Statutory Old Age Pension Scheme
Пенсия за осигурителен стаж и възраст
Coverage
Mandatory insurance
- Majority of economically active part of the population, i.e. 3rd labour category (non-hazardous jobs, including most civil servants and the self-employed) and 1stand 2nd labour categories (hazardous jobs).
- Specific groups of economically inactive persons who receive social insurance benefits (e.g. for periods of maternity and child-rearing, receipt of unemployment benefits, sickness benefits).
- Specific groups of economically inactive persons who do not receive social insurance benefits (e.g. parents during child-raising periods, home caregivers, persons with a temporary work incapacity who do not receive social insurance benefits).
Exempted
- Persons working in the defence and security sector.
Voluntary insurance
- Persons commissioned to work abroad by a Bulgarian intermediary; pensioners working as self-employed; the spouse of an individual who is on a long-term diplomatic mission.
Financing
General finances
- Mainly PAYG-financed out of insurance contributions of the currently insured population.
- Tax-financed: contributions for civil servants.
- Tax-financed: non-contributory insurance periods (credited as pension-relevant periods).
- The state finances any deficit.
Contribution rates
- 3rd labour categories: fixed share of monthly gross earnings (14.8%) with contribution assessment ceiling; contributions shared between the employer (8.22%) and the employee (6.58%); contribution for civil servants is entirely covered by the employer.
- 1st and 2nd labour categories: fixed share of monthly gross earnings (17.8%); contributions shared between the employer (9.97%) and the employee (7.83%).
- If persons opt out from the universal pension funds, the total contribution rate increases, with 5% shared between the employer (2.80%) and the employee (2.20%).
- If persons in the 1st and 2nd labour categories opt out from the professional pension funds, the total contribution rate increases by 12% for the 1st labour category and 7% for the 2nd labour category (paid by employer).
Administration
- The National Social Security Institute (NSSI) manages the scheme and is accountable for its actions to the National Assembly.
- The National Revenue Agency collects contributions and transfers them to the NSSI.
Qualifying Conditions
Qualifying conditions
- Standard old age pension: statutory retirement age increases to 65 until 2037 for women (born after 31/03/1972) and until 2029 for men (born after 31/01/1964); minimum insurance periods: increase until 2027 to 37 years for women and 40 years for men. After reaching 65 years, the retirement age will increase according to life expectancy.
- Old age pension for incomplete insurance periods: statutory retirement age increases to 67 until 2023 for men and women (born after 29/02/1956); minimum insurance periods: 15 years of actual contributory insurance periods.
Early retirement
- Available up to 1 year prior to reaching the retirement age of the standard old age pension with negative (permanent) adjustments to pension benefits (0.4% per month).
- Early retirement 1st labour category (if opted out from professional pension scheme): statutory retirement age increases to 55 (until 2037 for women born after 30/04/1982 and until 2029 for men born after 28/02/1974); minimum insurance periods: the sum of the total insurance periods and the retirement age must equal 94 for women and 100 for men; persons must have a minimum of 10 years of qualifying insurance periods within the 1st labour category.
- Early retirement 2nd labour category (if opted out from professional pension scheme): statutory retirement age increases to 60 (until 2037 for women born after 30/04/1977 and until 2029 for men born after 28/02/1969); minimum insurance periods: the sum of the total insurance periods and the retirement age must equal 94 for women and 100 for men; persons must have a minimum of 15 years of qualifying insurance periods within the 2nd labour category.
Deferred retirement
- Retirement can be deferred with positive (permanent) adjustments to pension benefits (2.8% per year).
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefits.
- After reaching statutory retirement age employment is permitted without earnings limit.
Benefits
Pension benefits
- Primarily based on the amount of contributory earnings throughout working career, including pension-credited periods like e.g. child-raising.
- Maximum amount: BGN 1,200.
- Minimum amount: BGN 250; for persons with a calculated pension income below the minimum pension threshold.
- Privileges for civil servants: right to special one-time compensation of the amount of last gross salaries (depending on the length of service, max. of up to 10 gross salaries), requiring the person to have met all qualifying conditions for standard old age pension/early pension.
Factors for benefit calculation
- Based on the following factors: (a) ‘individual coefficient’, (b) ‘the reference income for the calculation of the pension’, (c) ‘percentage used to determine the weight of each year of insurance periods’.
- Individual coefficient: the ratio of the individual’s average monthly insured earnings to the national average monthly insured earnings (based on the respective reference period) adjusted by the individual’s number of working days per month.
- Reference period: the insured earnings after 31/12/1999 until the date of claiming an old age pension. For pensions claimed after 30/04/2019 and before 01/01/2023 an alternative reference period can be opted for: 3 consecutive years of insurance periods within the last 15 insurance years until 01/01/1997 and the insured earnings after this date until the date of claiming an old age pension.
- Reference income for the calculation of the pension: multiplication of the ‘individual coefficient’ with the population average monthly insured earnings for the 12 calendar months preceding the month of retirement.
- Percentage determining the weight of each year of insurance: 1.2% per year (further adjusted for deferred retirement).
- If persons remain in the universal pension funds: the individual coefficient is lowered with the ratio of the insurance contributions for the capital-funded scheme and the total rate of the mandatory pension insurance (i.e. 5/19.8 = 25.3%).
- Adjustments: yearly adjustment of pension value accounting for changes of gross average earnings and increase of average living costs.
Taxation and social security contributions
- Pension benefits are not subject to tax.
- Health insurance contributions are covered by the state budget.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Majority of economically active part of the population, i.e. 3rd labour category (non-hazardous jobs, including most civil servants and the self-employed) and 1stand 2nd labour categories (hazardous jobs).
- Specific groups of economically inactive persons who receive social insurance benefits (e.g. for periods of maternity and child-rearing, receipt of unemployment benefits, sickness benefits).
- Specific groups of economically inactive persons who do not receive social insurance benefits (e.g. parents during child-raising periods, home caregivers, persons with a temporary work incapacity who do not receive social insurance benefits).
Exempted
- Persons working in the defence and security sector.
Voluntary insurance
- Persons commissioned to work abroad by a Bulgarian intermediary; pensioners working as self-employed; the spouse of an individual who is on a long-term diplomatic mission.
General finances
- Mainly PAYG-financed out of insurance contributions of the currently insured population.
- Tax-financed: contributions for civil servants.
- Tax-financed: non-contributory insurance periods (credited as pension-relevant periods).
- The state finances any deficit.
Contribution rates
- 3rd labour categories: fixed share of monthly gross earnings (14.8%) with contribution assessment ceiling; contributions shared between the employer (8.22%) and the employee (6.58%); contribution for civil servants is entirely covered by the employer.
- 1st and 2nd labour categories: fixed share of monthly gross earnings (17.8%); contributions shared between the employer (9.97%) and the employee (7.83%).
- If persons opt out from the universal pension funds, the total contribution rate increases, with 5% shared between the employer (2.80%) and the employee (2.20%).
- If persons in the 1st and 2nd labour categories opt out from the professional pension funds, the total contribution rate increases by 12% for the 1st labour category and 7% for the 2nd labour category (paid by employer).
- The National Social Security Institute (NSSI) manages the scheme and is accountable for its actions to the National Assembly.
- The National Revenue Agency collects contributions and transfers them to the NSSI.
Qualifying conditions
- Standard old age pension: statutory retirement age increases to 65 until 2037 for women (born after 31/03/1972) and until 2029 for men (born after 31/01/1964); minimum insurance periods: increase until 2027 to 37 years for women and 40 years for men. After reaching 65 years, the retirement age will increase according to life expectancy.
- Old age pension for incomplete insurance periods: statutory retirement age increases to 67 until 2023 for men and women (born after 29/02/1956); minimum insurance periods: 15 years of actual contributory insurance periods.
Early retirement
- Available up to 1 year prior to reaching the retirement age of the standard old age pension with negative (permanent) adjustments to pension benefits (0.4% per month).
- Early retirement 1st labour category (if opted out from professional pension scheme): statutory retirement age increases to 55 (until 2037 for women born after 30/04/1982 and until 2029 for men born after 28/02/1974); minimum insurance periods: the sum of the total insurance periods and the retirement age must equal 94 for women and 100 for men; persons must have a minimum of 10 years of qualifying insurance periods within the 1st labour category.
- Early retirement 2nd labour category (if opted out from professional pension scheme): statutory retirement age increases to 60 (until 2037 for women born after 30/04/1977 and until 2029 for men born after 28/02/1969); minimum insurance periods: the sum of the total insurance periods and the retirement age must equal 94 for women and 100 for men; persons must have a minimum of 15 years of qualifying insurance periods within the 2nd labour category.
Deferred retirement
- Retirement can be deferred with positive (permanent) adjustments to pension benefits (2.8% per year).
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefits.
- After reaching statutory retirement age employment is permitted without earnings limit.
Pension benefits
- Primarily based on the amount of contributory earnings throughout working career, including pension-credited periods like e.g. child-raising.
- Maximum amount: BGN 1,200.
- Minimum amount: BGN 250; for persons with a calculated pension income below the minimum pension threshold.
- Privileges for civil servants: right to special one-time compensation of the amount of last gross salaries (depending on the length of service, max. of up to 10 gross salaries), requiring the person to have met all qualifying conditions for standard old age pension/early pension.
Factors for benefit calculation
- Based on the following factors: (a) ‘individual coefficient’, (b) ‘the reference income for the calculation of the pension’, (c) ‘percentage used to determine the weight of each year of insurance periods’.
- Individual coefficient: the ratio of the individual’s average monthly insured earnings to the national average monthly insured earnings (based on the respective reference period) adjusted by the individual’s number of working days per month.
- Reference period: the insured earnings after 31/12/1999 until the date of claiming an old age pension. For pensions claimed after 30/04/2019 and before 01/01/2023 an alternative reference period can be opted for: 3 consecutive years of insurance periods within the last 15 insurance years until 01/01/1997 and the insured earnings after this date until the date of claiming an old age pension.
- Reference income for the calculation of the pension: multiplication of the ‘individual coefficient’ with the population average monthly insured earnings for the 12 calendar months preceding the month of retirement.
- Percentage determining the weight of each year of insurance: 1.2% per year (further adjusted for deferred retirement).
- If persons remain in the universal pension funds: the individual coefficient is lowered with the ratio of the insurance contributions for the capital-funded scheme and the total rate of the mandatory pension insurance (i.e. 5/19.8 = 25.3%).
- Adjustments: yearly adjustment of pension value accounting for changes of gross average earnings and increase of average living costs.
Taxation and social security contributions
- Pension benefits are not subject to tax.
- Health insurance contributions are covered by the state budget.
Legal Basis: Social Security Code, Section I (Кодекс за социално осигуряване); Decree on the Categorisation of Labour for Retirement Purposes (Наредба за категоризиране на труда при пенсиониране); Ordinance on Pensions and Insurance Periods (Наредба за пенсиите и осигурителния стаж); Law on Health Insurance (Закон за здравното осигуряване); Law on the Civil Servant (Закон за държавния служител).