What is the reason for the change in the decision on the planned increase in pensions from July 1? Are the funds available for the increase in the state budget and what will happen to pension insurance in the near future? Former Deputy Minister of Labor and Social Policy Zornitsa Rusinova and the Chairman of the Association of Industrial Capital in Bulgaria Vasil Velev commented on the topic in the NovaNews studio.
Due to the projected lower inflation, the National Social Security Institute proposes that pensions be increased by 10, not 11% from July 1.
Pension updates are calculated at the end of the calendar year according to the "Swiss rule". The account is obtained by adding 50% of the growth of inflation and 50% of the growth of the average insurance income. Thus, the indexation from July 1 should have been 11%, but the new estimates indicate otherwise.
"Actually, the exact percentage obtained by the "Swiss Rule" is 9.95. But since it is rounded up, it becomes 10.00%. For us, this is the right decision. The state has no money – she cannot give something to someone before she has taken it from someone else," remarked Vasil Velev.
In addition, Bulgaria has seen the highest increase in the retirement age in the last 25 years, according to data from the Organization for Economic Cooperation and Development.
"When we talk about a pension system, we must first restore stability and people's faith in it. The length of life depends to a large extent on the health care measures and solving the demographic problems in the country," said Rusinova.
Calculations of the Ministry of Finance show that the indexation of pensions will decrease in the coming years. Thus, it could reach 4% in 2027 if the current inflation rate is maintained.