Konstantin Prodanov, chairman of the parliamentary Budget and Finance Committee, denied that there were plans to transfer part of the contribution to the second pension pillar to the National Social Security Institute. The statement came after reports that the 2027 draft budget was considering reducing contributions to universal pension funds from 5% to 2.5%, with the remaining 2.5 percentage points going to the state public social security system.
“There is no such thing. It is not being planned, nor has it been planned,” Prodanov said during a briefing, as quoted by bTV. According to him, the information being circulated about a planned “quasi-nationalisation” of pension funds is disinformation.
At present, no official text of a budget measure to redirect future contributions from individual accounts to the National Social Security Institute has been presented. Reports on the matter cite unofficial information, while the funds already accumulated in the accounts have not been identified as subject to change. If such a scheme were introduced, its immediate effect would be that less money would accumulate in the insured persons’ individual accounts, while more funds would flow into the solidarity-based first pillar.
What opponents of the idea say
Opposition politicians described a possible reduction in contributions to the second pillar as partial nationalisation and as a transfer of the burden from individual accounts to the National Social Security Institute. Assen Vassilev said that We Continue the Change would call for protests if the measure were included in the budget. Democratic Bulgaria insisted that personal pension savings should not be used to cover a budget deficit.
According to calculations cited by Darik, transferring 2.5 percentage points would reduce the average annual accumulation in individual accounts by 433 euros. Critics also stress the difference between the two models: funds in the second pillar are held in an individual account and may be inherited under the terms of the law, whereas money held by the National Social Security Institute is not personal property and is not inherited under the same procedure.
Deficit data and proposals for change
When presenting audits by the Bulgarian National Audit Office, Prodanov said that spending on pensions and benefits had increased by approximately 56%, while gross domestic product had risen by 87.6%. According to him, the coverage of pension expenditure through collected social security contributions had fallen from 59.9% to 54.9%, while the shortfall in the Pensions Fund had reached nearly BGN 12 billion annually. These funds are provided through transfers from the central budget.
Prodanov linked the problem to changes made piecemeal and to the mixing of social security payments with social assistance. As an example, he cited the inclusion of temporary Covid supplements in the pension formula. According to him, around 45% of pensioners receive a minimum pension, showing the weakened link between social security contributions and the size of the pension.
The government programme envisages giving greater weight to the social security record actually accumulated. Payments made without social security contributions are expected to be removed from the pension system and financed through social assistance. The bill is to be prepared by December 2027, while the minimum and maximum social security income thresholds are to be updated annually.
Changes to the second pillar are also being prepared, including the option to choose between a dynamic, balanced and conservative sub-fund from 1 January 2027. A gradual reduction is also being discussed in the maximum deduction from pension contributions charged by pension companies, from 3.75% to 2.10% by 2036. These proposals differ from the alleged redirection of contributions to the National Social Security Institute and concern the way personal pension savings are managed.
In June, the National Assembly assigned the Bulgarian National Audit Office to conduct audits of public finances, state public social security and the Road Infrastructure Agency. The audit of the pension system is expected to assess the accumulated effects of changes made in recent years. The final budget parameters will show whether the disputed transfer of contributions is included at all as a legislative proposal.
Sources: dunavmost.com, business.dir.bg, dariknews.bg