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The income from contributions to the Social Security of the State Social Security (SEIC) is not enough to cover the costs of pensions, benefits and benefits is one of the six main strategic risks for the implementation of the strategic objectives of the NSSI.
This is stated in analytical material from the NSSI experts, published in the latest bulletin.
The material presents the NSSI perspective on strategic risks for the management of state social security in the period after 2020. It is developed as part of the process of updating the Risk Management Strategy at NSSI. The current strategy covers the period up to 2020 and needs to be updated.
According to the analysis, there are a number of factors that increase the likelihood that there is a risk that income is not sufficient to cover the costs of pensions, benefits and allowances.
Among them, in the first place, are demographic processes. Population forecasts indicate that by 2020 the age dependency ratio in the elderly (population 65 and over for every 100 people aged 15 and 64) will reach 34.30. This means that for every 100 people aged 15 to 64, there are 34 aged 65 and over. In the long term, the trends are not optimistic: the value of this proportion is expected to reach almost 45 in just two decades and in 2050 it will exceed 528, according to the analysis.
The latest actuarial report of the National Institute of Social Security of 2019 showed that the consequences of the aging of the population are the factor with the greatest weight in terms of the dynamics of pension spending as a percentage of GDP. According to the legislation in force as of 01.01.2020, the social security balance is expected to remain negative (expenditures will continue to be higher than income) throughout the period from 2019 to 2070. At 3.3 percent of GDP , the deficit in social security is expected to grow to 4.8 percent of GDP by the end of the period. Decisions related to changing one or the other of the insurance system parameters can accelerate or slow the impact of demographic processes on the state’s ability to meet its commitment to current and future policyholders and retirees, according to the analysis.
Other strategic risks are that the control mechanisms are not effective enough to detect and prevent errors, irregularities and fraud with social security funds, the control mechanisms are not reliable enough in the protection of information and assets. The risks of the development of information and communication technologies are also pointed out to precede the technological state of the NSSI, the interaction with the interested parties to lead to a discrepancy between the results of the activity of the NSSI and its normatively defined tasks . It is also a strategic risk that NSSI does not have sufficient human resources to perform the tasks assigned to it.
The analysis notes that public funds managed by NSSI account for about 10 percent of Bulgaria’s gross domestic product (GDP), thus NSSI is paying increasing attention to strategic risks, reports BTA.
The experts add that organizations must decide the direction of their development in an environment that is increasingly difficult to perceive and increasingly unpredictable.
“The world was unprepared for the 2008 global financial and economic crisis, and the result is that its effects are still being felt today. Now the global community faces a new challenge: the COVID-19 coronavirus pandemic. Forecasts from organizations Influential internationals like the International Currency funds, for example, indicate that this will be the worst crisis (health, economic, social) since the Great Depression ”, added the experts.
Bulgaria
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