High fees pump up Bulgarian pension insurers' profits in 1H/2010
Bulgaria's pension insurance companies chalked up bumper profits for the first half of the year against the backdrop of slightly better yields and slumping social security contributions, showed the latest numbers of the Financial Supervision Commission (FSC).
The regulator said profit growth was fuelled mostly by an increase in revenue from fees and deductions as well as by a 1.5% decline in total expenses. Between January and June, the combined profit of Bulgaria's pension insurers surged 28% year-on-year to reach EUR 5.3 million.
The figures also revealed that the sector continues to count heavily on the deductions charged on each contribution, but the drop in numbers has led to slimmer revenue. But this effect was offset by a sharp increase in investment fees and payments for other services such as pension fund transfer, providing additional information and withdrawing money from voluntary pension schemes.
A few years back, the then FSC chief Biser PETKOV chided universal and occupational pension funds for what he called exorbitant fees and called for legislative changes forcing them to bring them down. But the bill never made its way into Parliament.
Pension insurer DOVERIE CEO Daniela PETKOVA said the uncompleted bill was the main reason why companies are sticking to the high fees.
"The threat of administrative reduction has forced companies to sit on their hands. They want to know whether there will be a reduction or not in order to make their calculations," PETKOVA said. At the moment, pension insurers charge a 1% investment fee on the assets they manager under mandatory schemes, regardless of whether or not they have positive or negative yield.
