Trend in Bulgaria: Pensioner Numbers to Rise as Workforce Shrinks

More than 360,000 Bulgarians are working beyond retirement age, according to data from the National Social Security Institute (NSSI). At the same time, the funds held by insured individuals in voluntary pension schemes remain exceptionally low—just 1.6 billion leva (BGN)—figures from the Bulgarian National Bank and the Financial Supervision Commission show. Experts warn that current demographic trends point to a growing number of pensioners and a shrinking workforce.

• More than 360 000 Bulgarians work after retirement

The NSSI reports a sustained rise in working pensioners, with their number increasing by over 50% in the past five years. Yordan Ingilizov from Blagoevgrad, a former Ministry of Interior employee, continues to work as a security guard after retiring.

“I’ve been a pensioner since 2011 and I’ve worked every year since then. I only stopped for six months. I work because pensions aren’t enough, as they’re too small,” said Ingilizov.

To reduce the need for people to work out of necessity after retirement, those in employment can make use of voluntary pension funds, experts advised during an event dedicated to the so-called third pension pillar.

“Demographics and simple maths show that state pay-as-you-go pensions alone cannot deliver higher replacement income levels. The ratio between workers and pensioners does not allow a sustainable rise in pensions at acceptable contribution rates,” said Vladislav Rusev, chief executive of a pension insurance company.

According to NSSI calculations, pension contributions would need to reach 37% of income to ensure adequate future payouts—an unrealistic level for workers. As a result, experts recommend individuals set aside additional savings through voluntary pension schemes.

“The example we gave showed that 100 leva, or even 50 leva a month, would help ensure a good quality of life when you reach your golden years,” said Borislav Genov, head of retail banking at a commercial bank.

“If you start at 25, saving 5% of your income is enough, provided you are consistent. Most people start much later, and the tax relief covers up to 10% of taxable income. That amount is tax-exempt if paid into a pension fund, and it’s a good level for those beginning later, after age 40,” noted Rusev.

However, data show that most people only begin to think about retirement savings after the age of 40. Industry representatives insist that voluntary pension savings will not lose value due to inflation over the long term.

“Over 30 years the funds are invested in various instruments and earn returns which historically have exceeded inflation. In the end, you preserve your purchasing power—and even increase it,” explained Genov.

In addition to a 10% tax rebate, voluntary pension funds offer inherited balances, flexibility in contributions, the option to withdraw funds when needed, diversified investment portfolios and protection for savers.