Ordinance No. 12 of 10.12.2003 on the Method and Procedure for Determining Minimum Yield in Managing Assets of Additional Voluntary Pension Funds, Covering the Difference to Minimum Yield, and Forming and Using Reserves for Guaranteeing Minimum Yield

ORDINANCE No. 12 of 10.12.2003 on the Method and Procedure for Determining the Minimum Yield in Managing the Assets of Funds for Additional Voluntary Pension Insurance, for Covering the Difference to the Minimum Yield, and for Forming and Using the Reserves for Guaranteeing the Minimum Yield

Pub. - State Gazette, No. 110 of 19.12.2003; in force from 01.01.2004; corr., No. 1 of 06.01.2004; supp., No. 17 of 02.03.2004; am., No. 29 of 05.04.2005; am. and supp., No. 57 of 13.07.2007; am. and supp., No. 50 of 15.06.2018, in force from 19.11.2018; am. and supp., No. 52 of 22.06.2021; am., No. 64 of 09.08.2022, in force from 09.08.2022; am., No. 20 of 11.03.2025, in force from the date of introduction of the euro in the Republic of Bulgaria

Adopted by Decision No. 12-N of 10.XII.2003 of the Commission for Financial Supervision

Chapter One
GENERAL PROVISIONS

Art. 1. (Supp. - SG, No. 50 of 2018, in force from 19.11.2018) This Ordinance regulates the method and procedure for:

1. determining the minimum yield in managing the assets of funds for additional voluntary pension insurance;
2. covering the difference to the minimum yield;
3. forming and using the reserves for guaranteeing the minimum yield of a fund for additional voluntary pension insurance and of a pension insurance company.
4. (new - SG, No. 50 of 2018, in force from 19.11.2018) releasing funds from the reserve of a pension insurance company.

Chapter Two
DETERMINATION OF THE MINIMUM YIELD IN MANAGING THE ASSETS OF A FUND FOR ADDITIONAL VOLUNTARY PENSION INSURANCE

Art. 2. (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) (1) (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) For the purposes of determining the minimum yield for each type of fund for additional voluntary pension insurance in accordance with Art. 193, para. 2 and 3 of the Social Security Code, the average achieved yield is determined as a weighted average yield. (2) For the purposes of this Ordinance, the weighted average yield is determined in accordance with item 1 of Annex No. 1 based on:

1. the relative share of the value of the net assets of each fund in the total sum of net assets of funds of the corresponding type, participating in the determination of the average yield, as of the last working day of the reporting quarter, and
2. the yield in percentage on an annual basis, achieved by the corresponding fund for the last 24-month period.
   (3) In cases where the relative share according to para. 2, item 1 of a fund exceeds 20 percent of the total sum of net assets of funds of the corresponding type, in determining the weighted average yield, the relative share of this fund is limited to 20 percent. The remainder, resulting from limiting the relative share to 20 percent, is distributed proportionally among the remaining funds, which have a relative share of less than 20 percent.

(4) The procedure according to para. 3 is repeated until the relative share of each of the funds after the distribution of the remainder reaches a level not exceeding 20 percent of the total sum of net assets.
(5) The yield according to para. 2, item 2 is determined in accordance with items 2 and 3 of Annex No. 1.

Chapter Three
FORMING RESERVES FOR GUARANTEEING THE MINIMUM YIELD

Section I
Reserve of a Fund for Additional Voluntary Pension Insurance

Art. 3. A reserve for guaranteeing the minimum yield is formed in each fund for additional voluntary pension insurance.

Art. 4. (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) (1) The funds of the reserve, formed under the conditions of Art. 193, para. 7 of the Social Security Code, represent a part of the net assets of the corresponding fund.
(2) The funds in the reserve are recorded and accumulated in a separate portfolio, which is kept in euros and in shares.
(3) (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) The allocation of funds to the reserve is carried out by the pension insurance company on the first working day following the day of announcement of the minimum yield by the Commission for Financial Supervision.

Art. 5. (Am. and supp. - SG, No. 57 of 2007.) (1) When allocating funds to the reserve, the number of shares in the reserve portfolio is increased and the value of one share is decreased.
(2) The amount of funds in euros, which are allocated to the reserve, is determined as of the last working day of the 24-month period in accordance with items 1, 2 and 3 of Annex No. 2.
(3) The number of shares, which are recorded in the reserve portfolio, is determined by dividing the amount of funds in euros, calculated in accordance with para. 2, by the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached (Annex No. 2, item 4). (4) (New - SG, No. 17 of 2004, am., No. 57 of 2007.) When, with the amount determined in accordance with para. 2, the value of the reserve exceeds the limit of 1% of the net assets of the fund as of the end of the working day preceding the day of allocation of the reserve, only the part that reaches the limit is allocated to the reserve. (5) (New - SG, No. 17 of 2004.) In the cases according to para. 4, the number of shares, which are recorded in the reserve portfolio, is determined as the ratio of the amount of allocated funds, with which the limit of 1% is reached, and the difference between:

1. the value of one share for the last working day of the 24-month period and
2. (supp. - SG, No. 57 of 2007.) the ratio of the amount of allocated funds, with which the limit of 1% is reached, and the number of shares as of the end of the working day preceding the last working day of the 24-month period.
   (6) (Previous para. 4 - SG, No. 17 of 2004, am., No. 57 of 2007.) The reduced value of one share according to para. 1 is determined as the ratio of the value of the net assets of the fund as of the end of the working day preceding the day of allocation of the reserve and the number of shares in the fund after the allocation of the reserve and is valid for the day of allocation of the reserve.

Art. 6. (Am. and supp. - SG, No. 52 of 2021, in force from 01.09.2021.)
Pension insurance companies submit to the Commission for Financial Supervision a report on the formation of a reserve for guaranteeing the minimum yield for each fund for additional voluntary pension insurance managed by them according to the form according to Annex No. 3. The report is submitted by the end of the working day on which the allocation of funds to the reserve was carried out.

Section II
(Effective from 19.12.2003.)
Reserve of a Pension Insurance Company

Art. 7. (Supp. - SG, No. 29 of 2005; am. and supp., No. 52 of 2021.) (1) (New - SG, No. 52 of 2021.) Every pension insurance company managing a fund for additional voluntary pension insurance creates with its own funds a reserve according to Art. 193, para. 8 of the Social Security Code as of the end of the month in which the first contribution to the fund was received. The size of the reserve at its creation is determined based on the value of the net assets of the fund as of the end of the last working day of the month in which the first contribution was received. (2) (Previous text of Art. 7, supp. - SG, No. 52 of 2021.) The size of the reserve according to Art. 193, para. 8 of the Social Security Code is also determined and maintained as a percentage of the value of the net assets of the corresponding fund as of the end of the last working day of each month, reduced by the funds in the portfolio of the reserve for guaranteeing the minimum yield of the fund.

Art. 7a. (New - SG, No. 52 of 2021.) (1) When the value of the assets, with which the reserve of the pension insurance company is covered, is lower than 1.5 percent of the net assets of the corresponding fund for additional voluntary pension insurance, reduced by the funds of the reserve according to Art. 193, para. 7 of the Social Security Code, after recalculating the size of its reserve as of the previous working day, the pension insurance company may take a decision to supplement it with its own funds. The decision specifies the specific amount of funds with which the assets covering the reserve are supplemented. (2) The supplementation is carried out as of the day to which the recalculation according to para. 1 refers.

Art. 8. (Am. - SG, No. 50 of 2018, in force from 19.11.2018; am., No. 52 of 2021.) (1) The pension insurance company accounts for the reserve for the corresponding fund for additional voluntary pension insurance through a separate accounting account.
(2) The assets, with which the reserve is covered, are accounted for through separate accounting accounts or through separate sub-accounts to the corresponding accounting account.

Art. 9. (Am. - SG, No. 52 of 2021, in force from 01.09.2021.)
Pension insurance companies submit to the Commission for Financial Supervision a report on the formation of a reserve for guaranteeing the minimum yield from own funds and attachments to it according to the form according to Annexes No. 4 - 8 by the 20th day of the month following the reporting month.

Chapter Four
COVERING THE DIFFERENCE TO THE MINIMUM YIELD AND USING THE RESERVES

Art. 10. (Supp. - SG, No. 57 of 2007.) (1) The amount of funds necessary for covering the difference to the minimum yield of a fund for additional voluntary pension insurance is determined as the product of:

1. (supp. - SG, No. 57 of 2007.) the number of shares in the fund as of the end of the working day preceding the last working day of the 24-month period, and
2. the difference between the value of one share, at which the minimum level of yield is reached and the value of one share for the last working day of the 24-month period.
   (2) The value of one share, at which the minimum level of yield is reached, represents the product of the value of one share for the last working day of the 24-month period and a coefficient determined in accordance with item 5 of Annex No. 2.

Art. 11. (1) Covering the difference to the minimum yield with funds from the reserve in a fund for additional voluntary pension insurance is carried out by reducing the number of shares from the reserve of the fund and increasing the value of one share.
(2) The number of shares, with which the reserve portfolio is reduced, is determined as the ratio of the amount of funds for covering the shortfall to the minimum yield to the value of one share according to Art. 10, para. 2.

Art. 12. (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) (1) The amount of funds, which the pension insurance company covers in the case according to Art. 193, para. 9, sentence 2 of the Social Security Code, is determined as the difference between the amount of funds according to Art. 10, para. 1 and the value covered by the reserve of the fund. (2) (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) Covering the difference according to para. 1 is carried out by transferring funds from the corresponding reserve of the company to the fund on the day of covering the shortfall to the minimum yield.

Art. 13. (Supp. - SG, No. 50 of 2018, in force from 19.11.2018.) In case there is no reserve formed in the fund for additional voluntary pension insurance, the amount of funds according to Art. 10, para. 1 is covered by the reserve of the pension insurance company managing it, and when the funds in its reserve are insufficient - also from the own funds of the company.

Art. 13a. (New - SG, No. 50 of 2018, in force from 19.11.2018.) (1) The amount of own funds, with which the pension insurance company covers the difference to the minimum yield in the cases according to Art. 193, para. 10 of the Social Security Code, is determined as the difference between the amount of funds according to Art. 10, para. 1 and the value covered by the reserve of the fund and by the reserve of the company. (2) Covering the difference according to para. 1 is carried out by transferring funds from the company to the fund on the day of covering the shortfall to the minimum yield.

Art. 14. (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) The value of one share of a fund for additional voluntary pension insurance after covering the difference to the minimum yield is determined, as the value of the net assets of the fund, in which the funds transferred from the managing company are included, is divided by the number of shares of the fund, reduced by the number of shares according to Art. 11, para. 2.

Art. 15. (Am. - SG, No. 52 of 2021, in force from 01.09.2021.) When funds from the reserve according to Art. 193, para. 7 of the Social Security Code are used for covering the difference to the minimum yield, the pension insurance company submits to the Commission for Financial Supervision a report according to the form according to Annex No. 9 by the end of the working day on which the covering of the difference to the minimum yield was carried out.

Chapter Four "a"
(New - SG, No. 50 of 2018, in force from 19.11.2018.)
RELEASE OF FUNDS FROM THE RESERVE OF THE PENSION INSURANCE COMPANY

Art. 15a. (New - SG, No. 50 of 2018, in force from 19.11.2018; am., No. 52 of 2021.) (1) When the value of the assets, with which the reserve of the pension insurance company is covered, exceeds 0.5 percent of the value of the net assets of the corresponding fund for additional voluntary pension insurance, reduced by the funds of the reserve according to Art. 193, para. 7 of the Social Security Code, after recalculating the size of its reserve as of the previous working day, the pension insurance company may take a decision to release funds from it. The decision specifies the specific amount of funds, which are released from the reserve of the company. (2) The release of funds from the reserve is carried out as of the day to which the recalculation according to para. 1 refers. (3) When, upon recalculating the reserve in accordance with Art. 193, para. 8 of the Social Security Code, the value of the assets, with which it is covered, exceeds 1.5 percent of the net assets of the corresponding fund for additional voluntary pension insurance, reduced by the funds of the reserve according to Art. 193, para. 7 of the Social Security Code, the pension insurance company releases the excess from its reserve to bring its size into accordance with this limitation. (4) The release of funds from the reserve in accordance with para. 3 is carried out by the end of the month to which the recalculation according to Art. 193, para. 8 of the Social Security Code refers.

Chapter Five
(New - SG, No. 17 of 2004.)
ADMINISTRATIVE PENALTY LIABILITY

Art. 16. (New - SG, No. 17 of 2004.) (1) Whoever commits or allows the commission of a violation of this Ordinance is punished in accordance with Art. 351 of the Social Security Code.
(2) Violations of the provisions of this Ordinance are established by acts, drawn up by officials authorized by the Deputy Chairman of the Commission for Financial Supervision, heading the "Insurance Supervision" Department.
(3) The penalty orders are issued by the Deputy Chairman of the Commission for Financial Supervision, heading the "Insurance Supervision" Department, or by an official authorized by him.
(4) The establishment of violations, the issuance, appeal and execution of the penalty orders are carried out in accordance with the Law on Administrative Violations and Penalties.

TRANSITIONAL AND FINAL PROVISIONS

§ 1. (Abol. - SG, No. 52 of 2021, in force from 01.09.2021.) .
§ 2. (Abol. - SG, No. 52 of 2021, in force from 01.09.2021.) .
§ 3. (Abol. - SG, No. 52 of 2021, in force from 01.09.2021.) .
§ 4. (Am. - SG, No. 50 of 2018, in force from 19.11.2018.) This Ordinance is issued on the basis of Art. 193, para. 13 of the Social Security Code and is adopted by Decision No. 12-N of 10.XII.2003 of the Commission for Financial Supervision.
§ 5. This Ordinance enters into force from 1 January 2004, with the exception of the provisions of Chapter Three, Section Two, which enter into force on the day of publication.
§ 6. The Commission for Financial Supervision gives instructions on the application of this Ordinance.

Annex No. 1 to Art. 2, para. 2 and 5
(Am. - SG, No. 29 of 2005, No. 57 of 2007.)

1. (Am. - SG, No. 29 of 2005.) The weighted average yield for the last 24-month period on an annual basis of funds for additional voluntary pension insurance of the corresponding type is calculated by the formula:

[Formula Image/Text Missing]

where:
Ra is the weighted average yield for the last 24-month period on an annual basis of funds for additional voluntary pension insurance of the corresponding type; Rgodi - the achieved yield of the i-th fund for additional voluntary pension insurance of the corresponding type for the last 24-month period on an annual basis; wi - the relative share of the i-th fund for additional voluntary pension insurance of the corresponding type, corrected in accordance with Art. 2, para. 3 and 4; n - the number of funds for additional voluntary pension insurance of the corresponding type, participating in the determination of the minimum yield.

2. (Am. - SG, No. 29 of 2005.) The achieved yield on an annual basis for the last 24-month period is calculated by the formula:

[Formula Image/Text Missing]

where:
Rgod is the achieved yield of the corresponding fund for the last 24-month period on an annual basis; R - the yield of the corresponding fund in percentage for the last 24-month period.

3. (am. - SG, No. 57 of 2007.) The yield of the corresponding fund in percentage for the last 24-month period is calculated by the formula:

[Formula Image/Text Missing]

where:
R is the yield of the corresponding fund in percentage for the last 24-month period; Ub - the value of one share of the corresponding fund for the last working day of the last 24-month period; Ua - the value of one share of the corresponding fund for the last working day of the month preceding the 24-month period.

Annex No. 2 to Art. 5, para. 2 and 3 and Art. 10, para. 2
(Am. - SG, No. 29 of 2005, No. 57 of 2007; am., No. 50 of 2018, in force from 19.11.2018; am., No. 20 of 2025, in force from the date of introduction of the euro in the Republic of Bulgaria)

1. The value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached, is calculated by the following formula:

[Formula Image/Text Missing]

where:
Umax is the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached; Ub - the value of one share of the corresponding fund for the last working day of the 24-month period; f - the coefficient, with which the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached, is determined.

2. The coefficient, with which the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached:

[Formula Image/Text Missing]

where:
f is the coefficient, with which the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached; Ra - the weighted average yield of funds for additional voluntary pension insurance of the corresponding type on an annual basis for the last 24-month period; Rgod - the achieved yield of the corresponding fund on an annual basis for the last 24-month period.

3. (Am. - SG, No. 29 of 2005, No. 57 of 2007.) The amount of funds in euros, which are allocated to the reserve for guaranteeing the minimum yield from a fund for additional voluntary pension insurance, is calculated by the following formula:

[Formula Image/Text Missing]

where:
ResEUR is the amount of funds in euros, which are allocated to the reserve for guaranteeing the minimum yield of the corresponding fund; Umax - the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached; Ub - the value of one share of the corresponding fund for the last working day of the last 24-month period; s - the number of shares in the corresponding fund as of the end of the working day preceding the last working day of the 24-month period.

4. (Am. - SG, No. 29 of 2005.) The number of shares, with which the shares in the reserve portfolio of the corresponding fund for additional voluntary pension insurance are increased, is calculated by the following formula:

[Formula Image/Text Missing]

where:
ResU is the number of shares, with which the shares in the reserve portfolio of the corresponding fund are increased; ResEUR - the amount of funds, which are allocated to the reserve for guaranteeing the minimum yield of the corresponding fund; Umax - the value of one share, at which the greater of the two values according to Art. 193, para. 7 of the Social Security Code is reached.

5. The coefficient for determining the value of one share, at which the minimum yield is reached in a fund for additional voluntary pension insurance, is calculated by the formula:

[Formula Image/Text Missing]

where:
g is the coefficient for determining the value of one share, at which the minimum yield is reached; Rmin - the minimum yield of funds for additional voluntary pension insurance of the corresponding type in percentage for the last 24-month period, announced by the Commission for Financial Supervision; Rgod - the achieved yield of the corresponding fund for the 24-month period on an annual basis.

Annex No. 3 to Art. 6
(Am. - SG, No. 57 of 2007; abol. and new, No. 52 of 2021, in force from 01.09.2021.)

Annex No. 4 to Art. 9
(New - SG, No. 52 of 2021, in force from 01.09.2021.)

Annex No. 5 to Art. 9
(New - SG, No. 52 of 2021, in force from 01.09.2021; am., No. 64 of 2022, in force from 09.08.2022)

Annex No. 6 to Art. 9
(New - SG, No. 52 of 2021, in force from 01.09.2021; am., No. 64 of 2022, in force from 09.08.2022)

Annex No. 7 to Art. 9
(New - SG, No. 52 of 2021, in force from 01.09.2021.)

Annex No. 8 to Art. 9
(New - SG, No. 52 of 2021, in force from 01.09.2021.)

Annex No. 9 to Art. 15
(New - SG, No. 52 of 2021, in force from 01.09.2021.)

Final Provisions to ORDINANCE No. 68 of 10.06.2021 on the Reserves of Pension Insurance Companies for Guaranteeing the Gross Size of Contributions in Universal Pension Funds (SG, No. 52 of 22.06.2021)

§ 1. In Ordinance No. 12 of 10.12.2003 on the Method and Procedure for Determining the Minimum Yield in Managing the Assets of Funds for Additional Voluntary Pension Insurance, for Covering the Difference to the Minimum Yield, and for Forming and Using the Reserves for Guaranteeing the Minimum Yield (pub., SG, No. 110 of 2003; corr., No. 1 of 2004; am. and supp., No. 17 of 2004, No. 29 of 2005, No. 57 of 2007 and No. 50 of 2018) the following changes and additions are made:

1. In Art. 6 after the word "submit" the words "to the Commission for Financial Supervision" are added and the words "according to the form, approved by the Deputy Chairman of the Commission for Financial Supervision, heading the "Insurance Supervision" Department" are replaced with "according to the form according to Annex No. 3".
2. In Art. 7:
   a) para. 1 is created:
   "(1) Every pension insurance company managing a fund for additional voluntary pension insurance creates with its own funds a reserve according to Art. 193, para. 8 of the Social Security Code as of the end of the month in which the first contribution to the fund was received. The size of the reserve at its creation is determined based on the value of the net assets of the fund as of the end of the last working day of the month in which the first contribution was received."; b) the current text becomes para. 2 and after the words "as of the end" the words "of the last working day" are added.
3. Art. 7a is created:
   "Art. 7a. (1) When the value of the assets, with which the reserve of the pension insurance company is covered, is lower than 1.5 percent of the net assets of the corresponding fund for additional voluntary pension insurance, reduced by the funds of the reserve according to Art. 193, para. 7 of the Social Security Code, after recalculating the size of its reserve as of the previous working day, the pension insurance company may take a decision to supplement it with its own funds. The decision specifies the specific amount of funds with which the assets covering the reserve are supplemented. (2) The supplementation is carried out as of the day to which the recalculation according to para. 1 refers."
4. In Art. 8:
   a) para. 1 is supplemented with the words "through a separate accounting account"; b) para. 2 is supplemented with the words "or through separate sub-accounts to the corresponding accounting account".
5. Art. 9 is supplemented with the words "and attachments to it according to the form according to Annexes No. 4 - 8".
6. In Art. 15 after the words "Annex No. 9" the words "by the end of the working day on which the covering of the difference to the minimum yield was carried out" are added.
7. Annex No. 3 is abolished and Annexes No. 4 - 9 are created.

§ 2. This Ordinance enters into force from 01.09.2021.