The increase in pensions from July 1st will not be the promised 7.8% for all pensioners due to the decision by "Progressive Bulgaria" to remove the 60 BGN (30.68 EUR) COVID supplement from the base for the update. Thus, the real percentage of increase will be lower for most pensions, although the amounts already granted will not be reduced.
In practice, this means that the expected increase from next month will be at least 2.39 EUR less than previously announced. The update will not be the same for everyone: lower pensions will increase by a smaller percentage, while higher ones will receive a relatively larger increase. Only the minimum pension will be raised by the initially planned 7.8%.
Why is the COVID supplement being removed?
The motives of "Progressive Bulgaria" are related to a fundamental dispute over the nature of the COVID supplement. According to the party, paying out fixed sums like the 60 BGN supplement, especially after the official end of the pandemic in 2023, is a serious deviation from the "contribution-rights" principle – that is, the link between insurance contribution and the pension amount.
PB emphasizes that their goal is also to limit the growth of non-intrinsic expenses of pension funds, which they believe is an "indisputable argument" for removing the supplement. At the same time, critics note that removing these sums at the last minute – through an extension law and in the absence of an adopted budget – creates new anomalies and uncertainty.
What exactly is changing in the pension calculation
Through amendments to the extension law, PB proposes two key adjustments to the way the so-called Swiss rule for pension updates is applied. This rule, which is effective every year from July 1st, combines inflation and average income growth when calculating the increase.
The first change provides that the 60 BGN COVID supplement, included in the pension amount from July 1st, 2022, will no longer be updated. That is, these 60 BGN will not participate in the indexation under the Swiss rule, resulting in a different real percentage of increase for pensions granted until the end of 2025.
The motives state that these sums will remain at the reached levels until June 30th, 2026. This means that not only the initial 60 BGN but also the increases accrued on them in recent years will be "frozen," although questions requiring further clarification remain on the subject.
The second change affects newly granted pensions. From July 1st, the text in the Social Insurance Code is repealed, according to which, when granting a pension related to employment activity with a start date after July 1st, 2022, a fixed sum of 60 BGN is added to the calculated amount. This means that new pensions granted after July 1st, 2026, will no longer include this fixed supplement.
How much less will the increase be from July 1st
Technically, the mechanism works as follows: at least 30.68 EUR (the equivalent of 60 BGN) is deducted from every pension (with the exception of the minimum) before the 7.8% increase is applied to the remaining amount. Thus, the real increase that pensioners will receive will be at least 2.39 EUR lower than initially expected.
Since the deducted sum is the same for everyone, the effect on the percentage of increase varies – lower pensions lose a larger relative share, while for higher pensions, the deduction weighs less. This results in a "hidden" differentiation in favor of higher pensions.
Example: 1000 and 700 EUR pensions
To see the effect more clearly, two sample cases can be considered, using only the initial amount of the supplement without subsequent indexations. For a 1000 EUR pension, a 7.8% increase would mean an additional 78 EUR from July 1st. However, if 30.68 EUR is deducted before indexation, 7.8% is applied to 969.32 EUR, which gives 75.61 EUR. The difference is 2.39 EUR, and the real growth percentage falls to about 7.56%.
For a 700 EUR pension, 7.8% would give a 54.60 EUR increase. After deducting 30.68 EUR and indexing 669.32 EUR, the result is 52.21 EUR – again 2.39 EUR less in absolute value. Here, however, the relative effect is stronger: the real increase is now about 7.46%, which is lower not only than the initially promised 7.8% but also than the increase for the 1000 EUR pension.
The minimum pension – an exception to the new rules
The minimum pension for length of service and age is excluded from this mechanism. Its amount is determined by the state social insurance budget for each year, which is why a separate text is written for it. According to it, the minimum pension will become 347.51 EUR from July 1st, which represents exactly a 7.8% increase compared to the current 322.37 EUR.
Thus, the minimum pension will be updated in a "clean" way – without deducting the 60 BGN COVID supplement. This puts it in a special position compared to other pensions, whose real growth percentages will vary according to their size and the influence of the frozen supplement.
What follows: voting and political debate
These controversial changes are scheduled for a second reading in the budget committee, where lively debates are expected. For some experts, removing the COVID supplement is a logical step toward returning to the "contribution-rights" principle, but for others, it is a hasty decision made at "the eleventh hour" and without a clearly written long-term plan.
The outcome of the vote will determine not only exactly what the July 1st increase will look like, but also how pensioners will perceive the latest correction in regulations – as a fair ordering of the system or as yet another change that brings more confusion than security.