Mandatory universal funds: The public and private sector employees and self-employed persons born after 31 December 1959 must become members of a mandatory universal fund.

Mandatory professional funds: All employees, regardless of their age, who work in occupations classified in labour categories I and II (i.e. employees working under hazardous conditions) must become members of a mandatory professional fund. The Council of Ministers determines which occupations are classified in the respective labour categories.

All funds: The eligible persons who have not chosen a mandatory universal fund (and a mandatory professional fund, if required) within three months of taking up employment are affiliated to one of the registered universal funds (and a mandatory professional fund, if appropriate).

The ex officio allocation of members who have not chosen a fund is carried out by a commission composed of representatives of the National Revenue Agency (NRA), the FSC and the Bulgarian Association of Supplementary Pension Security Companies four times a year. The number of members allocated to each pension fund is determined by specific criteria.

All funds: Each pension insurance company may establish and manage only one universal and one professional pension fund.

The pension insurance companies are responsible for the management of fund assets. The pension insurance company is required to conclude a contract for investment advice in respect of financial instruments with a natural or legal person who satisfies the requirements of the applicable legislation.

The fund assets must be invested collectively with the care of a prudent person, observing the principles of reliability, liquidity, profitability and diversification in the best interest of members. The investment return is allocated to the individual accounts in proportion to their share of the total fund assets.

The mandatory pension insurance contributions, and any resources transferred from another pension insurance fund, are recorded and accrued in the individual account of each insured person. Each insured person may have only one individual account with a universal and, respectively, a professional fund. The individual account is kept in terms of BGN and units. The mandatory pension insurance contributions and any resources transferred from another fund are accounted in terms of units and fractions of units. Each unit represents a proportional part of the net assets of the fund. All units in a fund are equal in value. The value of all units and fractions of units in the fund is equal to the value of the net assets of the fund. The return on the investment of the resources of the fund is distributed to each individual account by the determination of the value of the unit. No reallocation of resources and units between individual accounts is permitted.

A pension insurance company may invest the financial resources of a supplementary mandatory pension insurance fund solely in:

1. debt securities issued or guaranteed by:
a) an EU Member State, the obligations under which constitute government debt, or by the central bank of such Member State;
b) the European Central Bank or by the European Investment Bank;
c) a third country designated by an ordinance of the FSC, the obligations under which constitute government debt, or by the central bank of such third country, which debt securities are admitted to trading in a regulated market in an EU Member State or an official stock exchange market, or in another organised market in a third country, functioning regularly, recognised and publicly available;
d) a third country outside those specified in letter "c", the obligations under which constitute government debt, or by the central bank of such third country, which debt securities are admitted to trading in a regulated market in an EU Member State;
e) international financial organisations; in such cases the securities shall have an investment rating;
2. bonds issued by:
a) a local authority of an EU Member State;
b) a local authority of a third country designated by an ordinance of the FSC; in such cases the bonds shall have an investment rating and shall be admitted to trading in a regulated market in an EU Member State or an official stock exchange market, or in another organised market in a third country, functioning regularly, recognised and publicly available;
c) a local authority of third country outside those specified in letter "c"; in such cases the bonds shall have an investment rating and shall be admitted to trading in a regulated market in an EU Member State;
3. bonds issued or underwritten by certain banks, whereby the resolution of the general meeting of shareholders and the offer to contract a bond loan contain an obligation to require admittance of the said bonds to trading on a regulated market in an EU Member State and to have the bonds admitted to trading on a regulated market in an EU Member State within a period not exceeding six months after the issuing of the said bonds; the aforementioned banks shall be institutions in which the stake held by the state exceeds 50 per cent and which have obtained approval to carry out banking activities according to the legislation of an EU Member State, with a view to funding long-term and medium-term infrastructure projects.
4. corporate bonds admitted to trading in:
a) a regulated market in an EU Member State;
b) an official stock exchange market or in another organised market in a third country, functioning regularly, recognised and publicly available; in such cases the bonds shall have an investment rating;
5. bank deposits with banks which are assigned a minimum credit rating and which have been granted authorisation to carry on business in the territory of an EU Member State;
6. shares units other than shares of a collective investment scheme, as well as rights and options thereon:
a) traded in a regulated market in an EU Member State;
b) traded in an official stock exchange market or in another organised market in a third country, functioning regularly, recognised and publicly available; in such cases the shares and/or units shall be included in indices of such markets;
c) preferred shares of an issuer whose shares are included in the indices referred to in letter "b";
7. shares, offered under the terms of an initial public offering pursuant to the legislation of the member state, for which a prospectus has been approved and published, providing for the obligation for securities acceptance request and securities to be admitted to trading on a regulated market in an EU Member State within 12 months of their issuing;
8. bonds offered under the terms of an initial public offering pursuant to the legislation of a Member State, for which a prospectus has been approved and published, providing for the obligation for bonds acceptance request and bonds to be admitted to trading on a regulated market in an EU Member State within 12 months of their issuing;
9. secured corporate bonds in respect of which the resolution of the general meeting of shareholders and the offer to contract a bond loan contain an obligation to require admittance of to trading on a regulated market, as well as to have the bonds admitted to trading on a regulated market within a period not exceeding six months after the issuing of the said bonds, and where it is stipulated that the requirements of the Public Offering of Securities Act regarding the bondholders' trustee and the securing a public bond issue will apply, mutatis mutandis, to the said bonds;
10. shares in:
a) any special purpose investment company licensed according to the procedure established by the Special Purpose Investment Companies Act, as well as in rights referred to in Item 3 of § 1 of the Supplementary Provisions to the Public Offering of Securities Act, issued upon an increase of the capital of the company;
b) any collective investment scheme the exclusive object of which is investment in real estate, which has been authorised to carry on business under the law of an EU Member State, which is supervised, and the shares in which are admitted to trading on a regulated market in an EU Member State;
11. shares and/or units issued by collective investment scheme established in an EU Member State or in a third country designated by an ordinance of the FSC;
12. shares and/or units in alternative investment funds managed by a person, authorised pursuant to the requirements of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010 (OJ, L 174/1 of 1.7.2011);
13. investment properties in an EU Member State.
The countries in the European Economic Area are also considered EU Member States for the purposes of the above-mentioned provisions.

Of total fund assets invested:

No more than 5 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in financial instruments issued by a single issuer, and this restriction:
1. shall not include the debt securities referred to in letters "a" and "b" of the financial instruments under Item 1 above;
2. shall not include the debt securities with investment rating referred to in letter "c" of Item 1 above;
3. where the issuer is a bank, the restriction shall also include any bank deposits with the said bank, the value of the reverse repo transactions with it and the value of the net exposure under currency forward contracts and interest rate swap agreements with this bank;
4. where the issuer is a financial institution, the restriction shall also include the value of the net exposure under currency forward contracts and interest rate swap agreements with this institution.

The total value of investments of a supplementary mandatory insurance fund in financial instruments issued by companies within the same group and persons with which such companies are in close links may not exceed 10 per cent of the fund's assets. This restriction shall also include:
1. any bank deposits of the fund with banks within the group and banks which are in close links with companies within the group, the value of the reverse repo transactions with such banks and the value of the net exposure under currency forward contracts and interest rate swap agreements with such banks;
2. the value of the net exposure under currency forward contracts and interest rate swap agreements with financial institutions within the group and financial institutions which are in close links with companies within the group.
(3) No more than 10 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any securities referred to in letter "d" of Item 1 above.
(4) No more than 10 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any securities referred to in letter "e" of Item 1 above.
(5) No more than 15 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in securities referred to in Item 2 above, and no more than 5 per cent of the said assets may be invested in bonds issued by a local authority and not traded in a regulated market.
(6) No more than 10 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 3 above.
(7) No more than 30 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 4 above.
(8) No more than 25 per cent of the assets of a supplementary mandatory pension insurance as a whole fund may be invested in bank deposits, whereas investments in bank deposits with a single bank may not exceed 5 per cent of the assets of the said fund.
(9) No more than 25 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 6 above.
(10) No more than 2 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 7 above.
(11) No more than 2 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 8 above.
(12) No more than 1 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 9 above.
(13) No more than 5 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in financial instruments referred to in Item 10 above, and no more than 1 per cent of the assets of the fund may be invested in special purpose investment companies performing securitisation of assets.
(14) No more than 20 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in financial instruments referred to in Item 11 above, and no more than 5 per cent of the assets of the fund may be invested in units in collective investment schemes managed by the same management company.
(15) No more than 1 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any financial instruments referred to in Item 12 above.
(16) No more than 20 per cent of the assets of a supplementary mandatory pension insurance fund may be denominated in any currency other than Bulgarian leva and euro, except for assets the currency risk associated with which is limited through concluded hedging transactions.
(17) No more than 5 per cent of the assets of a supplementary mandatory pension insurance fund may be invested in any investment property referred to in Item 13 above.
(18) The specific requirements for and restrictions of the investments of the supplementary mandatory pension insurance fund shall be set out in the fund's investment policy.

A pension insurance company may not invest the financial resources of a supplementary mandatory pension insurance fund in:
1. financial instruments issued by the pension insurance company which manages the said fund or by the parties related to the said company;
2. financial instruments issued by the custodian bank of the fund or persons in close links therewith;
3. bank deposits in a bank which is a related party the pension insurance company;
4. shares and/or units issued by collective investment scheme referred to in Item 11 above and by an alternative investment fund referred to in Item 12 above, managed by a person related to the pension insurance company;
5. financial instruments which are not fully paid up.

(2) The assets of a supplementary mandatory pension insurance fund may not be acquired by:
1. the pension insurance company;
2. persons related to the pension insurance company;
3. another supplementary pension insurance fund managed by the pension insurance company;
4. the custodian bank of the fund or persons in close links therewith;
5. any person in close links therewith;
6. any collective investment scheme or another collective investment undertaking managed by a person related to the pension insurance company.

(3) A supplementary compulsory pension insurance fund may not acquire any assets of the persons covered under Paragraph (2).

(4) The prohibition of acquisition under Paragraphs (2) and (3) shall not apply in the cases of a transaction concluded in a regulated market in an EU Member State or an official stock exchange market, or in another organised market in a third country, functioning regularly, recognised and publicly available.

(5) The pension insurance company may not carry out short selling and margin purchases of financial instruments in the name of a supplementary compulsory pension insurance fund managed thereby.

(6) Acting on behalf and for the account of a supplementary mandatory pension insurance fund managed thereby, a pension insurance company may not acquire or transfer on a regulated market financial instruments referred to in Items 6 and 10 above by means of transactions which, according to the trading rules of the relevant regulated market, are subject only to registration on the said market. This prohibition shall not apply to transactions involving shares which are the subject matters of commercial offers.

(7) The investment property owned by a supplementary mandatory pension insurance fund cannot be used for the needs of the pension insurance company which manages the said fund and of the parties related to the said company.

Please note that the provisions on the investments described above enter in force on 18.11.2018.

The assets of a mandatory pension fund must be kept by one custodian bank pursuant to a custodian services contract between the pension insurance company managing the fund and the custodian bank.

All financial resources of the mandatory pension fund must be transferred to the custodian bank. Within five working days, the pension insurance company must give written instructions to the custodian bank regarding the investment of the cash received. At the end of each working day, the custodian bank must send to the FSC information concerning the cash received, the transactions undertaken and the assets of the mandatory pension funds. The custodian bank is obliged to immediately notify the FSC of any violation of the Social Insurance Code and the statutory instruments on its application by the pension insurance company the bank establishes in the course of its custodial obligations. Upon request the custodian bank must provide the FSC with the entire information it has in connection with the performance of its custodial obligations. The custodian bank is liable to the pension insurance company, to the supplementary pension insurance fund, before the insured persons and the pensioners for all damages which are the direct and immediate consequence of non-performance of its custodial obligations, including incomplete, inaccurate and untimely performance, where such non-performance is due to reasons for which the custodian bank is responsible.

All funds: The covered persons must choose one mandatory universal fund and (if required) one mandatory professional fund.

After having been members of the universal or professional pension fund for one year, members may transfer the individual account balances, including all investment returns, to another fund of the respective type. Also, members are entitled to transfer their money in case of amendments in the rules for organization and operation of the pension fund, which are not related to amendments in the legislation.

The pension insurance company managing the former fund must transfer the individual account balance to the new fund. The individual account must be kept in BGN and in units, where each unit represents a proportional part of the fund's net assets. All units in a fund must have the same value and be determined in accordance with the legal requirements.

The members of the universal and the professional pension funds are also allowed to transfer their individual accounts balances to the pension schemes of the EU when commencing employment in the institutions of the EU, the European Central Bank and the European Investment Bank. The employees of the institutions of the EU, the European Central Bank and the European Investment Bank are entitled to transfers from these pension schemes to the universal pension funds and the public social insurance after the termination of employment.

Mandatory universal funds:
The universal pension fund members can change their insurance to the State Social Insurance and back to the universal pension fund once per year until they reach an age 5 years lower than the statutory retirement age in case they have not started receiving an old-age pension from the public state pension scheme.

Mandatory professional funds:
The professional pension fund members are entitled to change once their insurance to the State Social Insurance in case they have not started receiving an early-retirement pension from the professional pension fund.

The pension company may charge a fee of up to BGN 10 in case of transfers to the above-mentioned EU pension schemes.

Custodians must separate the pension fund assets under custody from their own assets.

The pension insurance companies are materially responsible for losses suffered by the members resulting from poor performance of their obligations related to the management of the respective pension funds.

An actuary must be appointed to prepare an annual actuarial report, including the status of the pension reserve, and submit it to the FSC.

The pension insurance companies must guarantee a minimum rate of return on the investment of mandatory pension funds' assets. The minimum rate of return is calculated on the basis of the returns achieved by all funds of the same type in the past 24-month period. It is calculated separately by the FSC for the universal and professional pension funds at the end of each quarter.

The minimum rate of return for the respective types of pension funds represents 60 per cent of the average rate of return achieved or 3 percentage points lower than the average, whichever of the two figures is smaller.

When a mandatory pension fund does not achieve the minimum rate of return, the pension insurance company administering the fund must, within 10 days from its announcement, make up the difference to the minimum rate with reserves that have been created especially for this purpose.

Where the rate of return achieved by a universal or an occupational pension fund exceeds by over 40 per cent the average rate of return achieved for the respective type of pension fund or exceeds the average by 3 percentage points, whichever of the two figures is greater, the resources resulting from return above this percentage are set aside for a reserve by the respective fund.
The value of the reserves at each pension fund may not exceed 1 per cent of the fund's net assets. The pension insurance company establishes, out of its own funds, a reserve for each mandatory pension insurance fund that it manages, thereby to an amount not less than 1 per cent and not more than 3 per cent of the net assets of the respective fund. Where the resources in the reserve within the fund are insufficient, the pension insurance company must make up the deficit from the resources of the reserve established at the pension insurance company.

The pension company must keep separate accounts for the mandatory universal pension fund and the mandatory professional pension fund which it manages and must also prepare separate financial statements for each of them. The company must submit to the FSC monthly reports of the mandatory pension funds under its management, within 20 days of the end of each month.

At the end of each financial year, the pension insurance company must prepare separate financial statements for the company and its mandatory universal pension fund and mandatory professional pension fund, in compliance with the provisions of the Accountancy Act, the applicable accounting standards, and the provisions of the Social Insurance Code. The annual financial statements must be audited and verified by two specialized auditing companies, which are registered auditors according to the Independent Financial Audit Act.

The registered auditors also carry out examinations and:
1. express an audit opinion on the fair presentation of the property and financial condition and the financial result of the pension insurance company and of the supplementary mandatory pension insurance funds managed thereby;
2. prepare a report confirming that the annual accounts for supervisory purposes are prepared on the basis of the audited annual financial statements of the company and of the supplementary mandatory pension insurance funds managed thereby and the information in them is consistent in all material aspects;
3. express an audit opinion on the compliance of the management system with the requirements of the Social Insurance Code and the statutory instruments for its application.

The audited financial statements must be adopted by the general meeting of the shareholders of the pension insurance company and then be submitted to the FSC and published in the state gazette.

The risk management unit, the internal control unit and the internal auditor must inform the FSC, in case it has informed the managing body of the company and it has not taken appropriate and timely remedial measures in case of significant risk that the company or a pension fund does not meet a significant statutory requirement and this can endanger the interests of the members/pensioners and in case of significant violation of the legal framework.

The custodians must inform the FSC of any violation of legal requirements by a pension insurance company.

The audit of the annual financial statements of the pension insurance companies and the pension funds is carried out jointly by two specialised auditing companies. The choice of the pension insurance company of the specialized auditing companies is subject to prior approval by the FSC.

Actuarial services may only be provided by a responsible actuary. The recognition of the capacity of a responsible actuary is carried out by the FSC and the applicants are required to demonstrate that they meet specific education, professional qualification and experience criteria.

The pension insurance companies may charge a percentage of each contribution in a manner, according to a procedure and at a rate established in the rules of organization and operation of the pension fund. The maximum rate may not exceed 4 per cent of the amount of each contribution (for 2018; for 2019 and the next years the maximum amount is 3.75 per cent).

The pension insurance companies may charge a maximum annual investment fee of 0.8 per cent of the fund assets under management (for 2018; for 2019 and the next years the maximum amount is 0.75 per cent).

The pension company may charge an additional fee of up to BGN 10 for every transfer of the individual account balance to the pension schemes of the EU, the European Central Bank and the European Investment Bank.

The actual fees must be set out in the rules of operation of the pension fund, which must be approved by the Financial Supervision Commission.

- proves that it will be solvent after the transformation;
- the rights of the insured persons and the pensioners are preserved.

The winding up of a pension insurance company is carried out by decision of the general meeting of the shareholders of the company (i.e. voluntary termination) or after the termination of its licence by the FSC (i.e. enforced termination). Winding up is also carried out in case a pension insurance company has been declared insolvent by a court ruling.

The FSC is the only entity entitled to initiate proceedings for bankruptcy of a pension insurance company. A recovery plan may not be proposed during the insolvency proceedings of a pension insurance company.

Upon transformation or termination of a pension insurance company, the company that receives the accumulated capital in the members' individual accounts must notify the members within one month following the transaction. The members may choose, within one month following the notification, whether to continue to participate in the new pension fund or to transfer their assets to another fund.

All funds: The members must be informed of the fund operating rules and all amendments and supplements. Upon signing a membership contract, a member may request a certified copy of the operating rules of the pension fund.

By 31 May of each year, each pension insurance company must send to the members free of charge a statement of their individual accounts for the previous year in accordance with a model form approved by the Financial Supervision Commission. On request, the pension insurance company must also provide additional information concerning the individual account, the amount of fees and the deductions from contributions and from the account balance, as well as the real rate of return achieved (nominal rate of return adjusted by inflation).

Upon submission of an application for choosing a pension fund or for transfer to another pension fund the (potential) member receives a key information document with data on the main characteristics of the fund.

The pension insurance company must establish an electronic dossier with the documents concerning the supplementary social insurance of each member. Members have online access to their electronic dossiers and their individual accounts.

The annual financial statements of the pension insurance company and of the mandatory universal fund and mandatory professional pension fund managed by it, adopted by the general meeting, must be submitted to the FSC and published on the company's website. On the company's website are also published key documents such as the rules of organization and operation of the pension funds, the investment policies of the funds, etc.

The member has the right to inform the pension insurance company, the board of trustees of the pension fund and the FSC about any violations in the activity of the pension insurance company.