PENSION INSURANCE COMPANY

DOVERIE AD

REGULATIONS

ON THE ORGANIZATION AND THE OPERATION

OF

DOVERIE VOLUNTARY PENSION FUND

SOFIA, 2007

REGULATIONS

ON THE ORGANIZATION AND THE OPERATION OF DOVERIE VOLUNTARY PENSION FUND

(Title amendment – Dec. 23, 2003)

(The amendments made by decision of the General Meeting of Shareholders of PIC Doverie of December 21, 2006 are approved by decision № 17 – ДПФ / 10.01.2007 of the Deputy Chairman of the Financial Supervision Commission, Head of the Insurance Supervision Department)

C O N T E N T S

  1. DEFINITIONS OF USED TERMS AND CONCEPTS
  2. ABBREVIATIONS USED
  3. CHAPTER ONE: GENERAL PROVISIONS
  1. Subject
  2. Name of the Pension Fund
  3. Establishment and Registration
  4. Management and Representation
  5. Registered Office and Address
  6. Guarantees for Fulfillment of Obligations
  1. CHAPTER TWO: TERMS AND CONDITIONS OF MEMBERSHIP IN THE VOLUNTARY PENSION FUND
  1. Conditions of Membership
  2. Insurance Grounds
  3. Membership in the Voluntary Pension Fund
  4. Insurance Intermediaries
  5. Termination of Membership
  6. Tax Preferences
  7. Pension Scheme
  8. Rights Deriving from Participation in a Supplementary Voluntary Pension Fund
  1. CHAPTER THREE: INSURANCE CONTRACTS
  1. Definition
  2. Types of Insurance Contracts
  3. Content of the Insurance Contracts
  4. Amendment and Supplementation of the Insurance Contract
  5. Termination of the Insurance Contract
  1. CHAPTER FOUR: INSURANCE CONTRIBUTIONS
  1. Type and Periodicity of Contributions
  2. Payment of Insurance Contributions
  3. Responsibility
  1. CHAPTER FIVE: INDIVIDUAL ACCOUNT
  1. General Requirements
  2. Opening and Closing of Accounts
  3. Contents of the Individual Account
  4. Individual Account Keeping
  5. Calculation and Announcement of the Value of a Unit
  6. Statement of the Individual Account
  1. CHAPTER SIX: MAIN GOALS AND RESTRICTIONS OF THE INVESTMENT POLICY. INVESTMENT YIELDS AND ASSESSMENT OF THE ASSETS OF THE VOLUNTARY PENSION FUND
  1. Major Investment Principles, Objectives and Strategy
  2. Investment Restrictions
  3. Portfolio Management Criteria and Process
  4. Risk Monitoring, Measurement and Management in Portfolio Management
  5. Investment Policy and Information Disclosure
  6. Assets Valuation
  7. Distribution of Investment Yields
  1. CHAPTER SEVEN: FEES AND DEDUCTIONS
  1. Registration Fee
  2. Investment Fee
  3. Deductions from the Insurance Contributions
  4. Fees Charged upon Withdrawal or Transfer of Assets
  1. CHAPTER EIGHT: TERMS AND CONDITIONS FOR PAYMENT OF SUPPLEMENTARY PENSIONS
  1. Eligibility Conditions for a Personal Old Age Pension
  2. Period for Receiving Personal Old Age Pension
  3. Amount of Personal Old Age Pension
  4. Personal Disability Pension
  5. Personal Disability Pension Amount
  6. Survivors Pension
  7. Survivors Pension Rate
  8. Minimum Amount of the Supplementary Pensions
  9. Order and Manner for Granting Supplementary Pensions
  10. Pension Contract
  11. Terms for Granting and Payment of Supplementary Pensions
  12. Recalculation of Supplementary Pensions
  1. CHAPTER NINE: SUSPENSION, RENEWAL AND TERMINATION OF PAYMENT OF SUPPLEMENTARY PENSIONS
  1. Suspension and Renewal of Payment of Supplementary Pensions
  2. Termination of Payment of Supplementary Pensions
  1. CHAPTER TEN: LUMP SUM OR RESCHEDULED PAYMENT OF THE ASSETS IN THE INDIVIDUAL ACCOUNT
  1. Conditions and Order for Lump Sum or Rescheduled Payment of the Assets in the Individual Account
  2. Contract for Rescheduled Payment
  1. CHAPTER ELEVEN: TERMS AND CONDITIONS FOR TRANSFER OR WITHDRAWAL OF ASSETS FROM THE INDIVIDUAL ACCOUNT
  1. Conditions for Transfer of Assets
  2. Order and Terms of Transferring Amounts to a Voluntary Pension Fund Managed By Another Pension Company
  3. Transfer of Amounts from Personal Contributions to the Individual Account of a Spouse or Direct Relatives up to the Second Degree
  4. Withdrawal of Funds from the Individual Account
  1. CHAPTER TWELVE: ADVISORY BOARD
  1. Membership, Functions, Rights and Duties
  1. CHAPTER THIRTEEN: RIGHTS AND OBLIGATIONS OF THE PENSION INSURANCE COMPANY, OF THE INSURED PERSONS, EMPLOYERS, THE PERSONS UNDER ART. 8, ITEMS 3 AND 4 AND THE THIRD-PARTY CONTRIBUTORS
  1. Rights and Obligations of the Pension Insurance Company
  2. Rights and Obligations of the Insured Persons
  3. Rights of the Insured Person and the Pensioners in Case of Transformation or Termination of the Pension Company or the Supplementary Voluntary Pension Fund
  4. Rights and Obligations of the Employers, the Persons under Art.8, items 3 and 4 and the Third-Party Contributors
  5. Amendments and Supplementations to the Regulations
  1. CHAPTER FOURTEEN: RIGHTS OF THE INSURED PERSONS AND THE PENSIONERS OF BULGARIAN PENSION INSURANCE COMPANY – VOLUNTARY PENSION FUND AFTER ITS MERGER WITH DOVERIE VOLUNTARY PENSION FUND
  1. General Provisions
  2. Insurance and Pension Contracts
  3. Insurance Contributions
  4. Personal Supplementary Old-age Pension
  5. Personal Disability Pension
  6. Survivors Pensions to Survivors or Beneficiaries of a Deceased Insured Person
  7. Lump-sum or Rescheduled Payment
  1. TRANSITIONAL AND FINAL PROVISIONS

DEFINITIONS OF USED TERMS AND CONCEPTS

Within the meaning of these Regulations:

1. “Insuredperson”isanaturalpersononwhosebehalfandtowhoseaccountcontributionshavebeenmadeforsupplementaryvoluntarypensioninsuranceinDoverieVoluntaryPensionFund, underthetermsandconditionsdefinedintheSocialInsuranceCode, theseRegulationsandtheinsurancecontract.

2. “Insurancecontract”isacontractconcludedbetweenPensionInsuranceCompanyDoverieADandanindividual, anemployer, personsunderArt. 8, items 3 and 4 herein, oranothercontributor, regulatingtherelationsregarding and inconnectionwithsupplementaryvoluntarypensioninsuranceinDoverieVoluntaryPensionFund.

3. (Amended -21.12.2006) “Insurancecontributor”iseverynaturalperson, legalentityoritssubsidiaryaswellasotherorganizationsthatareboundbylawtomakemandatory insurancecontributionsforothernaturalpersons.

4. “Third-partyinsurancecontributor”isaphysicalpersonoralegalentitythatmakesinsurancecontributionstoDoverieVoluntaryPensionFundinfavorofaphysicalpersonwherewith the said contributoris not in an employment or civil-service relationship or wherewith the said contributorhas not concluded a contract commissioning control or management.

5. “Insuranceintermediary“isaphysicalpersonoralegalentitythathasconcludedawrittencontractwithPICDoverieADandhencehastherightonbehalfofthecompanyandatitsexpensetoconcludeinsurancecontractsforvoluntarypensioninsurancewithDoverieVoluntaryPensionFund, aswellastocarryoutotheractivitiesconnectedwithsupplementarypensioninsuranceinaccordancewiththecontractprovisions.

6.“Apersonauthorizedbyaninsuranceintermediary – legalentity” isaphysicalpersonthatisempoweredbytheinsuranceintermediary – legalentitytocarryouttheactivitiesunderitem 5onbehalfofandattheexpenseof the legal entity.

7. "Security business"- the commercial business of ensuring protectionto natural and legal persons or to the property thereof against criminal trespass.

8. "Similar business"- any business which can be reasonably inferred tobe similar to, or to cover, security business.

9. “Pensioner”isaphysicalpersonthatreceivesapersonalorsurvivor’ssupplementarypensionfromDoverieVoluntaryPensionFund.

10. “Beneficiary” isaphysicalpersonnamedbytheinsuredpersonintheinsurancecontract, whoisentitledupondeathoftheinsuredperson toreceivetheamountsaccumulatedinhisindividualaccountorparts thereofintheformofasurvivor’spensionoralumpsumorrescheduledpayment.

11. “Periodicinsurancecontribution” isacontributioninDoverieVoluntaryPensionFundmadeat periods of at least two months.

12.“Supplementarypension”isamonthlybenefitfromDoverieVoluntaryPensionFundpaid toapensioner, tosurvivorsofaninsuredperson, survivorsofapensionerorabeneficiary.

13.“Pensionscheme”istheconcretefinancialmechanismundertheseRegulationsfordeterminingthepensionliabilitiesandpaymentsfromDoverieVoluntaryPensionFund, calculatedthroughstatistical (actuarial) methods.

14. “Statistical (actuarial) methods”areasetofstatisticalmethodsandrules, whichareappliedtodeterminetheexpectedrevenuesfromfuturecontributionsandinvestments, aswellastheamountsdueforpaymentoffuturepensionsfromthepensioncompany.

15.“Technical interest rate”is the interest rate used at calculating the amount of the pension benefits and of the pension reserves.

16. (Previous item 17 – 26.10.2006)“Custodianbank”isacommercialbank, whichhavingconcludedacontractwithPICDoverieADforcustodialservices,holdsinsafekeepingallassetsofDoverieVoluntaryPensionFundinaccordancewiththerequirementsoftheSocialInsuranceCode.

17. (New–26.10.2006)Related persons/parties are:

a) parties joined by a relationship where one of them controls the other or its subsidiary;

b) any number of parties whereof the activity is controlled by a third party;

c) parties that are jointly in control of a third party;

d) spouses, relatives in direct line without limitation, relatives in collateral line up to fourth line of descent and relatives by marriage to third line inclusive;

e) entities, one of which owns directly orthrough a party under its control 20 or more per cent of the capital or the votes in the general meeting of the other legal entity.

18.(New–26.10.2006)Controlexists when a person (party):

а) holds, including through a subsidiary or by virtue ofan agreement with another party more than50% of the outstanding votesat the general meeting of a company or another legal entity, or

b) may appoint, directly or indirectly, more than one half of the members of the governing or the supervisory body of a legal entity, or

c) by virtue of law, by-laws or agreement manages, represents and/or determines the investment policy of another party, or

d) may otherwiseexercise decisive influence on the decision-making concerning the business of another legal entity.

19.(New–26.10.2006)Secured corporate bonds–bond issue where the debt obligation is backed by collateral at the amount of at least 100 percent of the value of the receivables on the principal.

20.(New–26.10.2006)Repo (also called repurchase agreement)and reverse repo (reverse repurchase agreement) –an agreement between a buyer and seller of securities whereby the seller agrees to repurchase the securities at a stated price and stated future time. The agreement is a repo for the selling party and a reverse repo for the buying one.

21.(New–26.10.2006)Collective investment scheme is an undertakingwithin the meaning of § 1, item 26 of the Additional Provisions of the Law on the Public Offering of Securities

22.(New – 26.10.2006) Cross transaction - atransaction of two orders of opposite sides originating from the same approvedparticipant in a regulated securities market, executed against each other.

23.(New – 26.10.2006) Qualified debt securities–debt securities with investment credit rating granted by internationally recognized rating agency.

24.(New–26.10.2006)Option – a security which expresses the right to buy or sell a given number of securities at a price fixed in advance until the expiration of a given time limit or on a fixed date.

25.(New – 26.10.2006)Futures means a standardised security which expresses the right and theobligation to buy or sell a given number of securities at a pricefixed in advance on a fixed date.

26.(New – 26.10.2006) Forward currency contract - a contract obligating one party to buy and another other party to sell a definite amount of foreign currency at a specific future date and at an exchange rate and under conditions agreed in advance.

27.(New – 26.10.2006) Investment property - a property (land, property rights over land, buildings or parts of a buildings) purchased specifically to generate profit through:

a) rent,leasing, tenancy

b) sale

c) increase of the value by building up, adding to and raising additionally abuilding or making improvements with the purpose to give the property to beadministered.

28.(New – 26.10.2006) Interest rate swap – an agreement between two parties for an exchange of interest payments on a specific principal amount for a specified period.

29.(New – 26.10.2006) Member state/country –European Union member-states, or other states – parties to theEuropean Economic Area Agreement.

30.(New – 26.10.2006) Speculation currency transaction is the purchase, retention and sale of foreign currency to gain profit from the fluctuations in the exchange rate, excluding the cases concerning hedging transactions.

ABBREVIATIONS USED

SIC – Social Insurance Code

FSC – Financial Supervision Commission

SSS – State Social Security

NSSI – National Social Security Institute

SVPI – Supplementary Voluntary Pension Insurance

NMEC – NationalMedical Experts Commission

TMEC–TerritorialMedical ExpertsCommission

LPOS - Law on the Public Offering of Securities

Ordinance№ 3 of September24th 2003 of FSC - Ordinance№ 3 of September24th 2003on the terms and procedures for switching participation and transferring the amounts accrued in an insured person’s individual account from one supplementary pension fund to another fund of the same type, managed by another pension insurance company, issued by the Chairman of the Financial Supervision Commission, published SG, issue 90 of Oct. 10, 2003, effective from Jan. 1, 2004, amended issue 9 of Feb. 3, 2004, issue 85 of Sept. 28, 2004, effective from Oct. 1, 2004, issue 50 of June 17, 2005, effective from July 1, 2005, amended issue 52 of June 24, 2005, amendedissue 7 of Jan. 24, 2006, effective from Jan.01, 2006.

Ordinance № 9 of November 19th 2003 of FSC - Ordinance№ 9 of November 19th 2003on the terms and procedures for valuation of assets and liabilities of supplementary pension funds and pension companies, the value of the fund’s net assets, for calculation and announcement of the value of a unit, as well as for the requirements to maintaining individual accounts, issued by the Chairman of the Financial Supervision Commission, published SG, issue 109 of Dec. 16, 2003, effective from July 1, 2004, amended issue 34 of April 27, 2004, issue 57 of July 12, 2005,issue 32 of April 18, 2006, suppl. issue 86 of Oct. 24,2006.

DeputyChairmanofFSC– thedeputychairmanoftheFinancialSupervisionCommission, managerof the Insurance Supervision department

Ordinanceon the Boards of Trustees – Ordinanceon the boards of trustees of the funds for supplementary mandatory pension insurance and for the advisory boards of the funds for supplementary voluntary pension insurance, adopted by Government Decree № 29 of Feb. 18, 2005, published in the State Gazette, issue 19 of March 1, 2005, effective from March 1, 2005.

Ordinance № 29 of July12th 2006 of FSC – Ordinance № 29 of July12th 2006 of FSC on the minimum level of credit ratings of the banks and on determining the state, regulated markets and the indexes on the regulated markets of securities in accordance with Art. 176 (2) of the Social Insurance Code, issued by the Financial Supervision Commission, published in the State Gazette, issue 62 of August 1st, 2006.

Ordinance № 34 of October4th 2006 of FSC – Ordinance № 34 of October4th 2006 of FSC on the conditions for closing transactions for reducing the investment risk related to the assets of a fund for supplementary pension insurance and on the requirements and the restrictions on such transactions, adopted by Resolution № 66-Н of 4.10.2006 of the Financial Supervision Commission, published in the State Gazette, issue 86 of October 24th, 2006.

CHAPTER ONE

GENERAL PROVISIONS

Subject

Art. 1. (Amended - 31.05.2004) (1) These Regulations settle the organization and the operation of supplementary voluntary pension insurance with Doverie Voluntary Pension Fund, hereinafter referred to as the voluntary pension fund.

(2) The organization and the operation of the voluntary pension fund shall be performed in accordance with the provisions of the Social Insurance Code, the secondary legislation on its execution and these Regulations.

Name of the Pension Fund

Art. 2. (1) The name of the voluntary pension fund is Doverie Voluntary Pension Fund.

(2) The name of the voluntary pension fund can be written both in Cyrillic and Latin alphabet.

Establishment and Registration

(Title amended 31.05.2004)

Art. 3. (1) (Amended -31.05.2004) The voluntary pension fund is established by Pension Insurance Company Doverie AD, hereinafter referred to as the pension insurance company, by decision of the Board of Directors of October 3, 2000.

(2) (Amended - 26.10.2006) The pension insurance company is registered in Sofia City Court, file No 9023 of 09/05/1994, unique identification BULSTAT codeU No 831190986 and has License No 01 to carry out supplementary pension insurance activity, issued by the State Insurance Supervision Agency on September 21, 2000.

(3)(New–31.05.2004, amended 26.10.2006)ThevoluntarypensionfundisregisteredinSofia City Court, file № 12540 of November 03, 2000, unique identification BULSTAT code№ 130410344.

Management and Representation

(New title-31.05.2004)

Art. 4. (Amended - 31.05.2004) The voluntary pension fund shall be managed and represented before third parties by the governing bodies of the pension insurance company.

Registered Office and Address

Art. 5. The registered office of the pension inssurance company and of the voluntary pension fund is in Sofia, 5 Dounav St., Oborishte municipality.

Guarantees for Fulfillment of Obligations

Art. 6. (Amended - – 21.12.2006)The fulfilment of the obligations to the members of the voluntary pension fund according to law, these Regulations and the insurance contract shall be guaranteed by the assets of the pension insurance company.

CHAPTER TWO

TERMS AND CONDITIONS OF MEMBERSHIP IN THE VOLUNTARY PENSION FUND

(Title amended–31.05.2004)

Conditions of Membership

Art. 7. (Amended -–31.05.2004) (1) Member of the voluntary pension fund can be any person who at the time of entrance is at least 16 years old.

(2) Insurance with the voluntary pension fund shall be effected in accordance with the provisions of SIC, ofthe secondary legislation on its application and of the conditions set in these Regulations and in the insurance contract.

Insurance Grounds

(Title amended–31.05.2004)

Art.8.(Amended–31.05.2004)Insurancewiththevoluntarypensionfundisbasedonaninsurancecontract concluded between the pension insurance company and:
  1. an individual contributing at his own expense.
  2. anemployerwhomakesinsurancecontributionsathisexpenseinfavorofhisemployees.
  3. bodies, who are contributors for:

а) publicofficers;

b) magistrates, publicprosecutors, detectives, bailiffs, administrativejudges, andcourtofficers;

c) regular members of the armed forces under the Defense and Armed Forces of the Republic of Bulgaria Act, the public officers – officers, sergeants, and civilians under the Enforcement of Penalty Act;

  1. assignors, which are insurance contributors for persons, with whom they have concluded contracts for assigning management or supervision;
  2. third-partyinsurancecontributor– aphysicalpersonoralegalentitythatathisownexpensemakesinsurancecontributionsinfavorofaphysicalpersonwithwhichhehasnolegalrelations as under items 2, 3 or 4.

Membership in the Voluntary Pension Fund

(Title amended–31.05.2004)

Art.9.(Amended –31.05.2004)(1)Membership in the voluntary pension fund starts from the date of concluding the insurance contract.

(2) Thepensioninsurancecompanyshallwithin 30 daysfromthedateofthefirstinsurancecontributionissuetotheinsuredpersonadocumentcertifying the participation in the voluntary pension fund.

Insurance Intermediaries

(New title-31.05.2004)

Art. 10.(Amended -–31.05.2004)(1) Thepensioninsurance company may conclude contracts with insurance intermediaries – physical persons or legal entities.

(2) Insuranceintermediaries who are individuals, as well as individuals authorized by insuranceintermediaries who are legal entities, shall have the right to conclude insurance contracts for supplementary voluntary pension insurance on behalf of, and at the expense of, the pension company, as well as to perform other activities related to supplementary voluntary pension insurance pursuant to the written contract concluded with the company.

(3) For the performance of their functions, insuranceintermediaries and authorized persons shall comply with the principle of voluntary choice and shall diligently explain the rights and obligations arising from the insurance contract, and keep the commercial secret and the good commercial reputation of the pension company.

(4) Persons who have offered or are offering security services or are engaged in other similar activities, including persons who have been or are partners, shareholders, or members of a managing or a supervisory body of a commercial company, performing security services or other similar activities, may not be insurance intermediariesor entities authorized by insurance intermediaries.

(5) Employers may not act as insurance intermediarieson behalf of a pension company for their workers and employees.

(6) Insuranceintermediaries, as well as individuals authorized by insuranceintermediaries who are legal entities, may not work for more than one pension company.

(7) Within 14 days, the pension company shall notify FSC of the conclusion or termination of every contract with an insuranceintermediary, as well as of authorization of individuals by insuranceintermediaries who are legal entities.

(8) FSC shall include the insuranceintermediaries and the authorized individuals in the general register of insuranceintermediaries.

(9) The pension company shall provide every insuranceintermediary, respectively the individuals authorized by insuranceintermediaries who are legal entities, with an identification document to prove their authorization during the implementation of their activity. The sample identification document shall be approved by the Deputy Chairperson of FSC.

Termination of Membership

Art. 11. (1) Membership in the voluntary pension fund shall be terminated as follows:

  1. Upon death of the insured person.
  2. (Amended - 31.05.2004) upon conclusion of a pension contract;
  3. (Amended - 31.05.2004) The money accumulated in the insured person’s account has been withdrawn as a lump sum or rescheduled payment in the cases prescribed in these Regulations;
  4. (New 31.05.2004, amended 21.12.2006) If the insured person has transferred the amounts accumulated on his personal insurance account into another voluntary pension fund established and managed by another pension Insurance company and has terminated all insurance contracts based on which the insurance with the voluntary pension fund has been effected.

(2)(New 31.05.2004) Theconcretedateofterminationofmembershipforeveryoneofthecasesdescribedinpara 1 shallbedeterminedasfollows: