BULGARIA – The Bulgarian government says it has raised the share of social security contributions to second-pillar to three percent.

In addition pensions are set to rise by almost six percent and the pension ceiling has been almost doubled.

“The share of social security contributions going to second-pillar pension funds has increased from two to three percent,” the government said in a submission to the International Monetary Fund.

“Pensions will increase by 5.8% June, and the ceiling on maximum pensions has been raised from 250 leva to 420 leva (124 to 209 euros) per month,” said the letter to IMF managing director Horst Koehler, signed by finance minister Milen Velchev and central bank governor Ivan Iskrov.

They state that the government is “carrying out our structural reform agenda aimed at eliminating the remaining barriers to growth, while taking steps to reduce poverty and increase employment opportunities”.

“Our labour market policies are aimed at maintaining competitiveness and continuing to lower unemployment by reforming the labor code,” they added.

“We will seek to accelerate the dialogue among social partners on the proposed labor code amendments to reduce hiring and firing costs by abolishing the seniority premium, promoting flexibility in the duration of employment contracts, and increasing flexibility in employment during periods of production stoppage.”

Earlier this month the IMF disbursed around 39 million dollars to Bulgaria. The IMF’s first deputy managing director Anne Krueger said progress has been made in many areas of structural reform. “However, additional efforts are needed to complete the reforms, especially in the fiscal area, in order to provide further impetus to economic growth.”

Last year the government said that the development of the second and third pillars of the pension system would help “deepen our financial markets”.