Bulgaria Mulls Removing Interest Rates on Insurance Debts

Bulgaria's Social Minister Totyu Mladenov announced Monday the possibility of elimination of interest rates on debts to the National Insurance Institute. Photo by BGNES

The Bulgarian Social Ministry will propose elimination of the interest rates on debts to the National Insurance Institute (NOI), if the principal is paid by June 2011.

The Social Minister Totyu Mladenov said Monday that this proposal will be included in a project for amending the Social Insurance Code, which is to be adopted in July. The amendment envisions that companies and citizens who have debts to NOI for insurance payments will be able to pay these debts until the end of June 2011 without paying interest rates on them.

According to Mladenov, there might also be an elimination of interest rates on debts for mothers who have unduly used a paid leave for raising children up to age of 2 when their children have been attending nurseries.

“Mothers will have to give back the money they owe to NOI,” the minister said.

The regulations currently state that after one year of age of the child, the mother is allowed to ask for a paid leave for raising the child for one more year. During this time, the state will give her BGN 240 monthly with the condition that the child does not attend a nursery.

According to NOI, these regulations have been violated by 900 mothers.

Other changes in the Social Insurance Code will allow self-insuring people to pay in advance only on the minimum insurance income. Currently, they are insured on amounts between the minimum and the maximum insurance income.

After the implementation of the amendment, the requirement for outstanding payments on uncharged salaries will be removed.

The required age for entitlement to retirement pension, which is 60 for women and 63 for men, will remain unchanged. However, in order to retire, women will have to work 37 years, instead of 34 years, and men will have to work 40, instead of 37 years.

People who have reached the retirement age but lack the required amount of working years will be able to “buy” them. However, the period for that is decreased from 5 to 2 years.

Mladenov has stated that there will be changes in the way of calculating the amount of the pensions. He also added that employers will no longer be allowed to terminate the contracts with employees who have reached the retirement age.

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