Bulgarian Pension System – Is It A Sustainable Social Security Structure in The Long Term
Bulgarian pension system consists of three pillars. The first one functions on a pay-as-you-go principle and is a mandatory one, the second and third pillars are fully funded. The insurance into the second column is compulsory and that into the third one is voluntary. The unfavorable demographic trends in the country have an adverse effect on the pay-as-you-go part of the system. At the same time the minor accumulation of resources into the second and third pillar makes the sustainability of the pension system under question especially in the long term. The current research is trying to put some light on this issue by following the reforms made in the recent years and the tendencies concerning the government decisions on each of the pillars of the pension system. The paper is structured in two parts. The first one focuses on the pay-as-you-go part of the system and the factors that influence its financial health. The second one concentrates on the current problems of the funded component of the pension system and the way it must be strengthened in the long term to effectively support the dominant state pension system. Further reforms are needed to raise the sustainability of the pension system as a social security structure in the long term.