Ordinance No. 19 of 08.12.2004 on Pension Reserves and Reserves for Guaranteeing the Payment of Life Annuities

ORDINANCE No. 19 of 08.12.2004 on Pension Reserves and Reserves for Guaranteeing the Payment of Life Annuities (Title amended - State Gazette, No. 60 of 2020) Published - State Gazette, No. 110 of 17.12.2004; in force from 30.12.2004; amended, No. 18 of 27.02.2018, in force 27.02.2018; amended and supplemented, No. 60 of 20.07.2021; amended, No. 20 of 11.03.2025, in force from the date of introduction of the euro in the Republic of Bulgaria; repealed, No. 61 of 03.07.2026, in force from 01.01.2027. Adopted with Decision No. 30-N of 08.12.2004 by the Commission for Financial Supervision Issued by the Chairman of the Commission for Financial Supervision

Section I General Provisions

Art. 1. (Amended - State Gazette, No. 60 of 2020.) This Ordinance determines:

1. the procedure for creating pension reserves by pension insurance companies that manage a fund for additional voluntary pension insurance, hereinafter referred to as voluntary pension fund;
2. the requirements for the formation, calculation and maintenance of reserves for guaranteeing the payment of life annuities, their supplementation and the release of funds from them by pension insurance companies that manage a universal pension fund.

Art. 2. (Amended and supplemented - State Gazette, No. 60 of 2020.) (1) (Previous text of Art. 2, supplemented - State Gazette, No. 60 of 2020.) Pension reserves are used only for the payment of life annuities granted by voluntary pension funds to pensioners who have outlived the preliminary actuarial estimates. (2) (New - State Gazette, No. 60 of 2020.) The funds of the reserves for guaranteeing the payment of life annuities are used only to cover shortages in the funds for the payment of life annuities.

Section II Creation of Pension Reserves

Art. 3. (Repealed - State Gazette, No. 60 of 2020.).

Art. 4. (Amended - State Gazette, No. 60 of 2020.) (1) A pension insurance company managing a voluntary pension fund and paying life annuities from it creates a pension reserve for the payment of these annuities. (2) The pension reserve under para. 1 is formed from the following sources:

1. own funds of the pension insurance company;
2. (amended - State Gazette, No. 60 of 2020.) funds under Art. 245, para. 3 and 5 of the Social Insurance Code (SIC).

Art. 5. (Amended and supplemented - State Gazette, No. 60 of 2020.) (1) (Amended - State Gazette, No. 60 of 2020.) The pension insurance company accounts for the pension reserve through a separate accounting account. (2) (Amended - State Gazette, No. 60 of 2020.) The sources forming the pension reserve are accounted for through separate sub-accounts to the respective accounting account. (3) (New - State Gazette, No. 60 of 2020.) The assets with which the reserve is covered are accounted for through separate accounting accounts or through separate sub-accounts to the respective accounting account. (4) (Previous para. 3, amended - State Gazette, No. 60 of 2020.) Within one month from the date of establishment of the conditions under Art. 245, para. 3 and 5 SIC, the funds under Art. 4, para. 2, item 2 are transferred to the account of the pension insurance company and are reflected as an increase in the pension reserve.

Art. 6. (Amended - State Gazette, No. 18 of 2018, in force from 27.02.2018; amended, No. 60 of 2020.) (1) (Amended - State Gazette, No. 18 of 2018, in force from 27.02.2018; amended, No. 60 of 2020.) The amount of funds required for the pension reserve is determined by a prospective method and is equal to the sum of the positive differences between the present value of assumed liabilities and the funds in the individual accounts of pensioners with granted life annuities. (2) (Amended - State Gazette, No. 60 of 2020.) The present value of assumed liabilities to pensioners for the purposes of forming the pension reserve is calculated by the pension insurance company based on a technical interest rate and mortality tables for the respective year, separately for:

1. (repealed - State Gazette, No. 60 of 2020);
2. payment of personal life annuities for old age and hereditary life annuities from voluntary pension funds;
3. payment of personal life annuities for disability from voluntary pension funds. (3) (In force from 01.01.2005; amended, No. 60 of 2020.) Pension insurance companies apply uniform technical interest rates and mortality tables under para. 2, which are approved by the Deputy Chairman of the Commission for Financial Supervision, heading the "Insurance Supervision" department, by 31 December of each year.

Art. 7. (Amended and supplemented - State Gazette, No. 60 of 2020.) Every pension insurance company creates a pension reserve and begins to calculate its amount in accordance with Art. 6 from the beginning of the year following the year of granting the first life annuity from the voluntary pension fund it manages.

Art. 8. (Amended - State Gazette, No. 60 of 2020.) (1) The pension insurance company recalculates the amount of the formed pension reserve on 31 December of each calendar year. (2) (Amended - State Gazette, No. 60 of 2020.) When the amount of the pension reserve at the end of the year is less than the amount calculated in accordance with Art. 6, the pension insurance company supplements the difference from its own funds, reflecting it in the pension reserve account by 31 March of the following calendar year. (3) (Repealed - State Gazette, No. 60 of 2020.).

Art. 9. (Amended - State Gazette, No. 60 of 2020.) (1) (Amended - State Gazette, No. 60 of 2020.) The maximum amount of the formed pension reserve at the end of the year cannot be greater than 110% of the amount calculated in accordance with Art. 6. (2) (Amended - State Gazette, No. 60 of 2020.) The funds exceeding the maximum amount under para. 1 with the source being the receipts under Art. 4, para. 2, item 1 are released from the pension reserve and reflected in the account of the pension insurance company by 31 March of the following calendar year. (3) (Amended - State Gazette, No. 60 of 2020.) In cases where, as a result of receipts into the pension reserve under Art. 4, para. 2, item 2, the maximum amount under para. 1 is exceeded, the difference is not released in favor of the pension insurance company, but remains in the account of the pension reserve.

Art. 10. (Amended - State Gazette, No. 18 of 2018, in force from 19.11.2018; amended, No. 60 of 2020.) (1) (Amended - State Gazette, No. 18 of 2018, in force from 19.11.2018; amended, No. 60 of 2020.) The pension insurance company submits to the Commission for Financial Supervision a report on the state of the pension reserve according to the form in Appendix No. 1 simultaneously with the submission of the annual financial statements of the company and the voluntary pension fund. (2) (Amended - State Gazette, No. 18 of 2018, in force from 19.11.2018; repealed, No. 60 of 2020.).

Section III (Repealed - State Gazette, No. 60 of 2020.)

Administrative Liability Art. 11. (Repealed - State Gazette, No. 60 of 2020.).

Section IV (New - State Gazette, No. 60 of 2020.) Reserves for Guaranteeing the Payment of Life Annuities

Art. 12. (New - State Gazette, No. 60 of 2020.) (1) Every pension insurance company managing a universal pension fund creates a reserve for guaranteeing the payment of life annuities from the beginning of the year following the year of concluding the first pension contract for the payment of additional life annuity for old age. (2) When the pension insurance company has not created a fund for the payment of life annuities, it creates a reserve for guaranteeing the payment of life annuities and transfers to it the funds under Art. 170, para. 9, item 1 or 3 of the SIC within one month from the date of establishment of the conditions for their transfer.

Art. 13. (New - State Gazette, No. 60 of 2020.) (1) The pension insurance company accounts for the reserve for guaranteeing the payment of life annuities through a separate accounting account. (2) The sources forming the reserve are accounted for through separate sub-accounts to the respective accounting account. (3) The assets with which the reserve is covered are accounted for through separate accounting accounts or through separate sub-accounts to the respective accounting account.

Art. 14. (New - State Gazette, No. 60 of 2020.) (1) The reserve for guaranteeing the payment of life annuities is in the amount of 1 percent of the present value of liabilities to pensioners and their heirs under Art. 4, para. 3 of Ordinance No. 70 of 29.06.2021 on the requirements for funds for making payments (State Gazette, No. 60 of 2021) (Ordinance No. 70) on 31 December of the reporting year. (2) The maximum amount of the reserve is 2 percent of the present value of liabilities to pensioners and their heirs under Art. 4, para. 3 of Ordinance No. 70.

Art. 15. (New - State Gazette, No. 60 of 2020.) (1) The pension insurance company recalculates annually the amount of the reserve for guaranteeing the payment of life annuities on 31 December of the previous year. (2) When the value of the assets with which the reserve is covered is less than the amount under Art. 14, para. 1, the pension insurance company supplements the shortage with funds under Art. 192, para. 3, item 1 and/or 2 of the SIC. The pension insurance company may also allocate funds from these sources to the reserve up to the amount under Art. 14, para. 2. (3) When the value of the assets with which the reserve is covered exceeds the amount under Art. 14, para. 2, the funds exceeding the maximum amount with the source being the receipts under Art. 192, para. 3, item 2 of the SIC are released from the reserve and reflected in the account of the pension insurance company. (4) When the value of the assets with which the reserve is covered exceeds the amount under Art. 14, para. 1, but is lower than the amount under Art. 14, para. 2, the pension insurance company may decide to release funds from it with the source being the receipts under Art. 192, para. 3, item 2 of the SIC and/or to supplement it with funds under Art. 192, para. 3, item 1 and/or 2 of the SIC. The decision shall specify the specific amount of funds to be released from the reserve, respectively the amount of funds with which it is supplemented. (5) When there is a shortage under Art. 6, para. 1 of Ordinance No. 70 on 31 December of the reporting year, it increases the shortage under para. 2 and reduces the excesses under paras. 3 and 4 in the reserve for guaranteeing the payment of life annuities. (6) The supplementation and release of funds under paras. 2 - 4 are carried out within one month by 31 March of the year in which the recalculation under para. 1 is carried out. (7) In cases where, as a result of receipts under Art. 170, para. 9, item 1 and/or 3 of the SIC and/or under Art. 192, para. 3, item 1 of the SIC, the amount under Art. 14, para. 1 or 2 is exceeded, the difference is not released in favor of the pension insurance company, but remains in the account of the reserve.

Art. 16. (New - State Gazette, No. 60 of 2020.) The pension insurance company submits to the Commission for Financial Supervision a report on the state of the reserve for guaranteeing the payment of life annuities according to the form in Appendix No. 2 simultaneously with the submission of the annual financial statements of the company and the fund for the payment of life annuities.

SUPPLEMENTARY PROVISIONS § 1. (Amended and supplemented - State Gazette, No. 60 of 2020.) For the purposes of this Ordinance:

1. (Amended and supplemented - State Gazette, No. 60 of 2020.) "Pension reserve" means the sum of funds allocated in the appropriate manner, which are used to pay personal life annuities for old age, personal life annuities for disability and hereditary life annuities to pensioners from voluntary pension funds who have outlived the preliminary actuarial estimates.
2. "Mortality table" for the purposes of calculating the size of pension reserves means a theoretical model presented in the form of a statistical table characterizing the age-specific survival and mortality regime of a defined community of people.

TRANSITIONAL AND FINAL PROVISIONS § 2. (Amended - State Gazette, No. 18 of 2018, in force from 27.02.2018.) The amount of funds required for the pension reserve of a pension insurance company managing a voluntary pension fund, which on the basis of § 114 of the transitional and final provisions of the Law on Amendment and Supplement to the Code on Compulsory Public Insurance (State Gazette, No. 67 of 2003) (LACPI) has ceased to apply pension schemes with formed general accounts, is determined by a prospective method and is equal to the sum of the positive differences between the present value of assumed liabilities and the funds in the individual accounts of pensioners with granted life annuities, as this sum is reduced by the current amount of allocated funds according to § 114, para. 3, sentence first LACPI.

§ 3. (Amended - State Gazette, No. 60 of 2020.) This Ordinance is issued on the basis of Art. 192, para. 7 and Art. 213, para. 2 of the Social Insurance Code and is adopted with Decision No. 30-N of 8.12.2004 by the Commission for Financial Supervision.

§ 4. (1) This Ordinance enters into force on 30 December 2004, except for Art. 6, para. 3, which enters into force on 1 January 2005. (2) The Deputy Chairman of the Commission for Financial Supervision, heading the "Insurance Supervision" department, approves within one month by 31 March 2005 uniform technical interest rates and mortality tables, which are applied by pension insurance companies in calculating pension reserves on 31 December 2005. (3) In calculating pension reserves on 31 December 2004, pension insurance companies apply technical interest rates and mortality tables approved and established in the appropriate manner before the entry into force of this Ordinance.

§ 5. The Commission for Financial Supervision gives instructions on the application of this Ordinance.

Appendix No. 1 to Art. 10, para. 1 (New - State Gazette, No. 60 of 2021; amended, No. 20 of 2025, in force from the date of introduction of the euro in the Republic of Bulgaria)

……………………..................................………………………………………………………… name of the pension insurance company (PIC) REPORT ON THE STATE OF THE PENSION RESERVE for ...................................................................................................................................................... name of the voluntary pension fund as of 31 December …….. year No. by row Indicators Value reporting year previous year

1. Amount of funds required for the pension reserve, calculated in accordance with Art. 6 (in euros)
2. Available funds in the pension reserve – everything (in euros) 2.1. Own funds of the PIC (in euros) 2.2. Funds under Art. 245, para. 3 and 5 SIC (in euros)

Difference between available funds in the pension reserve and the amount calculated in accordance with Art. 6 (in euros) (row 2 – row

1. (with sign –, when there is a shortage)

Amount of own funds of the PIC, with which the pension reserve will be supplemented in accordance with Art. 8, para. 2 (in euros) (filled in when row 3 has a sign –) 5. Coefficient of coverage of the pension reserve (in %) (row 2 : row 1) 6. Amount of own funds of the PIC, which will be released from the pension reserve in accordance with Art. 9, para. 2 (in euros) (filled in when row 5 is > 110 %) Date of preparation: .................. year. Responsible actuary: ............................................................................... (name, surname, signature) Representatives of the company: .....................

1. .......................................................................... (name, surname, signature)
2. .......................................................................... (name, surname, signature)

Appendix No. 2 to Art. 16

(New - State Gazette, No. 60 of 2021; amended, No. 20 of 2025, in force from the date of introduction of the euro in the Republic of Bulgaria) ……………………..................................………………………………………………………… name of the pension insurance company (PIC) REPORT ON THE STATE OF THE RESERVE FOR GUARANTEEING THE PAYMENT OF LIFE ANNUITIES (RGPP) for ...................................................................................................................................................... name of the fund for the payment of life annuities as of 31 December…….. year. No. by row Indicators Value reporting year previous year

1. Present value of liabilities to pensioners and their heirs (in euros)
2. Required amount of funds in RGPP (in euros) (1 % of row 1.)
3. Available funds in RGPP – everything (in euros) 3.1. Transferred funds under Art. 170, para. 9, item 1 SIC (in euros) 3.2. Transferred funds under Art. 170, para. 9, item 3 SIC (in euros) 3.3. Funds under Art. 192a, para. 15, item 1 SIC (in euros) 3.4. Own funds of the PIC (in euros)
4. Shortage under Art. 6, para. 1 of Ordinance No. 70 as of 31 deceber of the year

Shortage in RGPP (in euros) (row 3 – row 2 – row 4) (filled in only if it is a negative value) 6. Coefficient of coverage of RGPP (in %) ((row 3 – row 4 ): row 2) 7. Amount of funds under Art. 192, para. 3, item 2 SIC, which will be released from RGPP in accordance with Art. 15, para. 3 (in euros) (filled in when row 6 is > 200 %) 8. Amount of funds under Art. 192, para. 3, item 2 SIC, which will be released from RGPP in accordance with Art. 15, para. 4 (in euros) 9. Amount of funds under Art. 192, para. 3, item 1 and 2 SIC, with which RGPP will be supplemented in accordance with Art. 15, para. 4 (in euros) Date of preparation: .................. year. Responsible actuary:

............................................................................... (name, surname, signature) Representatives of the company: .....................

1. .......................................................................... (name, surname, signature)
2. .......................................................................... (name, surname, signature)

Final Provisions to the Ordinance on Amendment and Supplement to Ordinance No. 17 of 2004 on the documents that are necessary for the issuance of a permit for the transformation of a pension insurance company and of a fund for additional pension insurance and on the requirements for the plans under Art. 327, para. 1, item 3 and Art. 336, para. 1 of the Social Insurance Code (State Gazette, No. 18 of 27.02.2018, in force from 27.02.2018)

§ 7. In Ordinance No. 19 of 2004 on the procedure for the creation of pension reserves by pension insurance companies that manage a universal pension fund and/or a fund for additional voluntary pension insurance (State Gazette, No. 110 of 2004 ) the following amendments are made:

1. In Art. 6, para. 1 the words "the positive difference between the present value of assumed liabilities to pensioners with granted life annuities and the sum of the funds in their individual accounts" are replaced with "the sum of the positive differences between the present value of assumed liabilities and the funds in the individual accounts of pensioners with granted life annuities".
2. In Art. 10 the following amendments are made: a) paragraph 1 is amended as follows: "(1) Pension insurance companies submit within the period under Art. 190, para. 1 SIC simultaneously with the submission of the annual financial statements to the commission a report on the state of each pension reserve at the end of the reporting year according to the form approved by the Deputy Chairman of the Commission for Financial Supervision, heading the "Insurance Supervision" department"; b) in para. 2 the words "Art. 186a, para. 1" are replaced with "Art. 186a".
3. In § 2 of the transitional and final provisions the words "the positive difference between the present value of assumed liabilities to pensioners and the sum of the funds in their individual accounts and" are replaced with "the sum of the positive differences between the present value of assumed liabilities and the funds in the individual accounts of pensioners with granted life annuities, as this sum is reduced by".

Transitional and Final Provisions to ORDINANCE No. 70 of 29.06.2021 on the requirements for funds for making payments (State Gazette, No. 60 of 20.07.2021)

§ 4. In Ordinance No. 19 of 8.12.2004 on the procedure for the creation of pension reserves by pension insurance companies that manage a universal pension fund and/or a fund for additional voluntary pension insurance (published, State Gazette, No. 110 of 2004; amended, No. 18 of 2018) the following changes and supplements are made:

1. The name of the Ordinance is changed as follows:

"Ordinance No. 19 of 8.12.2004 on Pension Reserves and Reserves for Guaranteeing the Payment of Life Annuities". 2. Article 1 is amended as follows: "Art. 1. This Ordinance determines:

1. the procedure for creating pension reserves by pension insurance companies that manage a fund for additional voluntary pension insurance, hereinafter referred to as voluntary pension fund;
2. the requirements for the formation, calculation and maintenance of reserves for guaranteeing the payment of life annuities, their supplementation and the release of funds from them by pension insurance companies that manage a universal pension fund."
3. In Art. 2 the following changes and supplements are made: a) the current text becomes para. 1 and after the words "payment of" the words "granted by voluntary pension funds" are added; b) para. 2 is created: "(2) The funds of the reserves for guaranteeing the payment of life annuities are used only to cover shortages in the funds for the payment of life annuities."
4. Article 3 is repealed.
5. In Art. 4, para. 2, item 2 the words "SIC" are replaced with "of the Social Insurance Code (SIC)".
6. In Art. 5 the following changes and supplements are made: a) in paras. 1 and 2 the words "each pension reserve" are replaced with "the pension reserve"; b) a new para. 3 is created: "(3) The assets with which the reserve is covered are accounted for through separate accounting accounts or through separate sub-accounts to the respective accounting account."; c) the current para. 3 becomes para. 4 and in it the words "Art. 170, para. 3 and" and "Art. 3, para. 2, item 2 and" are deleted, and the words "the respective pension reserve" are replaced with "the pension reserve".
7. In Art. 6 the following changes are made: a) in para. 1 the words "the respective pension reserve" are replaced with "the pension reserve"; b) in para. 2: aa) in the main text the words "the respective pension reserve" are replaced with "the pension reserve"; bb) item 1 is repealed; c) in para. 3 the words "separately for universal and for voluntary pension fund" and the comma after them are deleted.
8. In Art. 7 the word "respective" is deleted, and at the end "from the voluntary pension fund it manages" is added.
9. In Art. 8 the following changes are made: a) in para. 2 the words "1 March" are replaced with "31 March"; b) paragraph 3 is repealed.
10. In Art. 9 the following changes are made: a) paragraph 1 is amended as follows: "(1) The maximum amount of the formed pension reserve at the end of the year cannot be greater than 110% of the amount calculated in accordance with Art. 6."; b) in para. 2 the words "Art. 3, para. 2, item 1" are deleted, and the words "1 March" are replaced with "31 March"; c) in para. 3 the words "Art. 3, para. 2, item 2 and" are deleted.
11. In Art. 10 the following changes are made: a) paragraph 1 is amended as follows:

"(1) The pension insurance company submits to the Commission for Financial Supervision a report on the state of the pension reserve according to the form in Appendix No. 1 simultaneously with the submission of the annual financial statements of the company and the voluntary pension fund."; b) paragraph 2 is repealed. 12. Section III "Administrative Liability" with Art. 11 is repealed. 13. Section IV "Reserves for Guaranteeing the Payment of Life Annuities" is created with Art. 12 - 16: "Section IV Reserves for Guaranteeing the Payment of Life Annuities Art. 12. (1) Every pension insurance company managing a universal pension fund creates a reserve for guaranteeing the payment of life annuities from the beginning of the year following the year of concluding the first pension contract for the payment of additional life annuity for old age. (2) When the pension insurance company has not created a fund for the payment of life annuities, it creates a reserve for guaranteeing the payment of life annuities and transfers to it the funds under Art. 170, para. 9, item 1 or 3 of the SIC within one month from the date of establishment of the conditions for their transfer. Art. 13. (1) The pension insurance company accounts for the reserve for guaranteeing the payment of life annuities through a separate accounting account.