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HISTORICAL OVERVIEW OF THE SOCIAL SECURITY SYSTEM IN BULGARIA

The social security system in Bulgaria has a long history that goes through different periods of development and maturity, overcomes crises and changes considerably its organization and content.

The beginning of the pension insurance lies back more than a century ago, in the time of the Third Bulgarian Kingdom when in 1886 the first pension insurance law (concerning military disabled persons) was created. In the next years (up to 1901) the pension funds for teachers, clergymen, civil servants and employees under the civil authority and military persons and officials under the military authority were created. In 1915 the “Law for the Pensions of the Employees” in the above mentioned was adopted. Three years later the “Law on the Insurance of Hired Laborers and Employees in Case of Accident and Disease” came into force.

The beginnings of the pension insurance lie more than a century ago, in the time of the Third Bulgarian Kingdom - in 1886, with the creation of the first pension insurance law concerning military disabled persons. Through the next years up to 1901 were created the pension funds for teachers, clergymen, civil servants as well as for the employees under civil authority and the military persons and officials under military authority. In 1915 is adopted the Law for the pensions of the employees in the enumerated institutions. Three years later came into force the Law on the insurance of hired laborers and employees in case of accident and disease.

With the “Law for Public Insurance” as of year 1924, Bulgaria was the first country on the Balkan peninsula to have created an overall social insurance system, covering all categories of hired laborers and all kinds of public insurances: accident-at-work and professional disease; illness and motherhood; disability, old age and death. At that time, by this law, the essentials of the public insurance science were introduced. Every insurance policy was financially independent and autonomous from property and accounting point of view. A year later – in 1925, by the “Law for Labor Adjustment and Unemployment Insurance” the social security in Bulgaria acquired its modern form. All social risks, known to the insurance science at that time, were also included.

In 1941 the National Assembly passed the “Law on the Public Insurance Institute”. By the adoption of this Law, the social insurance benefits and allowences in Bulgaria received their own independent and autonomous governing body. The Public Insurance Institute was a government-autonomous institution with a Head office and regional offices. In the mixed form of its management, the participants were representatives of the state authorities, of the employers and of the employees. The management of the Institute was composed of a Board of Managers, Boards on the Insurances, a General Board and a Director who was the head of the Institute. The payments covering the expenses on the insurance benefits were gathered on the tripartite principle (equal parts from employees, employers and the state). The benefits were paid according to the extent of the salary. Up to 1945, the legislation created different professional insurance funds, such as of: the tradesmen; the craftsmen; the farmers; the freelance professionals; the state, the municipal and the public officials.

In the years of the socialist government, by the adopted in 1948 “Law for the Public Insurance”, the principle of the right to benefits and pensions been a consequence of the years of service (not of the participation with insurance payments) was introduced. With this Law the state enterprises and institutions undertook the insurance payments of the workers and employees. Under the guidance of the State Public Social Security Institute (SPSSI) all existing independent insurance funds in the country were united. The next steps in the change of the social security system were made with the “Labor Code and the Decree for the National Free Medical Aid” - as of the year 1951 and with the “Pension Law” as of the year 1958. By these legislative acts the centralization of the resources in the social sphere (typical for a socialist society) was carried out.

With the “Labor Code” (1951), the budget of the social security was included in the State Budget, so that the State assumed the obligation to cover the eventual shortage of incomes from the insurance payments and to pay benefits and pensions. According to the Code, the functions on the social insurance of the workers and employers were transferred to the Central Council of the Labor Unions, which had the right to represent them on all the questions referring to labor and social insurance.

Next step in the development of the social security administration was in 1984 when by an Ordinance of the Council of Ministers to the Committee of Labor and Social Affairs the Head office “Social Security ” was created. It was a governmental-public body, a legal entity, carrying out a unified policy of short-term social insurance and pension affairs. The Head, who was a vice-president of the Committee of Labor and Social Affairs with the rank of Deputy-Minister, managed it. The regional directorates “Pension Insurance” at the Ministry of Finance and the departments “State Public Insurance” at the regional councils of the Bulgarian Professional Unions became regional bodies of the Head office of “Social Security”. Thus, the regional social security offices, which function till now were created.

The next stage of the social security administration development in Bulgaria began after the democratic changes. The social insurance system acquired a new face and content trying to respond to the new social, economic and political realities and to get closer to the best models of the social security systems in the developed countries. This stage had began in 1995 with the adoption of the “Fund Social Security” Law. For the management of the fund the National Social Security Institute was created as a successor of the Head office “Social security”.

In 1999 the Law for “Additional Voluntary Pension Insurance” was adopted, regulating the third pillar of the pension system which legalizes the activities of the private pension funds. The “Code for the Obligatory Pension Insurance” as of 2000 (now Social Insurance Code (SIC)) settles the pension insurance in the first and second pillars and the following social risks: disease, disability, old age, death and as of 2002 – unemployment was added.

Although legislatively and institutionally the social security system is already reformed, the process of its improvement and adaptation continues simultaneously with the needs of flexibility and the international development.

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