U.S. readers, brace yourselves for a significant shift in the pension landscape.The insurance contribution for the “Pensions” fund will remain steady for the upcoming year, but brace for impact: a substantial 5 percentage point hike is on the horizon, phased in over 2026 and 2027.
The insurance policy for the 2025-2028 period, as outlined in the updated medium-term budget forecast, reveals a two-step increase.In 2026, the contribution will rise by 3 percentage points, followed by an additional 2 percentage points in 2027.
The Health Contribution: Steady at 8%
Accompanying this pension contribution adjustment, the health contribution will maintain its current 8% rate, at least until 2028, as per the forecast published alongside the draft Budget 2025 by the Ministry of Finance.
This planned increase marks the most significant rise in pension provision in years. The last time the contribution surpassed 20% was back in 2008.The Kalfin reform, which began with more gradual increases of 1 percentage point each in 2017 and 2018, pales in comparison.
Currently, the pension contribution stands at 19.8% for those born before 1960 and 14.8% for those born after 1959, with 5% allocated too a universal fund. The insurance is split 60:40 between employer and employee.
Post-2026, the pension contribution will escalate to 22.8% for those born before 1960 and 17.8% for those born after 1959. By 2027, these figures will climb to 24.8% and 19.8%, respectively.
The maximum insurance income for all insured individuals is also set to increase throughout the forecast period, reaching BGN 4130 in 2025, BGN 4430 in 2026, BGN 4730 in 2027, and BGN 5030 in 2028.
The Swiss Rule: Lower Pension Updates Ahead
The timing of the insurance increase coincides with a period where the Swiss rule will result in significantly lower pension update rates than the current 11%. For 2025, the estimated rate is 8.7%, with subsequent years seeing rates dip to 3-4%.
Adding to the mix, the pension ceiling remains fixed at BGN 3,400 until the end of 2028. Unemployment compensation stays unchanged at BGN 18.00 as the minimum daily amount and BGN 107.14 as the maximum, with these figures to be maintained until 2028.
Interviewer: Welcome to our special segment today. We’re diving into some significant updates in the pension landscape. I’m here with our guest expert, who has extensive knowledge on this topic.Thank you for joining us!
Expert: Thank you for having me! It’s a crucial time for manny readers to understand these changes.
Interviewer: Absolutely. let’s start with the upcoming pension contribution adjustments. can you explain what readers should expect in the next couple of years?
Expert: Sure! For the upcoming year, the pension contribution will remain at its current level. Though, starting in 2026, we are looking at a significant increase—3 percentage points first, and then an additional 2 percentage points in 2027. This is quite different from previous years.
Interviewer: That’s quite a leap! What will the final contribution rates look like after these adjustments?
Expert: After the adjustments,the contribution will rise to 22.8% for individuals born before 1960 and 17.8% for those born after 1959 in 2026. By 2027, it will further increase to 24.8% and 19.8%. This marks the most significant rise in pension provisions we’ve seen in years.
Interviewer: fascinating! Now, alongside these changes, what about the health contribution?
Expert: The health contribution will remain steady at 8%, and this rate is expected to hold until at least 2028, according to the latest forecasts.
Interviewer: Got it! Now, I’ve also read that the expected pension updates will be lower due to the Swiss rule. Can you elaborate on that?
Expert: Yes,the Swiss rule will lead to a decrease in the pension update rates,dropping from the current 11% down to an estimated 8.7% for 2025,and then to around 3-4% in the following years. This means that while contributions are rising, the actual benefits from those contributions may not increase as significantly.
Interviewer: That seems concerning for future retirees. What should people keep in mind regarding the pension ceiling and unemployment compensation?
Expert: The pension ceiling will remain fixed at BGN 3,400 until the end of 2028, which is another factor that could limit potential benefits for some individuals. Additionally, unemployment compensation remains unchanged, with the minimum daily amount at BGN 18.00 and a maximum of BGN 107.14, maintaining these figures until 2028.
Interviewer: It’s clear that many elements are in motion,and individuals need to be prepared. Thank you for yoru insights! Any final thoughts for our readers?
Expert: Just to remind everyone to stay informed and plan accordingly. These changes will shape the financial landscape for many,so it’s important to keep an eye on both contributions and benefits in the coming years.
Interviewer: Thank you once again for joining us today.We appreciate your expertise and hope our readers found this facts valuable!
Expert: Thank you for having me! It’s been a pleasure.
