A compromise between the amount of work experience and the age of retirement is at the core of the changes to Bulgaria’s pension system, presented by Labour and Social Policy Minister Totyo Mladenov on May 5 2010, Bulgarian-language Dnevnik daily said.

According to Mladenov, the changes that will come into effect as of July 1 2011 would include an increase in the number of years of work experience required for people to retire.

Currently, Bulgarian men are required to have worked for 37 years in order to retire while the quota for women is 34 years. The proposed amendments envision men needing to have worked for 40 years and women - 37 years.

As a compromise, Mladenov’s plans do not include an increase in age at which people are eligible for retirement. It will remain 63 years for men and 60 years for women.

Those who reach retirement age, but are up to three years short of the work experience requirement, would still get a pension, but it would be 2.4 percentage points lower for each of year of work experience they lack.  

In return, those who continue working despite having reached retirement age and have the required work experience would get a 2.4 per cent bonus for every extra year spent working.

The changes will affect employees of the Interior Ministry and the military, who now can retire after 25 years of work. The amendments envision that these people would be able to retire after accumulating 30 years of work experience, of which 20 years must be at the Interior Ministry’s system or the military, respectively.

Early retirement will be restricted.

Another planned measure is to introduce mechanisms for differentiated social security thresholds for the self-insured - under Bulgarian tax law these are practitioners of liberal professions, owners of small businesses and small farmers. Now, all of them pay social security contributions equivalent to a monthly income of 420 leva, regardless what their actual income is.

The stated goal of the changes was to shore up the budget of the National Social Security Institute (NSSI), which collects mandatory employer and employee contributions and pays out the benefits, and to allow for an increase of all pensions.

Mladenov’s changes will be discussed in May by the tripartite council that brings together the Government, employers and trade unions. In June, the changes are expected to be approved by the Cabinet and tabled in Parliament in September.

On May 5, the council finally reached agreement on the payment scheme for sick leaves, following more than a month of negotiations. NSSI asked for a change, saying that there was a sharp increase in the number of sick leaves used by Bulgarian workers this year, which not only suggested abuse of the system, but also cost the NSSI budget millions of leva.

According to the new agreement, on each of the first three days of a sick leave period, workers would receive 70 per cent of their daily wage, paid by their employers. From the fourth day of the sick leave period onwards, workers would be paid 80 per cent of their daily wage, which would be covered by the NSSI.