Pension insurance system
Supplementary Voluntary Pension Insurance (SVPF)
Pillar 3 of the pension insurance system in Bulgaria is a voluntary form of pension insurance. It is an option for a third, additional pension. Contributions to a voluntary pension fund will help you accumulate amounts in an account of your own. If you add the third pillar to the other two pillars you are free to dream about the things you want for yourself after retirement.
Who can be insured?
Supplementary voluntary insurance works on a capital principle. If you are 16 and over, you can insure yourself or be insured.
Insurance may be individual, by an employer, or to the benefit of a third party. Just like the mandatory voluntary insurance, the amount of the pension mostly depends on the amount of the funds accumulated on the individual account of the insured person.
What are the benefits?
Flexible form of insurance
In voluntary pension insurance there is no mandatory amount for contributions and everyone can choose what sums to deposit, how often, and even when to withdraw them.
The contributions to voluntary pension insurance are tax-deductible.
- In voluntary pension insurance with individual contributions the insured are granted tax concession amounting to 10% of the tax base.
- Incomes from investment of the fund’s assets, distributed to the account, are not subjected to tax, regardless of whether an insured person has been entitled to pension or not.
- The sums paid after retirement are tax-exempt.
- Monthly employer contributions of up to BGN 60 per employee are recognized as operating expenses, provided the employer does not owe tax payments or payments to State Social Security at the time of their deposit. Employer contributions that exceed BGN 60 are recognized as working expenses, and the sum in surplus of BGN 60 is subject to a 10% tax on expenses pursuant to the Corporate Income Tax Act.
Option to get the amounts accumulated in case you decide to retire earlier in life
In case your employer insures you, there is the advantage to have control on your funds if you choose to retire earlier. The payment is not linked to a requirement for age. When the insured person is entitled to a pension for length of service and age (in accordance with art. 68, par. 1-3 of Social Security Code) and up to 5 years before the age for acquiring the right to a pension, there is a possibility for a single payment or periodical payment of the sums accumulated in the form of a pension.
If you insure in a voluntary pension fund, you have the option to specify in advance, who can inherit your funds.