Pension Reform 2026 in Bulgaria: What Every Employer Needs to Know
Pension Reform 2026 in Bulgaria introduces significant changes that affect employers, payroll processes, and labor costs across the country.
What Is the Pension Reform 2026 in Bulgaria?
From September 2026, employees in Bulgaria will have to make a decision about their pension.
Most of them won’t know how.
And the questions will reach the Employer.
Let’s explain what is happening, why it matters, and what employers in Bulgaria can do about it.
This is not just a pension topic. It is a topic that will land directly with every employer in Bulgaria, every payroll specialist, and every team that processes salaries.
If you are an employer in Bulgaria, see how we can help with our payroll services and end-to-end salary administration.
Why the Multi-Fund Model Is Being Introduced
Until now, the pension system has worked the same way for everyone — regardless of age or how many years remain until retirement. The money in the universal pension fund has been managed with a single, conservative approach.
The result: a person with 30 years left until retirement and a person with 3 years left have received the same relatively low pension fund returns. The system served neither of them well.
The solidarity model of the first pension pillar is under increasing demographic pressure. The second pillar needs to work better to compensate.
On 5 March 2026, the Bulgarian National Assembly adopted amendments to the Social Security Code. The multi-fund model was introduced — already applied successfully in Croatia, Slovakia, and several other European countries, and recommended by the OECD. The law has been passed and is awaiting publication in the State Gazette.
Will Salaries and Social Security Contributions Change?
Important clarification: The amount of contributions for supplementary mandatory pension insurance does not change. Employers and employees in Bulgaria will continue to contribute the same percentages as before — 2.8% from the employer and 2.2% from the insured person (for third-category workers), totaling 5%. The change applies only to how those funds are managed and invested.
What Changes in the Pension Insurance System in Bulgaria
Each universal pension fund must create three sub-funds with different investment profiles:
Dynamic sub-fund — high risk, high return potential. Up to 90% of assets in equities and variable-income instruments. Designed for people with a long horizon to retirement. All insured persons under 50 will be automatically placed here unless they explicitly choose otherwise.
Balanced sub-fund — medium risk. Up to 55% in equities, the remainder in safer instruments. Upon turning 50, insured persons are automatically moved here.
Conservative sub-fund — low risk. Up to 25% in equities, the remainder in bonds and low-risk instruments. Mandatory for persons in the last 3 years before reaching retirement age.
What Happens to the Fees
The fee picture moves in two directions and deserves attention.
The contribution fee is being reduced. Currently, pension companies deduct 4% from each insurance contribution. A gradual reduction to 2.10% is planned by 2036.
The investment fee model is changing. Previously, pension companies collected up to 0.75% annually on managed assets regardless of performance. Under the new rules, a two-component fee is introduced: a fixed part on assets and a variable part tied to the returns achieved. The intention is to give pension companies an incentive to generate higher returns, since their income will depend on it.
Critics point to the other side of this: in poor market years, the risk falls entirely on the insured person, while the company continues to collect the fixed fee. That is a legitimate argument worth understanding.
