Bulgarian Court Rules 'Nationalization' of Private Retirement Funds Illegal

Bulgaria's Constitutional Court declared the transfer of deposits in private retirement funds to the National Social Security Institute (NOI) anti-constitutional.

The rule dates from May 31, and is published on the Court's official internet page.

The revoked paragraph 4a from the Social Security Code stated that "funds from individual accounts existing by January 1, 2011, of females born between 01.01.1955 and 12.31.1959, and males born between 1.1.1952 and 12.31.1959, which until 12.31.2010 have been in private retirement funds, should be transferred to NOI."

The amount involved is estimated at BGN 70 M. The idea behind the transfer was for NOI to provide the money needed for early retirement for those eligible until 2014, while after 2015 this money would be paid only by private funds.

The claim was submitted by 52 Members of the Parliament on the grounds the said text violates the sanctity of private property, leading to the loss of individuals' rights to manage the funds, along with violations of a number of insurance rights.

The Court ruled the text not only violates the rights of the insured, but oversteps the boundaries of the acceptable State regulation of retirement associations; creates uncertainty and doubts in the latter, and expectations for other possible changes, which violates the principle of investments' protection.