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This paper analyzes the performance of the Bulgarian private defined contribution pensions in the second and third pillars of the pension system.

Life insurance -- Bulgaria. --- Old age pensions -- Bulgaria. --- Pensions -- Bulgaria. --- Social security -- Bulgaria. --- Pensions --- Old age pensions --- Employees --- OASI (Old age and survivors insurance) --- Old age and survivors insurance --- Older people --- Retirement pensions --- Survivors' benefits (Old age pensions) --- Compensation --- Pension plans --- Superannuation --- Retirement income --- Annuities --- Social security individual investment accounts --- Vested benefits --- Financial Risk Management --- Insurance --- Labor --- Public Finance --- Social Security and Public Pensions --- Nonwage Labor Costs and Benefits --- Private Pensions --- Governmental Property --- International Financial Markets --- Insurance Companies --- Actuarial Studies --- Public finance & taxation --- Finance --- Insurance & actuarial studies --- Pension spending --- Government asset management --- Asset management --- Finance, Public --- Asset-liability management --- Bulgaria

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Public pension funds have the potential to benefit from low operating costs because they enjoy economies of scale and avoid large marketing costs. But this important advantage has in most countries been dissipated by poor investment performance. The latter has been attributed to a weak governance structure, lack of independence from government interference, and a low level of transparency and public accountability. Recent years have witnessed the creation of new public pension funds in several countries, and the modernization of existing ones in others, with special emphasis placed on upgrading their investment policy framework and strengthening their governance structure. This paper focuses on the experience of four new public pension funds that have been created in Norway, Canada, Ireland and New Zealand. The paper discusses the safeguards that have been introduced to ensure their independence and their insulation from political pressures. It also reviews their performance and their evolving investment strategies. All four funds started with the romantic idea of operating as 'managers of managers' and focusing on external passive management but their strategies have progressively evolved to embrace internal active management and significant investments in alternative asset classes. The paper draws lessons for other countries that wish to modernize their public pension funds.

Alternative asset --- Asset classes --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial Systems --- International Bank --- Investment and Investment Climate --- Investment Policy --- Investment strategies --- Macroeconomics and Economic Growth --- Pension --- Pension Funds --- Private Sector Development --- Reserves --- Transparency