The state is spending on welfare payments faster than GDP and its revenue are growing, according to a National Audit Office review covering 1 January 2020 to 30 June 2026. The auditors say people in need are better protected. But they say this has put the whole state budget and the Consolidated Fiscal Programme at risk.
The audit office submitted the report to parliament today. It is one of three, alongside reports on the Road Infrastructure Agency and on public finances. MPs ordered it earlier this year, and it was filed within the deadline of 30 October 2026.
Background: Audit office: Road agency signed contracts worth €9.2bn against a €5.6bn budget
The auditors checked payments from the budget of the Ministry of Labour and Social Policy under eight laws. These cover child protection, people with disabilities, personal assistance, family benefits for children, social assistance, Bulgarian sign language, war veterans, and war invalids and war victims.
They also checked changes to state social security (SSI) at the National Social Security Institute. The changes were to the maximum and minimum insurable income, the pension formula and the way benefits are set.
From the start of 2020 to mid-2026, the ministry paid out €7.4bn, covering more than 5m cases or people. About 765,000 people got help each month on average. The biggest share, about €4.4bn, went under the laws on people with disabilities and personal assistance.
The audit office says the gap between spending and revenue is not the result of a short-term crisis. It is built into the laws themselves, because payments follow economic indicators that rise automatically. The auditors say the system is unbalanced, weighs on the budget, is hard to change and is losing its financial independence. They say it is turning into a large state social programme.
The reform of June 2023 has added the most to costs. Since then, benefits have no longer been based on the guaranteed minimum income. They are based on a "poverty line" that the Council of Ministers sets each year by decree.
The base used for the calculation rose from €38.35 (75 leva) to €257.69 (504 leva) in 2023, an increase of 572%. In 2026 it is €390.63 (764 leva). The audit office says this widens the circle of people who qualify automatically, while costs rise explosively. Monthly benefits under the Social Assistance Act rose by 110% in total and reached €74.14m (145m leva) in 2025.
The minimum wage doubled between 2020 and 2026. Since 2023 it has been set automatically at 50% of the average gross wage over 12 months. Pay for social and personal assistants is tied to it. In 2020 this pay cost €103.28m (202m leva). In 2025 it cost €0.66bn (1.3bn leva), about €665m. The auditors say this cost keeps growing, which leads to shortfalls and emergency transfers from the central budget.
Benefits for schoolchildren came to €4.84m (9.47m leva) in 2020 and €37.48m (73.31m leva) in 2025, almost nine times more. In 2023 the income test was dropped for the one-off payment for first and eighth grade, and the payment now goes to all pupils up to fourth grade. The budget now depends on how many children enrol, and the state cannot control the cost through family incomes, the audit office writes.
In SSI, more than 45% of payments are covered by taxes from the central budget. For 2025 that is more than €6.14bn (12bn leva). The system's main income is mandatory contributions from employers, employees and the self-employed.
Income from contributions almost doubled, from €4.03bn (7.88bn leva) in 2020 to €7.60bn (14.87bn leva) in 2025. The audit office puts the rise down to the higher minimum insurable income, the minimum wage and inflation, not to economic growth. Total inflation was 41.3%, while the number of insured people grew by only 6.4% between 2020 and 2025.
The minimum insurable income went up by about 77% for employees and the self-employed. Unemployment, sick pay and maternity benefits are worked out from it, so the rise also pushes up spending. The maximum income was raised threefold and reached €2,112 (4,130 leva) in 2025. But it grew by 37.7%, half as fast as the minimum. The auditors say that falling behind inflation and the average wage limits income from high earners.
SSI spending was €7.30bn (14.28bn leva) in 2020 and €13.95bn (27.28bn leva) in 2025, which is 91% more. The forecast for 2026 is close to €15.34bn (30bn leva). In 2020, contributions covered 59.9% of this spending. Now they cover 54.9%. Spending on pensions and benefits is outpacing revenue by more than 17 percentage points, and the shortfall has roughly doubled.
As of 30 June 2026, pensions make up 89% of SSI spending, up from 78% in 2020. Since December 2021, each year of service has been worth 1.35, and all pensions were recalculated automatically. For 2022 alone this cost €229.62m (449.1m leva).
In July 2022, the temporary Covid supplements of €30.68 (60 leva) became a permanent part of the pension base. As a result, indexation under the "Swiss rule" is now worked out on a base of 10% instead of 6.1%. From 1 October 2022, under the so-called Measure 3, old pensions were recalculated for 928,000 people. This costs more than €0.51bn (1bn leva) a year.
The minimum pension has grown by nearly 188%, and pensions overall by 155% on average. About 45.3% of pensioners get the minimum pension. The audit office says this makes real contributions pointless and puts people off paying in on their real income. The rise in the minimum pension changed the rule for updating pensions. The rise in all pensions means SSI must be balanced each year with ever larger transfers from the budget.
Since January 2024, the employer has paid the first two days of sick leave instead of three. The third day is paid by SSI.
The audit office says quick management decisions are needed to keep public finances sustainable. The auditors recommend deeper impact assessments in advance, and an analysis of the total financial effect of each new welfare measure together with those already in force.