Cabinet Approves 10 Per Cent Increase of Pensions

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At a meeting Wednesday the cabinet approved a 10 per cent rise of pensions and a reduction of the social insurance payments by 3 percentage points, effective October 1, the Government's information service said. The cabinet also approved a bill amending and supplementing the 2007 Public Social Insurance Budget Act.

With the changes the average monthly pension is expected to reach 184 leva (roughly equal to 92 euros).

This is the second time this year when pensions are increased by 10 per cent, after the first rise on July 1.

The social insurance burden is reduced by a total of 3 per cent. Pension contributions for people born before January 1, 1960 become 22 per cent from 23 per cent, while for people born after
that the percentage becomes 17 per cent instead of 18 per cent. The Unemployment Fund contributions are cut by 2 per cent, from 3 per cent to 1 per cent.

The 10 per cent rise of pensions is made possible by overshooting the revenue target of the public social insurance budget and the state budget, as well as by expected cost cutting in the former. The reduction of the social insurance payments is attributed to the sharp decrease of unemployment in this country and availability of resources, notably a surplus in the Unemployment Fund from 2006.

The rise of pensions will require an extra 1,212.2 million leva, which will have to be offset to the public social insurance budget.

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