The Bulgarian social security system has been in the state of collapse for years. One of the reasons is the rapidly melting difference in the number of workers and pensioners. Currently, there are approximately 2.7 million working people and 2.2 million retirees. Poor collection of social security taxes also contributes to the crisis. The result is lack of money in the social security funds and using the budget to pay pensions and benefits. The advisory council for optimization of the social security system at the Ministry of Labour and Social Policy has developed a package of various reform proposals in order to overcome the problems. What will be the future of the social security system, however, depends entirely on the new government with GERB being the leading party.
In order to increase revenues, experts call for equalizing the minimum insurance income for all self-employed. This will affect farmers and tobacco growers who are currently insured on a lower income. According to the social minister, however, farmers should be compensated with additional subsidies. Another measure in this direction is also stripping civil servants from the privilege of the state paying their social security taxes. The council has also proposed the introduction of criminal liability for those not paying social security taxes. This measure is expected to increase tax collection by some 5 percent."The reason for proposed changes in contribution rates is that the deficit in social security funds is very high,” Interim Social Minister Jordan Hristoskov says. “Currently 53 per cent of the money needed for paying pensions and social benefits come from the state budget. If this trend continues, estimates show that soon more than 60% of pensions will be paid from the national budget. The gradual raising of the social security taxes will gradually lead to a better balance between state budget and social security revenues. Similar recommendations have also come from prestigious international organizations, including the World Bank and the International Monetary Fund."
Proposed reforms provide for gradually increasing retirement age for all labor categories and limiting early retirement, including by introducing minimum retirement age for the employees of the so-called special departments. By 2028 or 2036, depending on the option that is chosen, men and women will have to retire at 65. Introducing social benefits in case of unemployment soon before retirement is another planned measure.
English: Alexander Markov
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