Periodicity of Preparation and Deadlines for Submission of Reports for Supervisory Purposes of Pension Insurance Companies and Funds Managed by Them (State Gazette, No. 70 of 20.08.2024)

§ 23. In Decree No. 60 of 2.05.2018 on the requirements for the documents under Art. 122a, paragraph 1, items 6 and 11, Art. 145, paragraph 1, items 4, 8, 9 and 11 and Art. 218, paragraph 2, items 3, 7, 8 and 11 of the Social Security Code for the issuance of a pension license and an authorization to manage a pension fund (published, State Gazette, No. 39 of 2018; amended and supplemented, No. 60 of 2021) the following amendments and supplements are made:

1. In Art. 2, item 6 the words "insured persons" are replaced with "clients".
2. In Art. 4, para. 2:
   a) in the text before item 1 after the words "Art. 218, paragraph 2" a comma is placed and "item 3" is added; b) in item 1 letter "d" is created:
   "d) all essential conditions from the agreement under Art. 246a, paragraph 1 of the SSC, including the amounts due to the insurer from the voluntary pension fund for PEPP, the risks covered by the insurer and the amounts due by it to the fund, PEPP beneficiaries and their heirs."; c) in item 2:
   aa) in letter "a" after the word "pensions" the words "for old age from a supplementary voluntary pension insurance fund" are added; bb) in letter "b" after the word "disability" the words "from a supplementary voluntary pension insurance fund" are added; g) in item 3:
   aa) in the text before item 1 after the words "three years" the words "and of each sub-fund under Art. 214a of the SSC" are added; bb) in letter "a" the words "insured persons and pensioners" are replaced with "insured persons, persons insured under PEPP, pensioners and PEPP beneficiaries"; d) in item 4 a comma is placed at the end and the words "respectively of each sub-fund under Art. 214a of the SSC" are added; e) in para. 3 the words "para. 1, item 2, letters 'a' and 'b'" are replaced with "para. 1, item 2, letter 'a' and para. 2, item 2, letters 'a' and 'b'".