Bulgaria Proposes 8-9% Pension Increase Starting July 2025

The caretaker government of Bulgaria has proposed an 8-9% pension indexation for July 1, 2025, as part of the draft budget for the State Social Insurance in 2025. According to the proposal, pensions for individuals who retire by December 31, 2024, will be updated based on a percentage determined by the Social Insurance Code. The exact increase will be set after inflation and social security income figures are finalized.

Additionally, the minimum pension and related amounts for work activity will be adjusted in July 2025 according to the same rule, known as the Swiss rule. A similar increase will apply to the social pension. However, the ceiling for pensions will remain unchanged at 3,400 leva.

The proposal also includes a significant rise in the maximum insured income from January 1, 2025, with the amount increasing to 4,130 leva from the current 3,750 leva. In contrast, the expenditure policy remains largely unchanged, with no modifications to benefits for maternity, sick leave, and unemployment, which will continue at their current levels.

The average pension in 2025 is expected to reach 975.64 leva, marking a 10.5% nominal increase from the average of 883 leva in 2024. This increase is anticipated to result in a real pension growth of 7.9%, taking into account the projected inflation rate of 2.4% for the coming year. The social security budget for 2025 will amount to 27.4 billion leva, representing a 3 billion leva increase over this year's budget. Of this amount, over 24 billion leva will be allocated for pensions, a rise of 11.6% from the previous year.

The cost of pensions in 2025 will represent 11.2% of Bulgaria's GDP. Despite the proposed increases, the government does not plan to raise social security contributions, and the...