Bulgarian cabinet moves on pension reform

Written by on May 20, 2015 in Bulgaria - Comments Off on Bulgarian cabinet moves on pension reform

Bulgaria’s cabinet approved on May 20 changes to the Social Security Code, introducing short-term and long-term measures which the government says will provide financial stability to the pension system and improve the adequacy of pensions.

The same day, Deputy Prime Minister and Labour Minister Ivailo Kalfin said that there was general agreement between government, business and labour on principles regarding changes in the social package.

The social package he referred to includes a guaranteed minimum pension increase by at least 40 per cent over the next 10 to 12 years.

Kalfin, the sole member of the minority socialist ABC party in Bulgaria’s coalition cabinet, called on parties in Parliament to back the government’s proposed social package.

He said, regarding talks with private sector and trade union organisations, that there were still issues such as disability pensions and the operation of pension funds about which discussions were continuing. A few more months of work were needed, Kalfin said.

The proposals approved by the cabinet on May 20 include, according to a government media service statement, changes that would lead to revenue growth in the insurance system that would reduce the dependence of the system on the state budget. This related to a proposed gradual increase in the amounts of social security contributions.

The bill also proposes changes leading to cost optimisation in the insurance system by introducing more stringent and fair access to pensions, the government statement said.

It is envisaged that there will be gradual increases in and gradually equalisation of the standard retirement age for men and women, while gradually increasing the contribution years required for retirement for workers in what Bulgaria terms the third category of labour.

There are changes with respect to the retirement of workers under the first and second category of labour.

The first and the second categories are those involving heavy and hazardous conditions of work. The first category includes, for example, mine workers, divers, airline pilots, people gathering radioactive waste. The second category includes occupations such other underground workers, metal processing and repair workers, people engaged in work with lead, cyanide, chromium and lead tubs.

The third category of labour covers all labour not included in the first two categories.

Kalfin said that urgent meetings would be held with all parliamentary groups, “especially those on which the making of the decision depends” with determination to retain the currently achieved agreement as is, to give further impetus to the development of the pension system.

Pension system reform in Bulgaria has a fraught political issue for years, while the country faces serious issues such as demographic changes that will have a serious economic impact.

Further, current attempts at changes have seen ire among Interior Ministry employees, who resist the idea of rewriting rules that currently allow them retirement in their early 50s.

Employees of the Interior Ministry account for more than a third of all state employees in Bulgaria, 51 085 out of a total 140 767, according to a separate report on the state administration adopted by the cabinet on May 20.

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