HIGHER PENSIONS FOR RETIREES
The law amending and supplementing the Social Insurance Code enters into effect as of July 1, 2006 after it was approved by the National Assembly on June 28 (Wednesday). It stipulates that the size of the minimum pension for insurance length of service shall not be calculated as a percentage of the social pension for old age and that shall be done on an annual basis by the Law on Budget for State Public Insurance. The minimum amounts of other pensions for length of service - disability and hereditary pensions will be calculated as a percentage of the minimum pension for insurance length of service and age. That is done because the social pension for old age is like social assistance and its size goes up much slower than labour remunerations. Thus, the comparatively low minimum size of pensions for length of service will be raised.
The law entitles the Cabinet of Premier Sergey Stanishev to set the minimum size of pensions for insurance length of service and age as per the proposal of Minister of Labour and Social Policy Emiliya Maslarova and the National Social Security Institute (NSSI), but only for the July 1 - December 31, 2006 period. As of the date the amendments enter into effect - July 1 - the Council fo Ministers will make a single indexing of personal pensions for length of service.
The legislative amendment introduces the European directive for observation of the additional pension rights within the community, but the existing pension model is not being changed and is only updated by establishing a fourth pillar for professional pension schemes. According to them workers and employees will be able to agree with the employer to make certain instalments into additional pension accounts. Their amount will be set in the collective labour agreement between the employer and the syndicates in the company for each individual enterprise. The company fund where the instalments will be collected will be managed by a chosen pension company. If the employee quits his position the money can be transferred to the new enterprise, and after turning a certain age he may get it monthly from the former place of work for a certain period of time.
Bulgarian pension companies managing the money will be allowed to operate in all EU countries and vice versa.
The amendments to the Social Insurance Code will raise the incomes of some 1.6 million retirees, the Social Ministry estimates.