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Pension reform halted before taking off

Photo: BGNES

The controversial pension reform endorsed on Friday will never take off within the prescribed period. This decision, as surprising as it is predictable, was made on Sunday after a meeting Prime Minister Boyko Borissov had with Radan Kunev, co-chair of coalition partner the Reformist Bloc, under threat of its leaving the coalition thus calling into question the very existence of the cabinet.

The pressure on all sides against the pension reform, laid down but a week ago and making significant but highly contested amendments to the current pension model, mounted by the day and by the hour. All parties represented in parliament, with the exception of the opposition ethnically tinged Movement for Rights and Freedoms, rose against the reform negotiated at a meeting on Sunday between the trade unions and the GERB administration, as did professional organizations, employers, businesses and citizens who came out into the streets to protest. They all refused to accept the changes put forward by the administration: that the people insured for pensions shall be able to choose a second compulsory pension between private pension funds and the state National Social Security Institute. Before these amendments, this second pillar of the pension system was entirely in the hands of private insurance companies, which have accumulated some EUR 4 billion in supplementary pension contributions. The opponents to the reform saw in this an attempt at a hidden nationalization of the pension system, at annihilating the businesses incapable of withstanding the cutthroat rivalry of the state giant. A great many political analysts and social experts, even cabinet ministers and President Rossen Plevneliev himself stated that the changes were ill-conceived, rash, that the results they would yield were unpredictable and that the pension system would implode, something that is not in the interest of Bulgaria’s future pensioners. Not that they are particularly happy now with a pension ceiling of around EUR 450 a month, but the new reform is undermining the country’s pension system that is in chronic deficit anyway, they say.

As it turned out, the staunchest opponents to the measures mapped out and conclusively adopted “on paper” by parliament are GERB’s coalition partners from the rightist Reformist Bloc, plus the “Patriots’ and the left-of-centre ABV, which otherwise support the coalition. Not to mention the leftist Bulgarian Socialist Party which even threatened to appeal to the Constitutional Court to declare the legislative amendments anti-constitutional. The opposition Movement for Rights and Freedoms was the only parliamentary party to have stated its support for the changes.

All this triggered a serious crisis, dramatically rocking the boat of the ruling majority, a majority that has been very fragile and unhomogeneous from the start. Faced with the risk of a parliamentary and government crisis Prime Minister Borissov is now evidently aware of the magnitude of the impending disaster, and in the vein of the diplomacy and willingness to compromise he has been demonstrating which has come as a surprise to many, postponed the reform until the time a coalition agreement was reached. According to the Reformist Bloc, this is possible by the end of January. Until then, no official documents on the practical application of the legislative amendments will be published and the negotiations will continue.

“We shall make the decisions on the future of the pension model by way of direct political dialogue and shall not permit any influence by the Movement for Rights and Freedoms on political power or the financial sector,” Reformist Bloc co-chair Radan Kunev stated emphatically.

English: Milena Daynova




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