Social insurance is a system through which the state provides protection to citizens in the event of certain social risks. The private sector may offer supplementary insurance that complements the public system but does not replace it. Due to its key role in protecting people and maintaining social justice, most countries have introduced compulsory state social insurance. In Bulgaria, it is regulated by the Social Insurance Code (SIC).

One of the core principles of social insurance is solidarity. This means that insurance contributions are not used solely for the individual needs of the contributor. The funds of the state social insurance (SSI) are collected from contributions paid by/on behalf of all individuals insured under the SSI for the respective social risks (general illness, work-related accident, occupational disease, maternity, unemployment, old age), and are spent in the event of an insurance claim concerning a specific insured person.

People often do not clearly distinguish between social insurance and taxes, as both are deducted from the gross salary. The difference, however, is significant. In insurance, there is a direct link between the amounts paid and the size of the indemnities received. As for taxes, no such dependency exists - regardless of how much one has paid, they have access to the same public goods. If an employer does not insure their employee based on the actual amount of income received, they are effectively disadvantaging them - the employee will receive a lower pension and reduced benefits in cases of temporary working incapacity, maternity, or unemployment. At the same time, taxes are owed on various types of income, while insurance contributions apply only to income from employment and other income subject to insurance.

Another important distinction between taxes and insurance is the established “ceiling” on which insurance contributions are paid – the maximum monthly insurable income according to the State Social Insurance Budget Act (SSIBA) for the respective year, applicable to all insured individuals. For income exceeding the maximum monthly insurable amount, no insurance contributions are due, but such income is still subject to taxation.

In Bulgaria, the insurance system is managed by the National Social Security Institute (NSSI), which is responsible for the SSI budget. Employment is fundamental to SSI. The performance of the relevant work activity forms the basis for insuring individuals against some, or all of the social risks covered by SSI. Within the structure of SSI, there are several separate funds, the largest of which is the Pensions Fund. More information on other types of insurance, as well as additional pension and health insurance you could find in article "Other Insurance. Health Insurance".

 

Pensions Fund

The Pensions Fund of the SSI pays pensions for insured length of service and old age, disability pensions due to general illness and survivor’s pensions. The pensions of current pensioners are paid through the social security contributions of those currently working. This is how the solidarity principle works, unlike the capital principle, which is characteristic of the supplementary compulsory pension insurance in private fund.

As of 2026, 62 years and 6 months of age and 36 years and 10 months of service are required for retirement for women. For men, the required age is 64 years and 9 months, and the length of service is 39 years and 10 months. By 2037, the requirements for length of service and age will gradually increase to 37 years of service and 65 years of age for women and to 40 years of service and 65 years of age for men. It is possible for a person to retire without the required length of service if they are 67 years old and have at least 15 years of insured length of service.

The amount of the pension for length of service and old age is determined by a formula that includes the average monthly insurable income for the country for 12 months of granting the pension; an individual coefficient of the person related to their insurance contribution and the insured length of service of the person converted to the third category of labour.

The amount of the disability pension due to a general illness is determined by a formula that includes the average monthly insurable income for the country for 12 months of granting the pension; individual coefficient of the person until the date of disability, the actual insured length of service and the recognized insured length of service.

A survivor’s pension is paid to the children of the deceased until the age of 18 or, if they continue their education – until the end of it, but not later than 26 years. Both those born in marriage and out of it are entitled to it. Adopted children are not entitled to a pension from their birth parents and vice versa, except in cases where the parent of the adopted child is the spouse of the adopter. The surviving spouse is also entitled to a survivor’s pension – up to 5 years earlier than their age for acquiring a pension for insured length service and old age. In certain cases, the parents of the deceased are also entitled to a pension.

The Pensions Fund is primarily financed through the social insurance contributions of employed individuals, but in cases of insufficient funds, it is supplemented by transfers from the state budget, meaning that in practice it is mainly funded by tax revenues.

The rate of the social insurance contribution to the Pensions Fund for individuals working under conditions of the third labour category is as follows:

·         19.8% for individuals born before January 1, 1960, of which 11.02% is paid by the employer and 8.78% by the insured person;

·         14.8% for individuals born after December 31, 1959, of which 8.22% is paid by the employer and 6.58% by the insured person.

Mandatory insurance to the Pensions Fund applies to individuals working under employment contracts, individuals working under non-employment legal relationships (provided that the monthly remuneration received is equal to or greater than the minimum wage (MW) after deducting expenses for the activity in accordance with the Personal Income Tax Act (PITA), or if the person is insured on another basis during the respective month, regardless of the amount of remuneration received), self-employed individuals, regardless of which social risks they have chosen to insure themselves against, and others.

 

Pensions Fund for Persons under Art. 69

This fund is independent of the general Pensions Fund. It concerns pensions only for specific categories of insured persons – individuals working in special conditions, such as military personnel, police officers, firefighters, employees of the Ministry of Internal Affairs, the Ministry of Defence, and others. They are subject to retirement under simplified conditions. Employees do not make contributions to this fund at their own expense. Similar types of pensions are paid to those from the Pensions Fund.

 

Supplementary Compulsory Pension Insurance 

Supplementary compulsory pension insurance (SCPI) is carried out by private pension insurance companies through the universal and professional pension funds they manage. All employed individuals born after 31.12.1959 are insured in a Universal Pension Fund (UPF), while all workers engaged in labour under Category I and II, regardless of their age, are insured in a Professional Pension Fund (PPF). SCPI is based on the capital-funded principle. The funds of each insured person are accumulated in their individual account, which serves as the basis for calculating their pension.

The contribution rate for SCPI – UPF is 5%, distributed as follows: 2.8% paid by the employer and 2.2% by the insured person. Detailed information is available in the Retirement Section.

 

If necessary, check the current rates of the various types of insurance contributions in the relevant regulatory documents.

 

Useful links:

National Social Security Institute

Social Insurance Code