Pensioners Paid Millions to Buy Internship for Retirement

Potential pensioners in Bulgaria paid almost BGN 5.3 million to buy an internship for a pension in the first six months of this year, according to a report by the National Institute of Social Sciences.

According to the organization’s plans, Bulgarians are expected to pay almost BGN 20.6 million in contributions in order to retire this year. For the period from January to March this year, almost BGN 4.439 million was received in the budget, and the average length of service of these people was almost two years – 23 months.

Last year, a total of 4,707 potential pensioners paid BGN 32.8 million to retire, and in 2022, 4,093 people did so and it cost them BGN 24.43 million. The amount for a month of lost experience is 19.8% of the minimum insurance income, which has risen to BGN 933 since the beginning of this year.

As a result, a month of internship currently costs BGN 184.73, and a year costs BGN 2126.80. For the entire period of five years, the applicant-pensioner must pay BGN 11,084.

Transfers from Private Pension Funds

More than BGN 28 million has been transferred from private general pension funds to the budget of the National Insurance Institute, indicating that these individuals have given up their second pension and will receive only the state pension.

The insurance organization expects the amount of transferred funds to reach BGN 80 million per year.

State Fund for Guaranteeing the Sustainability of the State Pension System

At the end of last year, the State Fund for Guaranteeing the Sustainability of the State Pension System, also known as the Cash Fund, had BGN 3.904 billion. In 2023, BGN 99.7 million was transferred from/to the central budget due to the State Fund, and interest in the amount of BGN 108.8 million was received on the account of the fund.

Pension Expenditure Projections

After 2025, pension expenditure as a share of GDP is expected to fall, reaching its lowest value of 9.6% in the period 2042-2047. It is then expected to rise to 10.0% in 2060, followed by a slight decrease to 9.9% at the end of the forecast period.

Insurance Options for Individuals

Individuals insured in a general pension fund have the right to choose to change their insurance from a general pension fund to a “Pensions” fund, with a higher insurance contribution in the amount of the insurance contribution for a general pension fund.

This option is also available to those insured in a professional pension fund, with the amount of funds transferred amounting to more than BGN 5.40 million.

The National Insurance Institute also received interest income from overdraft pensions, unemployment benefits, and sick leave.