2024-02-14 16:54:42
Because if and when it is achieved, the yield is solid and is a result of competence and foresight, realized in the conditions of extremely strict regulation of the investment process.
Strict regulation of the investment process is not an end in itself for the legislator or a frivolous activity of the regulator. Its main goal is full and comprehensive protection of the interests of pension insured persons (PIL) and maximally comprehensive channeling of the assumption and management of risk in the investment process. The principles of investment, introduced with the Social Security Code, aim to invest the funds in the funds in accordance with the long-term interests of POL, observing the principles of reliability, liquidity, profitability and diversification. The introduction of strict quantitative limits and categories of investable assets has the task of achieving precisely this goal through diversification and calibration of forms, methods, terms. The taking and management of investment risk in pension insurance is the most stringent and highly guaranteed regulation among all formats in the vast industry of foreign money management.
All pension funds are reliable in terms of security and stability, but how much return they produce on our pension money is the main question!
The official distribution or the official first choice of a pension fund for persons starting their career is carried out by a commission established at the National Revenue Agency, according to certain criteria applied to all pension funds:
- achieved annual yield from the respective pension fund based on the previous 24-month period;
- amount of the fees charged by the pension companies from each insurance contribution;
- number of accepted individual applications for new participation in a universal or occupational pension fund.
The three criteria are applied based on the quarter preceding the service distribution. After one year from the last transfer, LPOs can freely choose another Universal Pension Fund (UPF) or Occupational Pension Fund (OPF) for their compulsory supplementary pension insurance contributions. Anyone over the age of 16 can choose to put their savings into a Voluntary Pension Fund to provide greater financial security for their old age and help achieve longevity. The main criteria by which this choice is made in developed democratic countries are the achieved profitability and confidence in the qualifications and morals of the fund managers – naturally, because they all work under the same regulation and equal rights. The scale of individual funds matters little when comparing returns because very often, even more often, small funds achieve higher proportional returns for years.
The skill, dedication and morale of the fund managers lead to high returns
Vast arrays of information, advanced qualifications in leading universities and experience gained in global financial institutions are a great asset for fund managers in any modern pension company. There are different ways to achieve good profitability – by outsourcing the investment process to external, specialized investment companies or by developing internal expertise, which is always more profitable, but only after its rise to global orbit. Or by “passively” following stock indices, as alternative “active” investing requires more round-the-clock cultivation of investment portfolios. Of course that in–house (internal) and active management of increased levels of risk-taking can and does bring higher, even record returns, but is difficult to achieve and sustain over long periods. In these days of geopolitical upheavals, wars, technological revolutions, economic and migration processes and uneven development of the labor force and its productivity – even the use of artificial intelligence by the most qualified fund managers cannot create guarantees for long-term success.
When the hands are on the wheel and the driver is disciplined, qualified and well experienced – it goes far
Because there are always crises and upswings in individual economic sectors, diversification is regulatory introduced as mandatory in the investment process of pension funds. And it is precisely with the ability to fulfill the mandatory diversification, taking into account all trends and factors, their weight, in the national and world economic life, that the high profitability that pleases the trusted POL is born.
In conclusion and from personal experience: a well-balanced team of fund managers in terms of age, qualification, background and especially highly motivated in the conditions of a modern company culture has a much greater chance of lasting success, especially when they work with great love for the profession: congratulations Trifon Dumped and Valentine’s Day to all PAUL and colleagues!
The facts and explanations given are not related to and are not a promise of future results, nor are they a guarantee of future positive returns. A comparison with the reflected data can be made on the website of the Financial Supervision Commission (https://www.fsc.bg).