The Bulgarian Pension System: Caught Between Adequacy and Sustainability: Bulgaria

Selected Issues Papers, June 24, 2024

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Canonical URL: The Bulgarian Pension System: Caught Between Adequacy and Sustainability: Bulgaria

During the COVID-19 pandemic, the Bulgarian authorities increased pensions substantially to support pensioners’ living standards and aggregate demand.
These increases have become permanent and improved the adequacy of pensions.
The pension increases were not matched by revenue measures and have widened the deficit of the pension system.
Reforms that increase the incentives to contribute to the pension system and thus revenue would improve the financial sustainability of the pension system and reduce fiscal risks.

Pension increases enacted during the COVID-19 pandemic have become permanent and have materially improved pension adequacy.
The lack of accompanying revenue measures has widened the pension system deficit.
Improving incentives to contribute is identified as a pathway to increase pension system revenue and enhance financial sustainability.
Addressing contribution incentives would also help reduce fiscal risks associated with the pension system.

Implement reforms that increase incentives to contribute to the pension system to boost revenue.
Pair benefit increases with revenue measures or contribution-incentive reforms to preserve long-term financial sustainability.
Focus policy design on reducing fiscal risks from pensions by strengthening the revenue side of the system rather than relying solely on expenditure adjustments.

Source: The Bulgarian Pension System: Caught Between Adequacy and Sustainability: Bulgaria, Jean-Jacques Hallaert, June 24, 2024

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