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SOCIAL INSURANCE CONTRIBUTION RATES AND THE SPLIT BETWEEN EMPLOYER AND EMPLOYEE

SOCIAL INSURANCE CONTRIBUTION RATES AND THE SPLIT BETWEEN EMPLOYER AND EMPLOYEE . BULGARIAN EXPERIECE PhD J. Hristoskov. PUBLIC SOCIAL SECURITY IN BULGARIA. General sickness. N S S I. Fund “General sickness and maternity” (3.5%). Employer – 2.1% Employee – 1.4%. Maternity.

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SOCIAL INSURANCE CONTRIBUTION RATES AND THE SPLIT BETWEEN EMPLOYER AND EMPLOYEE

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  1. SOCIAL INSURANCE CONTRIBUTION RATES AND THE SPLIT BETWEEN EMPLOYER AND EMPLOYEE BULGARIAN EXPERIECE PhD J. Hristoskov

  2. PUBLIC SOCIAL SECURITY IN BULGARIA General sickness N S S I Fund “General sickness and maternity” (3.5%) Employer – 2.1% Employee – 1.4% Maternity Work injuries Employer – (0.4% - 1.1%) Fund “Work injuries and occupational sickness” (0.4% - 1.1%) Occupational sickness Old age Employer – 10% Employee – 8% State budget -12% transfer Fund “Pensions” (30%, 5% of which in the II pillar) Invalidity Survivals Fund “Unemployment” (1%) Employer – 0.6% Employee – 0.4% Unemployment

  3. ARGUMENTS FOR SPLITING CONTRIBUTIONS BETWEEN EMPLOYER END EMPLOYEE (1999) • To reinforce the autonomy of the social insurance and the tripartite governance • To increase the employee’s responsibility and attitude to the social insurance • To improve the compliance by involving the employees in the collection control • To open additional room for the second pension pillar and the health insurance keeping the employer’s contribution rate almost at the same level

  4. DISSCUSSIONS HOW TO SPLIT THE CONTRIBUTIONS • To split the contributions in proportion 50:50 (or 60:40)at once – this option was suggested by the Government, but strongly opposed by the unions • To apply step by step approach – this option was agreed between employers and employee’s organizations

  5. INITIAL PLAN FOR INCREASING THE WORKER’S PARTICIPATION • 2000 and 2001 – 20% of total contribution rate • 2002 – 25% of total contribution rate • 2003 – 30% of total contribution rate • 2004 – 35% of total contribution rate • 2005 – 40% of total contribution rate • 2006 – 45% of total contribution rate • 2007 – 50% of total contribution rate This plan was prescribed in the legislation.

  6. FURDER DISSCUSSIONS AND THE POLITICAL IMPACT ON THE INITIAL PLAN • 2000 – 2001 – 80 : 20 • 2002 – 2004 – 75 : 25 • 2005 – 70 : 30 • 2006 – 2007 - 65 : 35 • 2008 and in the future – 60 : 40 • 2009 – pension contribution are split among the Government, employers and employees in proportion 12 : 10 : 8

  7. COMPENSATION POLICIES TO KEEP NET WAGES UNCHANGED • The Government compensates all persons employed under labor contract in state and municipal sector • Civil servants, military and police officers, prosecutors and judges do not pay personal contributions • Collective agreements between employers and employees • Decreasing of taxes – in the last few years personal income tax rate dropped from 29% to 10% flat rate • Decreasing of the social insurance contributions rates

  8. THANK YOU? QUESTIONS ?

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