There is no one in Bulgaria who would say that pensions are high, however, politicians must take into account the realities, which are that in recent years the increases have been too large, and there is no money for them. This was said by former Minister of Social Affairs Hristina Hristova in the program “ReVizia” on NovaNews. She commented that Bulgarian pensions are not the lowest in the EU.
“The absolute size of pensions must be commensurate with the standard of living and the level of living in the given country, but the main measure is the so-called. replacement rate or how much of the previous income, our income from work replaces the pension. According to this indicator, European statistics say that in our country the replacement rate is about 55%, and there are countries in the EU where it is 40%, 42%, 45%. That is, Bulgarians receive at least half of their salary as a pension after retirement", commented Hristova.
According to her, the pension model in our country is increasingly "polluted" and no longer follows its original logic. As part of the pension and as different types of supplements, various payments are directed, which should actually be in the form of social benefits, not as pension supplements.
"The problems with the financial condition of the pension system in Bulgaria are due to one subjective factor - the political decisions that were quite unreasonable, quite populist in recent years”, Hristova is categorical.
„The politicians decided to start trying to please the people and manage the pension system without taking into account the principles of pension and insurance logic. This is one of the reasons, but of course there is also a major objective reason. And it is the demographic crisis. Indeed, we have problems with a decrease in the birth rate and with negative growth, we have a problem with the total mortality rate and we still have a problem, albeit a decreasing one, with migration. And as the population decreases, so do the people of working age - those who actually contribute to the system".
In her words, there is no system in the world that can afford an increase in spending by 151%, as has been happening in the last 5 years. Not without thinking about increasing revenues. And the revenues in the NSSI system come only from the insurance contributions of employees:
"The pension insurance contribution is not low. It is 17.8% and it is not low at all, this is not a small amount of money from our monthly income. If we include the health contribution and other insurance contributions - this money is not small at all. And that's the problem - the contribution is already heavy, and we have to think about additional income to cover the costs", adds the former social minister.
According to her, another problem is that in Bulgaria there is a guaranteed minimum pension regardless of how large the amounts and how long we have contributed to the system. Calculations show that there are about 600,000 people who - if the logic of the pension insurance model is followed - should receive a lower than the minimum pension.
"The connection between a person's contribution to the system and what they really receive later has been broken", summarizes Hristova.
Then what are the possible solutions? Hristina Hristova says that everything depends on the courage of politicians to speak openly with citizens and present the alternatives. One of them could be borrowed from Israel:
"You could say - yes, the system is no longer in its pure form, it is obviously subsidized by the state through people's taxes and let's see whether to change it. We can say that we have reached this point with the pension insurance system, that there should be some standard monthly contributions for working people and one standard payment after we finish working, which will play the role of a pension."
What do the numbers show and what is the system like in Bulgaria?
By design, the model in our country is solidarity-based, which means that all our personal insurance contributions go to the same place - to the treasury of the National Social Insurance Fund.
This means that the money does not accumulate in our personal accounts, as is the case with the second private pillar, and with its general revenues, the National Social Insurance Fund pays the pensions of current pensioners. In Bulgaria, the total number of pensioners is over 2 million people, and the working population is 2 million and 900 thousand people. Simple calculations show that 100 working people today pay the pensions of 70 pensioners through their insurance. That is why the system is constantly in deficit.
In 2025, our total pension bill will be over 24 billion leva. However, the National Social Security Institute will not be able to collect this amount, only half of it. Therefore, the remaining 50% comes as a so-called transfer from the central budget. In translation, this means that those working today pay for the pensions of current pensioners twice - the first time through their insurance contributions, the second - through their taxes. Against this background, pensions in our country are constantly increasing every year and it is very difficult to make an argument against this, even though there is no money. Pensions are simply very low. Despite the increases, hundreds of thousands of adults live below the poverty line. The latest calculations show that almost 690 thousand adults receive less than 638 leva.
With the upcoming indexation in July, the minimum pension will become 630 leva. At the same time, there is also a maximum pension in Bulgaria. No matter what amount we sign for our monthly pay slip, there is a maximum insurance threshold in the country, above which we do not pay insurance contributions. That is why there is a ceiling on the possible pension, although there is a serious gap between what we may have contributed to the system with a high salary and what we will receive.
This year, the maximum pension is frozen at 3,400 leva, as it was before. However, this does not apply to the maximum insurance threshold, which continues to grow and in 2025 will be 4,130 leva. Ultimately, however, pensions in our country are growing, even though there is no money, even though they are still low and even though it is obvious that something needs to be done.
The average pension this year will reach 975 leva. For comparison, in 2007, the average pension in our country was 200 leva. In 2015 - 330 leva. In 2020 - about 413 BGN. Or simply put - in 13 years it has increased by a little over 200 BGN, while in the last five - by almost 600 BGN.