site.btaFinance Minister: Increasing Pensions with One-Off Supplements Is Vicious Practice

Outgoing Finance Minister Assen Vassilev said at a briefing here on Tuesday that increasing pensions right before elections using one-off supplements is a vicious practice, as it divides pensioners into groups. Vassilev's statement came after a proposal for Easter supplements for pensioners below the poverty line.

Earlier Tuesday, GERB-UDF and the Movement for Rights and Freedoms tabled amendments to the Public Social Insurance Budget Act, which provide for Easter supplements for pensioners below the poverty line. The draft provides for a one-off supplement of BGN 75 for the poorest pensioners. The measure will likely cost around BGN 40 million and cover 534,000 pensioners.

Vassilev said that the Finance Ministry's position under his administration has always been to give permanent pension increases, instead of relying on one-off supplements.

The Minister stated that dividing pensioners into groups and giving money out without it being funded in the budget is a vicious practice used to keep pensions low. He specified that if a person's monthly pension is BGN 527, then they would not be covered by this measure, while another person whose monthly pension is just BGN 3 lower would receive the supplement of BGN 75. "The question here is why we are dividing pensioners and not permanently increasing their pensions, which they have earned based on their length of service and their contribution to the social security system?" Vassilev said.

Vassilev pointed out that the minimum monthly pension in 2009 was BGN 136, compared to BGN 250 in 2020 and BGN 523 in 2023. As of July 1, 2024, the minimum monthly pension will become BGN 580, after funds were secured under the National Social Security Institute (NSSI) budget. For comparison, Bulgaria's poverty line in 2024 is BGN 526.

Regarding the availability of funds under the submitted proposal, Vassilev said that the Ministry of Finance had approached the NSSI to make sure that their estimates matched those of the NSSI. He said that as of the end of January, the NSSI has collected BGN 6 million more than estimated. Towards the end of the year, that sum may reach BGN 35-40 million, or it may not, depending on the collecting of social security contributions and the salaries on which those contributions are levied, the Minister noted.

Vassilev said that given that there is currently no surplus of BGN 40 million formed in the NSSI, the potential adoption of such a decision in Parliament, which does not include a top-up from the central budget, puts at risk the possibility of making the permanent increases that are budgeted to all pensioners.

He said: "My appeal to the National Assembly is not to play with populism but to do what is right, which is for our parents to have a dignified retirement based on permanent pension increases."