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High yield, liquid yield!
Choosing the right pension company is not just an administrative matter – it is one of the most important financial steps in our lives
An interview by Maria Kouzmanova
with Biser Ivanov, CEO of “POD DallBogg: Life and Health”
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Mr. Ivanov, you lead the newest and very successful pension insurance company, and we are working, we have savings: how to secure a better financial future?
Many people ask themselves, “Will my pension be enough for me to live comfortably after my working career?” or “Will I be able to have so-called ‘golden years’ as a pensioner?” and “How can I make my money work for me?”. The truth is that our financial future depends on the decisions we make today. To ensure a peaceful old age, we need to invest our retirement funds properly.
Pension provision is no longer just a mandatory element of our career path – it is a strategic decision that will determine our standard of living in retirement. The funds we contribute to second and third pensions do not and should not just sit on deposit – they must work for us, yield a high return and be liquid to maintain and increase their value over time. To achieve this clear objective, what matters most is which pension fund we choose today, regardless of where we were allocated long ago or not so long ago. The right choice of pension company to manage our funds for the long term starts with its stability, investment strategy, reported returns over the last 24 months and of course – clarity of structure and ownership allocation.
With strict regulatory stability guaranteed, what does “high yield” mean?
Interest rates are low and will fall further. Excellence in so-called deposit money management cannot or rarely reach the 6.94% average set by the Financial Supervision Commission (FSC). High returns are not just an abstract concept – they are the real result of proper, i.e. far-sighted, investment management. A successful pension insurance company must achieve a return above the market average and the return set by the regulator.
High returns are achieved by:
- Diversification of assets: investments in different economic sectors, different currencies, different investment classes and regions, which reduces risk;
- Choosing stable financial instruments – stocks, bonds, funds and other assets that deliver long-term returns;
- Proactive management – the company’s ability to “anticipate” market changes and optimize the investment portfolio.
We strive to ensure that our money does not lose value over time – on the contrary, it should grow and provide us with a better standard of living in retirement.
We at the youngest pension insurance company in Bulgaria “POD DallBogg: Life and Health” set a good example by achieving an annualised return of 9.36% on an annualized basis for the last 24-month period. This return for our insured persons exceeds the 6.94% average set by the FSC for universal pension funds (UPF). A similar annualised return of 9.25% was recorded in the DallBogg: Life and Health Voluntary Pension Fund (VPPF), which offers a reasonable option for investing saved funds – instead of interest-free bank deposits.
What is ‘liquid yield’ and why is it so important for savers?
In addition to a high yield, it is essential that investments are liquid. Liquidity means that pension assets can be easily and quickly converted into cash when needed.
Liquidity is achieved by:
- Investing in instruments in stable financial markets – large, developed economies – with high trading volumes;
- Asset allocation in liquid securities – easily marketable at a fair price;
- Flexible investment strategy – ability of the pension company to respond quickly to market conditions by successfully switching from one asset to another.
Liquidity provides additional security because it enables pension funds to respond appropriately to economic changes, to ensure timely payment of pensions and to protect the accumulated funds of insured persons.
When is the right time to choose a pension fund?
Our financial stability after retirement depends on the decisions we make today. Therefore, it is important for everyone to check which pension fund they are insured in and analyse its profitability. We should choose a pension company that does not just manage our funds, but actively works to increase them.
Here are the steps:
- Check which fund we are insured in – does it meet our expectations of growth and stability?
- Analyse its performance – is it delivering above-average results?
- Make an informed choice – if necessary, switch to a better fund.
Our money needs to work for us consistently – it’s time to make wise choices!
Special Reserve ____________________________
These results are not related to future performance and do not guarantee positive return. It is not guaranteed that the funds in the individual accounts at OPF „DallBogg: Life and Health“ will keep their full amount.
A description of the significance of the achieved rate of return and investment risk indicators
Nominal return – this is the return achieved on the management of a fund’s assets. It is calculated by dividing the difference between the value per unit of the fund valid for the last business day of the relevant year and the value per unit of the fund valid for the last business day of the previous year by the value per unit valid for the last business day of the previous year.
Standard Deviation – is a statistical measure of the dispersion of the values of a random quantity about its average or expected value. Standard deviation is accepted as one of the main indicators for measuring the risk of an investment portfolio.
Sharpe Ratio – an indicator that compares the returns achieved from managing an investment portfolio and the risk taken to achieve those returns.
The methodology for calculating the achieved nominal return and the level of investment risk is in accordance with Annex 15 of the „Regulation № 61/ 27.09.2018 of the FSC.
The investment policies of the funds managed by „PAC DallBogg: Life & Health“ are available on the Company’s website – https://dallbogg.bg, section „Investments“/ Rate of return and risk
A description of the significance of the achieved rate of return, the level of investment risk, the methodology for calculating and the investment policy of the fund are available on the Company’s website – https://dallbogg.bg, section „Investments“/ „Rate of return and risk“.
A comparison with the data can be made on the Financial Supervision Commission website (https://www.fsc.bg), section “Social Insurance activity”/ “Statistics”/ “Statistics and Analysis”/ 2023-2024
