Lydia Shuleva and Shteryo Nozharov for BNT studio
The budget update envisages an increase in pensions starting from October 1st. Who will benefit, when and how will the recalculation of pensions affect the budget?
According to Shteryo Nozharov, economic adviser at BIA, the focus of the budget adjustment should be on preparing the state for a possible subsequent COVID wave. He clarified that this is an update of the budget, not an entirely new budget.
According to him, the problem is that without determining the macroeconomic parameters of social security contributions and the maximum social security income, there is no way to adopt a fundamental pension reform.
"The macroeconomic problem is that the proposals require additional funding," Nozharov added.
He commented that the current government proposal narrows the deficit but does not eliminate it.
"The conversation is both political and of expertise. It is conducted in both circles, as there are several different approaches and several different approaches have been applied over the years," Nozharov said.
According to Lydia Shouleva, Deputy Chair of the Economic and Social Council, recalculating pensions with insurance income is correct and fair.
"This voluntary raising of the minimum pension has led to severe disparities in the pension model and has deepened the inequality between people who have been insured on a real income and those who were insured on the minimum wage," Shuleva commented.
She explained that it is impossible to update all pensions. It wouldn't be logical for those who are retired with the current insurance income to increase the new recalculation, as their pensions are consistent with the insurance income retired.
"It will be challenging to survive this shock if pensions are not adequately updated for ten years or more, if suddenly an update is made by 2019, for example. It will be a massive shock for the budget. Therefore, I think that pensions should be updated with insurance income, but this increase should take place over two or three years," Shuleva concluded.
