Decree No. 69 of 15.06.2021 on Technical Interest Rates under the Social Security Code and Formulas for Calculating Additional Life Old-Age Pensions

DECREE No. 69 of 15.06.2021 on the technical interest rates under Art. 169, para. 1, item 3 and para. 8, item 3 of the Social Security Code and the formulas for calculating the additional life old-age pensions Pub. - State Gazette, No. 53 of 25.06.2021 Adopted by Decision No. 217-N of 15.06.2021 of the Commission for Financial Supervision

Art. 1. This Decree determines:

1. the requirements for the technical interest rates under Art. 169, para. 1, item 3 and para. 8, item 3 of the Social Security Code (SSC) and their maximum size;
2. the formulas for calculating the additional life old-age pensions under Art. 167, para. 4 of the SSC in the manner prescribed by Art. 169, para. 1 and 4 of the SSC.

Art. 2. (1) The technical interest rate for determining the additional life old-age pension shall not be higher than the long-term interest rate for assessing the degree of convergence (monthly data) published by the Bulgarian National Bank, averaged over the last seven years. (2) The technical interest rate for determining the term professional pension for early retirement shall not be higher than 150 percent of the long-term interest rate for assessing the degree of convergence (monthly data) published by the Bulgarian National Bank, averaged over the last seven years. (3) When determining the technical interest rates under para. 1 or 2 during the first half of the year, the maximum size calculated based on the data for the long-term interest rate for assessing the degree of convergence as of 30 September of the previous year shall be applied, and during the second half of the year - based on the data as of 31 March of the current year. (4) The specific sizes of the technical interest rates under para. 1 and 2 are determined on the basis of the principle of prudence and in compliance with the requirements of Art. 169, para. 9 of the SSC. When the maximum size determined under para. 1 or 2 is a negative value, the corresponding technical interest rate shall be determined at 0%.

Art. 3. (1) The additional life old-age pension without additional conditions is calculated using the following formula:

[Formula Image/Text Placeholder]

where:
P is the pension amount;
S - the amount of funds from which the pension is calculated, determined under para. 4 or 5;

[Formula Image/Text Placeholder], when the first pension is due for the month of concluding the pension contract or for a month prior to it;

[Formula Image/Text Placeholder], when the first pension is due for the month following the month of concluding the pension contract;

[Formula Image/Text Placeholder], when the first pension is due for a month following the month following the month of concluding the pension contract; x - the age of the person in whole years as of the date of concluding the pension contract, rounded up if six or more months have passed since the last whole year; x+d - the age of the person in whole years as of the first day of the month for which the first payment is due, rounded up if six or more months have passed since the last whole year; k - the number of payments due as of the date of concluding the pension contract; Dx - discounted numbers representing the present value of future survivors at age x after applying the approved technical interest rate:

[Formula Image/Text Placeholder]; r - technical interest rate, approved in the manner prescribed by Art. 169, para. 9 - 12 of the SSC; lx - number of survivors at age x, according to the mortality table and average remaining life expectancy under Art. 169, para. 1, item 2 of the SSC:
pi - survival probabilities from the mortality table; l0 - accepted initial number of persons at age 0 in the hypothetical cohort of the mortality table; Dx+d - discounted numbers representing the present value of future survivors at age x+d after applying the approved technical interest rate, with the formula for Dx applied accordingly; Nx - commutative numbers representing the sum of discounted numbers of survivors from age x to the maximum age in the mortality table:
max - the maximum age in the mortality table;
Nx+d - commutative numbers representing the sum of discounted numbers of survivors from age x+d to the maximum age in the mortality table, with the formula for Nx applied accordingly.

(2) The additional life old-age pension with a guaranteed payment period is calculated using the following formula:

[Formula Image/Text Placeholder],

where:
P is the pension amount;

[Formula Image/Text Placeholder], when the first pension is due for the month of concluding the pension contract or for a month prior to it and the technical interest rate (r) exceeds 0;

[Formula Image/Text Placeholder], when the first pension is due for the month following the month of concluding the pension contract and the technical interest rate (r) exceeds 0;

[Formula Image/Text Placeholder], when the first pension is due for a month following the month following the month of concluding the pension contract and the technical interest rate (r) exceeds 0;

[Formula Image/Text Placeholder], when the technical interest rate (r) is 0; k - the number of payments due as of the date of concluding the pension contract or the number of months by which payment is deferred, whichever is applicable; x+d - the age of the person in whole years as of the first day of the month for which the first payment is due after the expiration of the guaranteed period, rounded up if six or more months have passed since the last whole year; n - guaranteed period (in years); The indicators r, x, S, Nx, Nx+d, Dx, Dx+d and v are determined in accordance with para. 1.

(3) The additional life old-age pension, including the deferred payment of part of the funds until the age chosen by the pensioner is reached, is calculated using the following formula:

[Formula Image/Text Placeholder],

where:
P is the pension amount;
Ti - discounted amount of the i-th payment with discount factor υ, where payments due as of the date of concluding the pension contract are not discounted:
Hi - amount of the i-th payment; bi - number of months from the date of concluding the pension contract to the i-th payment; m - number of deferred payments according to the agreement with the person; x+d - the age of the person in whole years as of the first day of the month for which the first life annuity payment is due, rounded up if six or more months have passed since the last whole year; The indicators S, x, υ, Nx, Nx+d, Dx and Dx+d are determined in accordance with para. 1.

(4) When the pension amount is guaranteed based on the gross amount of transferred insurance contributions, the amount of funds from which the pension is calculated (S) is equal to the funds in the individual account, calculated in accordance with Art. 131 of the SSC as of the date of concluding the pension contract. (5) When the pension amount is guaranteed based on the accumulated funds in the individual account of the person in the manner prescribed by Art. 169, para. 4 of the SSC, the amount of funds from which the pension is calculated (S) is determined using the following formula:
S = Z*(1-R)
Z - accumulated funds in the individual account of the person as of the date of concluding the pension contract; R - risk coefficient, determined and approved in the manner prescribed by Art. 169, para. 5 - 7 of the SSC.

Final Provision
Paragraph 1. This Decree is issued on the basis of Art. 169, para. 14 of the SSC and is adopted by Decision No. 217-N of 15.06.2021 of the Commission for Financial Supervision. Chairman: Boyko Atanasov