Pensions in Bulgaria Increase by 8.6% from July 1 - What Will It Actually Cover for Pensioners?

Starting today, July 1, pensions in Bulgaria will increase by 8.6%, following the so-called "Swiss rule". More than two million pensioners will receive their updated payments. The increase applies to all individuals who retired by the end of 2024. Meanwhile, experts commenting on the programme Business.BG have pointed out that the current pension model continues to accumulate growing deficits in the national budget and may not be sustainable in the long term.

The average pension in the country becomes BGN 1,012 from today, the minimum pension for length of service and age reaches BGN 630.50 and the minimum pension for old age - BGN 333.48. For comparison, the poverty line in Bulgaria is 638 BGN.

“It went up by 89 leva. I saw the order, I reviewed it—it's a very small increase. Prices are skyrocketing, and it's very difficult for a pensioner to make ends meet. Medicines cost a lot, and this increase can’t fight inflation.”

Valentin Topalov:

“It’s unlikely I’ll be able to afford anything more than I already do, but it’s something, at least.”
“It’s hard to explain what you can actually buy with 60 leva.”

BNT: How much should pensions increase?

“More. But since our country isn’t wealthy, there’s no money for pensions. There’s no economy—where should the money come from?”

At the moment, the shortfall in the State Social Insurance budget for pensions alone, which is compensated by the Treasury, is 10 billion BGN and is constantly increasing.

Prof. Bogomil Manov from the Fiscal Council explained:

“If we take 100% as the pension amount, 52% comes from insurance contributions. The remaining 48% comes from the state budget. When a pensioner goes shopping—whatever they buy—they pay 20% VAT. That VAT goes to the state budget and is then recycled to finance pensions for today’s retirees.”

He adds that this model ignores the actual contributions that insured individuals make during their working lives:

Prof. Bogomil Manov, Fiscal Council: "What the person receives should be a function of what he did during his active employment, i.e. what he contributed to the social security system."

In the second and third pillars of the pension system—mandatory and voluntary pension savings—the total accumulated funds amount to approximately 27 billion BGN, which is nearly the same amount disbursed annually for pensions.

Maya Rousseva, member of the Bulgarian Association of supplementary pension security companies: "At the beginning when the pension reform was conceived, there were projects for a gradual increase of the contribution to 7%. This has not happened so far."

Another persisting issue is that many people declare lower-than-actual incomes for social security purposes.

Maya Rousseva, member of the Bulgarian Association of supplementary pension security companies: “I must admit that pension companies themselves haven’t done enough to popularize additional pension savings.”

A broader discussion is expected soon on how to balance the pension system in light of the accumulating deficits.