site.btaScientists Say It Makes Sense for a Person to Receive Pensions from Two Sources

Scientists Say It Makes Sense for a Person to Receive Pensions from Two Sources


Belchin Banya, Sofia Region, February 25 (BTA) - Scientists and
experts have calculated that a retired person who receives two
pensions, one from the National Social Security Institute (NSSI)
and the other from a universal pension fund, will have a larger
aggregate income than a person who receives a pension only from
NSSI, even though the NSSI pension in the second case is larger
than the NSSI pension in the first case. This applies to people
who will become entitled to receive a pension around the 2040s
and who will have completed the full length of the required
contributory service.

The calculations have been made by Yordan Hristoskov of the
Economic Research Institute with the Bulgarian Academy of
Sciences and actuaries serving with pension funds. The results
were unveiled by Hristoskov at a seminar on the Social Insurance
Code.

For the purposes of the study, the estimated size of a lifetime
pension from a universal pension fund is based on the average
monthly contributory income in the period between 2002 and 2014.
The study assumes that the retirement age will be 65 years for
men and 63 years for women, and that the required full length of
contributory service for third-category work (the most common
category) will be 40 years for men and 37 years for women.

Based on these assumptions, around the 2040s a man who has done
third-category work and has completed the full length of the
required contributory service will receive either a sole monthly
pension of 1,383 leva from NSSI or an aggregate monthly pension
of 1,691.97 leva (including 1,137.60 leva from NSSI and 554.37
leva from a universal pension fund). A woman meeting the same
requirements will receive either a sole monthly pension of
1,105.80 leva from NSSI or an aggregate monthly pension of
1,258.59 leva (including 909 leva from NSSI and 349.59 leva from
a universal pension fund).

Hristoskov said that giving workers the right to choose between
NSSI and a universal pension fund puts NSSI on the losing side,
because many people with small savings will rely on NSSI to
guarantee their pensions.

He believes that the push to give people this particular right
has been a matter of interests and unfulfilled obligations. The
government wants to draw resources from the individual accounts
of people insured by universal pension funds in order to offset
its growing budget deficits, while trade unions have arranged
for a freeze of the retirement age and have "sealed up" the
privilege of early retirement for first- and second-category
workers in enterprises which are their strongholds, he said. The
changes to the Social Insurance Code should have undergone an
impact assessment before they were proposed, Hristoskov argued.