01.09.2021

A NEW PENSION MECHANISM FROM TODAY

The change guarantees a higher amount of benefits paid by the insurance institute in the second pension pillar as well.

As of today, the National Social Security Institute starts calculating pensions under a new mechanism. This applies to people who are about to retire and who will receive a second pension from private funds.

The reduction, or so-called reduction of the state pension, will already be half of what was done until yesterday. The change guarantees a higher amount of the pensions paid by the insurance institute for the insured in the second pension pillar as well.

Anyone who meets the conditions to receive an employment pension, has accumulated the required length of service and age and from today onwards applies for a pension at the National Social Security Institute will benefit from the new methodology when he has kept his funds accumulated in a private fund. His state pension will be reduced by about ten percent, instead of 20 percent, as has been the case so far.

"We expect about 50 percent to reduce the reduction, that is - if the reduction for a particular person was about 20 percent, now to be under the new mechanism for reduction of about ten," explained to BNR the director of the Pensions Directorate at NSSI Lyubomira Yazadzhieva.

People with already granted disability pensions, such as seniority and age, which have been calculated with a higher reduction rate, can request a recalculation under the new mechanism by 30 September next year. This requires the submission of an application, which can be downloaded from the NSSI website.

About 172 thousand people already with disability pensions, such as seniority and old age, which were calculated with a higher reduction rate, can request a recalculation under the new mechanism by September 30 next year. The recalculation is not automatic and requires the submission of an application, which can be downloaded from the NSSI website.

However, for those who are at a minimum size, it is unlikely to have a positive effect. "This is especially true for disability pensions - out of 151 thousand disability pensions granted with a reduction of the coefficient, almost 70% are below the minimum," Yazadzhieva added. For 15,000 young retirees with seniority and old-age pensions, the recalculation would increase pensions.

Also as of today, private pension companies are starting to provide funds to those who have reached the general retirement age. The money will be paid depending on the accumulated on the personal accounts and after concluding a contract for selection of a pension product.

Daniela Petkova from the Association of Supplementary Pension Insurance Companies commented:

"There are several payment options, including three types of lifelong pensions. One must receive the relevant information in order to find out in one's exact decision which of the three types one prefers to start receiving. In recent months, many people have called us - from those who are about to retire, we have informed them. But the first step from people's point of view is to get reliable and comprehensive information about their insurance rights."