Meet the EU pensioners living on €82 a month

 Meet the EU pensioners living on €82 a month

In this file photo from January 2007, Bulgarians protest in front of the country’s parliament building, calling for the government to increase their pensions.

(AP/Petar Petrov)

Eighty-five year old Nedyalka Arabadzhieva lives in the northern Bulgarian mountain city of Veliko Tarnovo. After working with the postal service for most of her professional life, she now survives on a monthly pension of 161 Bulgarian lev (approximately €82 or US$90).

It’s a paltry sum by any standard: not only should Nedyalka be receiving double that amount if her income is to reach the poverty line (currently 314 lev, which is about €160 or US$180), but her pension is also three times lower than the minimum pensions in nearby Albania, Macedonia and Serbia, and around 10 times less than the pensions in other EU countries.

Nedyalka’s pension is the minimum amount you can receive if you have worked all of your adult life; those who haven’t receive a lower payment of about 118 Bulgarian lev (€60 or US$67).

Since she retired in 1988, Nedyalka’s pension has only increased once, following a recalculation in 2008. But it wasn’t enough money in 2008 and it certainly isn’t enough now. “When I receive my pension, I first pay all my bills, and I take from the leftover to pay my medicines. Whatever is left over of the leftover is for food.”

She says she survives on careful budgeting and help from her two daughters. She is one of lucky ones – many others rely on food handouts from charities such as the Red Cross.

“Only a few days ago I saw a man spend over 100 lev (€51 or US$57) just on medicines,’’ Nedyalka says. ‘’That’s how people with small pensions die. They cannot afford these expensive medicines.”

State of crisis

Bulgaria’s pension system is in a state of crisis. According to data from 2016, of the country’s almost 2.2 million pensioners, approximately one in four receives the minimum payment. Many of them are barely able to buy food, let alone keep warm in the winter, especially as energy companies recently announced an increase to heating costs by as much as 40 per cent. As a result, many people of pensionable age continue to work well past the official retirement ages of 60 years and 10 months for women and 63 years and 10 months for men.

Statistics from the National Social Security Institute (NSI) also show that, on average, women receive lower pensions than men due to a combination of reasons which include fewer years of paid work (due to motherhood and other types of unpaid care work) and discrimination.

If, for example, men receive an average of 386 lev (€196 or US$215) for length of service and age, women receive two-thirds of that, according to NSI data.

A few weeks before Bulgaria’s most recent parliamentary elections in March, hundreds of pensioners held a demonstration to protest against the country’s sub-poverty level pensions.

During the election campaign, Bulgaria’s two leading parties – the centre-right GERB and the Bulgarian Socialist Party – discussed increasing the country’s pensions. But most of their solutions focused on raising the retirement age and the number of years workers would have to put in before being able to draw a state pension.

For example, the newly re-elected GERB government of Prime Minister Boyko Borisov has promised to increase the minimum pension to around 201 lev (€102 or US$112). However, there has been little clarification on how this will be achieved.

“What will happen if the minimal pension is increased? Two things: there will either be a devaluation of the lev and people will receive bigger pensions but they will buy less with them. Or, big infrastructure projects will have to be stopped and the state will work only for pensions,” economist Nikolay Vasilev, Bulgaria’s former Economics Minister from 2001 to 2003, tells Equal Times.

Demographic crisis

Following the fall of communism in 1989, rising inflation has meant that while nominal pension payments have increased, in terms of purchasing power, the value of Bulgarian pensions have plummeted.

Compounding the crisis is a demographic issue. In the coming years, the number of people of working age will further decrease while the number of people who receive pensions and need social protection will rise.

According to official NSI projections, by 2060 state expenditure on pensionswill rise to over 30 billion leva annually (€15 billion or US$16.5 billion) – the current amount of the entire state budget – from around 8 billion lev (€4.09 billion or US$4.59 billion) around in 2014.

In addition, by 2060, every Bulgarian in work will have to support an average of one pensioner since the country’s working population of 3.3 million is expected to shrink to two million.

Since 2016, women have had to work 35 years and two months before qualifying for a pension; for men, its 38 years and two months. By 2036 the length of service will be 37 years for women and 40 years for men; the retirement age will be 64 years and nine months for women and 65 years for men.

There are even more problems on the horizon for Bulgaria’s elderly. The number of people who have reached pension age without covering the required length of service is increasing, according to the NSI. In fact, such workers currently make up nearly one-fourth of all newly-retired people.

With an ever-increasing number of informal workers, minimum wage workers and seasonal workers who have never had social security in Bulgaria, the country’s pensions crisis is a ticking time bomb just waiting to explode.