EKIP– Expert Club for Economics and Politics A Different Opinion
Close your eyes and start imagining. Imagine working for years and dutifully paying taxes and social security contributions, even though at times you don't like how the state handles them.
Despite everything, you continue to believe that things will get better. Imagine putting money into your own account for years with the slightest hope of using it when it's time to retire. Imagine the people around you - relatives, friends, acquaintances - doing the same.
Imagine now that at some point someone decides that all this money conscientiously collected for years from people should be collected in one place regardless of who, how much and for how long has been deposited into their personal account. The argument - "sharing the risk of survival between the insured persons". Besides, the possibility of your relatives inheriting the money you have deposited for years is eliminated. Somehow it doesn't sound very fair, does it?
I hope you have imagined it well, because it could very soon become a fact in our country. In its traditional style, when it comes to decisions of a significant nature - in the late hours of Friday evening, the Ministry of Finance (MF) proposed exactly this. According to the latest idea for amending the Social Security Code, future second pensions from private pension funds will be lifelong, but will be paid from a "common pool", and not from the individual accounts of the insured. What exactly the ministry understands by "common pool" is not clear yet. However, one thing is clear - in general, such actions by any government in the world are called nationalization.
The big questions are two - why is the Ministry of Finance proposing this and why right now?
The first one has a generally clear answer. The National Insurance Institute is dying. It is becoming increasingly difficult for the state to pay pensions in the face of an aging population. However, the outlook is even more frightening. If we look at it in the longer term, this problem is much more threatening than it seems to us at the moment.
According to the latest forecasts, by 2070, due to negative population growth and emigration, 5.1 million people will live in Bulgaria. This will also reduce the state's ability to pay pensions.
The answer to the second question is more interesting - why exactly now is the Ministry of Finance proposing such a step. In the years before the 2008 crisis, Bulgaria had the international reputation of a country with low public debt and a balanced budget - almost equal revenues and expenses. This was the case until 2012-2013, when the country's debt was one of the lowest in Europe despite the difficult years of the crisis. Objectively speaking, it still remains so compared to the rest of the European Union. The problem is that in a short period of time it has doubled in percentage terms and almost tripled in nominal terms.
Logically, Brussels' reaction was not long in coming. A January report by the European Commission's Directorate-General for Economic and Financial Affairs showed that within the next 10 years the debt-to-GDP ratio could reach 42%. And that's assuming that there will be no serious financial and economic shocks, and that all governments will follow their current fiscal policies during this period. For comparison, before 2008 it was below 15%.
Although there is not much noise about these issues, it seems that something in the system is lame. What is worse is that no one reacts. And rather, they react in the easiest way - by reaching into people's savings to patch holes in a bottomless pit with a bleak future, which is the National Insurance Institute. Somehow it doesn't sound very fair, does it?
* Dimitar Vuchev is the editor-in-chief of the Bloomberg TV Bulgaria website and a presenter on business television.
Link to the original article: http://www.investor.bg/biudjet-i-finansi/333/a/moite-spestiavaniia-razpredeleni-v-obsht-kiup-pul-215739/
Naturally, the second pension must be inherited and there cannot be a common lump sum, but this can also be applied to the state pension - everyone with a personal account and 50% is inherited if the person dies before retiring and then there can be some inheritance up to 5 years after retirement, that is, this is also available now, etc. The details are being specified.
I look at the ''system'' as a whole and due to the systemic crisis, private funds will certainly go bankrupt, and I have explained why - https://www.facebook.com/atanas.shalapatov/posts/1752811994997027
According to the McKinsey Global Institute, global total debt for the period 2007-2014 increased by $57 trillion, outpacing global GDP growth in percentage terms - does anyone know what this means?
,and Jon Hellevig, from the Finnish consulting company Awara Group explains it well
In short, leaving aside the topic of division and productivity of labor, the crisis is systemic because economic growth cannot be infinite, because the final demand from the state and citizens cannot be infinite in a closed system like the Earth, and because of exhaustible energy sources (oil, gas...), and because of global warming.
BUT the current structure of the global financial system due to usury, etc., yields on stocks and bonds require endless growth, and since this is impossible, a new "system" and a systemic approach are needed - a resource-based and planned ecological economy.
In other words, in order to have infinite growth, you need another Earth and billions more consumers of goods and services, and after a while, another Earth and more consumers, which is impossible, and that is why the crisis is systemic, and there may be another 10-20 years of growth with an artificial increase in final demand by the state, but this will deepen the problems and they will become irreversible.
The world financial and economic system is wrong and that's why I like how it's said ''About Anatol Kaletzky (graduated from Oxford and Harvard)
"What crashed in 2008 was not a bank or a financial system, but an entire political philosophy and economic system, a way of life and thinking about the world."
The article is manipulative, it does not aim to inform about the essence of the problem. The change is taking place now, since in the coming years the first payment of benefits from the second pillar is due and the regulatory framework has gaps.
The change itself is not well thought out, as it does not give a choice, but rather limits it. However, the opinion that in this way money is transferred to NOI or the state budget is not true: the money in the pool remains in the private fund and there is no effect for NOI. It is only possible that more people will decide to transfer their funds to NOI, but in the current state of the regulations I understand them. New pensioners will receive a larger pension only from NOI if they transfer their money than from NOI and the private fund.