by Glenn Tschimpke
Staff Writer
The country of Bulgaria is courting insurance and financial management giant New York Life to manage its national pension plan. Since the switch from a communist to democratic government in the early 1990s, the Eastern European country is slowly adjusting to Western business practices.
“We’ve been e-mailing and setting up tentative trips over there,” said New York Life manager Bill Murphy. “So we’re talking to the select people we should be talking to.”
Eight Bulgarian pension executives visited Jacksonville’s New York Life offices in October to investigate alternatives to their fledgling national pension plan to make it as lucrative as possible.
“The only alternative they had for the last three years, and it’s a fairly new government, is the bonds of the country, which is not very exciting,” said Murphy. “It certainly doesn’t keep up with the inflation rate, which is really double over there, or triple sometimes.”
Recognizing the need to reform their national pension program, Bulgarian government appealed to the U.S. Agency for International Development. USAID selected Ponte Vedra Beach-based International Leadership Institute as an intermediate to locate a business that would be able to accommodate Bulgaria’s needs.
“We have been doing this program since the collapse of communism,” said Jarga Tusek president and CEO of International Leadership Institute. “Someone needs to help them to transition into democracy.”
Tusek contacted New York Life agent Bill Cassidy of the Arnall & Cassidy Group, who in turn set the ball rolling for the company to begin talks with Bulgaria. The pension plan officials subsequently came to Jacksonville for training sessions and gain information on the services banks and insurance companies provide as custodians of pension funds.
“I think they got exposure to better alternatives to their voluntary plan,” said Cassidy. “Their public system was on the verge of bankruptcy. The focus on coming here was to try to get their system back on track.”
New York Life, in business since 1845, currently manages pension funds for many Fortune 100 companies. Active in trying to expand their global footprint, they have pursued business in China, Vietnam and India. Bulgaria is their first foray in to Eastern Europe.
Bulgaria, a country about the size of Tennessee on the western shore of the Black Sea, has about 1.5 million contributors in its pension fund that is worth roughly $50 million in U.S. dollars. In four years, they expect the amount to increase to $750 million.
“Right now, it’s not a high-income type country,” said Murphy. “But everyone is trying to save. Now they’re a democratic society so they’re being exposed to a lot of different things. Certainly saving, even on a small basis, multiplied by a large number of people is going to be a very large pension plan.”
Negotiations for New York Life to eventually act as custodian or part custodian are still in the works.
“At least what we’ve done is establish a dialog,” said Cassidy. “What will eventually come out of this, who knows. But there was good dialog and they got a lot of good background. They’ve got to do their homework and they’ve got to make their sale over there [in Bulgaria].”
Added Murphy: “When you’re dealing with foreign governments, it takes some time. We’re ready to go over there any time. It’s just a matter of red tape.”