So far the only visible result of the pension reform of the ruling GERB party was to blast the social dialogue in the country. The dozen of hastily taken decisions by the Finance Minister Simeon Dyankov not only are hardly likely to have a positive financial impact on the budget of the state social insurance, but will burden the system with new expenditure. Clear evidence of the negative impact of recent changes is the increased number of applications for retirement, filed last month with the National Insurance Institute (NII). People obviously have no confidence in the pension model and act aggressively against each novelty. Maybe because no one from that Government came out to explain how the austerity measures of today will benefit pensioners tomorrow.
Even the much-discussed increase in retirement age by four months a year for the three categories of labour, which in 2012 will affect about 65 thousand people will save in the words of the head of the Social Insurance Institute, Biser Petkov, only BGN30 million. This money will not be enough to raise the minimum pension from BGN136.08 to BGN145 a month. The missing part of the necessary BGN42 million should be provided through measures to improve revenue collection, said Petkov and thus indirectly pointed to the main bug in the scheme. And it is that the national social security system cannot take the money from its existing debtors, and at the same time needs to pursue new ones.
The report on implementation of the budget of the State Social Security System for 2010 indicates that the total non-collected revenue for the year amounted to
EUR213.72 million. By the lifting of the retirement age the government expects by the end of 2017 to save 300 million if, of course, the estimate once again does not prove wrong. This measure would not be needed at least five more years if there were ways to collect the entire revenue.
Cabinet took a very debatable decision – to abandon the proven working rule for indexation of pensions. Until now, the text of Article 100 of the Social Code has provided that pensions granted until 31 December of the preceding year shall be updated annually on 1 July with a decision of the Supervisory Board of the National Insurance Institute by a percentage equal to the sum of 50 percent of increase in insurance income and 50 percent of the CPI rise during the previous calendar year. As of 2013 the pensions will depend only the rate of inflation. This effectively means that the money for the most vulnerable groups will continue to be calculated only on the basis of the results of a questionable statistical method, which is made by the state. According to recent data from the National Institute of Statistics, annual inflation for the period October 2010-October 2011 was 3.5 percent. The problem is that these statistics are far from reflecting the real appreciation of life. When accounting for inflation, a dramatic increases in the prices of food and everyday products can be significantly reduced by the constant rates of 500 other goods. Among them are cell phones, the prices of repair services, taxis, domestic appliances, new clothes and shoes that are still only dream for most retirees.
