“A Pretext for Raising Social Security Contributions”: The Social Security Fund’s Budget Deficit Alarms the Fiscal Council

The trend of steadily rising expenditures in the State Social Security (SSS) budget exacerbates the risk to the fiscal sustainability of the entire social security system. This is noted in a new opinion by the Fiscal Council, which reviews the report on the implementation of the SSS budget for 2025.

The opinion emphasizes that the policy of increasing pensions through government transfers “beyond the pension system’s capacity without the necessary reforms is unsustainable in the long term.”

According to the analysis, although the budget was executed almost entirely as planned – 99.6% on the expenditure side – structural problems are deepening, and the link between insured individuals’ personal contributions and the pension income they receive is gradually breaking down.

A Continuing Trend

The analysis of expenditures shows a continuing significant increase in pension funding – a trend that began with one-time supplements in 2020 and continued with their substantial increase in subsequent years. Experts from the Fiscal Council note that this has led to a sustained increase in the average pension amount.

Pension expenditures continue to rise at a rapid pace every year,” the Council warns.

In 2025, pension expenditures amounted to 24.1 billion leva, an increase of 11%, or nearly 2.5 billion leva, compared to 2024. Following a record 22% increase in pension expenditures in 2023, the growth rate slowed to 13% and 11%, respectively, in the period from 2024 to 2025.

Given the declining number of pensioners, the result is an increase in the average pension amount. Within the structure of the Social Insurance Fund’s expenditures, pension expenditures account for 88.4%, while benefits and assistance account for 11%,” the Council adds.

Some of the key findings in the analysis of revenues and expenditures include:

• Reported expenditures under the Social Security Fund budget amount to 27.29 billion BGN, which is 2.67 billion BGN more than in 2024;
• Pension expenditures amounted to over 24 billion levs, or 10.6% of GDP, increasing by 11% year-over-year in 2025;
• Social security revenue was 98.6% of the target – about 211 млн. лев. below the target – due to slower-than-expected growth in social security income.

“Pressure for Higher Taxes and Social Security Contributions”

According to the Fiscal Council, a serious problem is the growing share of the “Pensions” fund in the budget structure. This item now accounts for over 80% of all state social security expenditures, followed by the “General Illness and Maternity” Fund at 8.3% and the “Pensions for Persons Under Article 69” Fund at 6.5%.

This trend reduces budget flexibility by limiting opportunities for restructuring. These conditions create the conditions for pressure to increase social security and/or tax contributions,” according to the advisory body.

Alarming Ratio

Particularly alarming, according to the analysis, is the ratio of pensioners to insured persons, which is twice as high as the European average – 0.72 in Bulgaria compared to an EU average of 0.35 and 0.31 for the OECD.

This, according to the Fiscal Council, makes the system heavily dependent on tax revenue transfers. For 2025, the Social Security Fund’s budget received 12.2 billion levs from the state budget, and the deficit, although declining to 44.5% (from 46.8% in 2024), remains high compared to the 2019 level, when it was reduced to 34%.

In conclusion, the Fiscal Council notes that despite the reported minimal surplus of approximately 60 million BGN, the significant increase in the deficit during the 2020 – 2025 period and the corresponding rise in transfers from the central budget pose risks to public finances as a whole.

Translated with DeepL.