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1 Page 1 of 46 Comparative Tables on Social Protection - Results Situation on 01/07/2008 Bulgaria I. Financing Financing principle 1. Sickness and maternity: Benefits in kind Contributions (employer and insured person) and taxes. 2. Sickness and maternity: Cash benefits 3. Long-term care 4. Invalidity 5. Old-age 6. Survivors Contributions (employer and insured person). No single discrete long-term care scheme. Contributions (employer and insured person). State Budget covers deficit. Contributions (employer and insured person). State Budget covers deficit. Contributions (employer and insured person). State Budget covers deficit. 7. Employment injuries and occupational diseases 8. Unemployment 9. Family allowances Contributions (employer). Contributions (employer and insured person). Taxes. Contributions of insured and employers 1. Overall contributions The State Public Insurance (Държавно обществено осигуряване) covers all risks except health care. It is based on gross earnings and varies according to two factors. The first factor is the category of labour. There are three categories relating to how dangerous/arduous the occupation may be with the 3rd category being the least arduous/ dangerous. The second factor is the range of risks against which a person is insured. The range of coverage is determined by law for particular categories of people. In some cases the range of coverage can be extended through voluntary participation in the insurance. (1) 3rd category persons born before % & 43 x 3rd category persons born

2 Page 2 of 46 after % & 43 x 1st and 2nd category: 3% additional (2) Insured for all risks except unemployment: 3rd category persons born before % & 43 x 3rd category persons born after % & 43 x 1st and 2nd category: 3% additional (3) Insured for invalidity, old-age, death and employment injury/disease (employees working for no more than 5 days or 40 hours per month): 3rd category persons born before % & 43 x 3rd category persons born after % & 43 x 1st and 2nd category: 3% additional (4) Insured for invalidity due to general illness, old-age and death (freelance, professional farmers and sole entrepreneurs): all categories: 22.0% The persons from this group can at their wish voluntarily insure themselves against all other risks except employment injury/occupational disease and unemployment. x is the contribution for employment injury/disease which varies between 0.4 and 1.1% according to the group of economic activities of the employer. The social insurance contribution shall be divided between the insurers and the insured persons in a certain ratio that for 2008 is 60:40 respectively. Contributions for employment injuries and occupational diseases are paid solely by the employer. The minimum amount of the contributory income per month varies according to occupation and industrial branch. Minimum amount of the contributory income per month for self insured in 2008 is: BGN 240 ( 123). Earnings ceiling: BGN 2,000 ( 1,023) per month. 2. Sickness and maternity: Benefits in kind 6% of gross earnings (shared 60:40 between employers and employees). Minimum amount of the contributory income per month varies according to occupation and industrial branch.

3 Page 3 of 46 Minimum amount of the contributory income per month for self insured: BGN 240 ( 123). Ceiling of contributory income: BGN 2,000 ( 1.023) per month. 3. Sickness and maternity: Cash benefits 4. Long-term care 5. Invalidity 6. Old-age Included in the overall contribution: 3.5% of gross earnings are apportioned to this risk from the global contribution. No single discrete long-term care scheme. Included in the overall contribution. First Pillar: Included in the overall contribution. 7. Survivors Second Pillar: Supplementary compulsory pension insurance in professional funds: 1st category: 12% of gross earnings. 2nd category: 7% of gross earnings. Supplementary compulsory pension insurance in universal funds for persons born after 31 December 1959: 5% of gross earnings or declared earnings. Contributions in professional funds are paid solely by employers. Included in the overall contribution. 8. Employment injuries and occupational diseases 9. Unemployment 10. Family allowances Included in the overall contribution: 0.4 to 1.1% of gross earnings are apportioned to this risk from the global contribution according to the group of general economic activities of the employer. This contribution is paid solely by the employer. Included in the overall contribution: 1% of gross earnings are apportioned to this risk from the global contribution.

4 Page 4 of 46 No contributions. 11. Other special contributions The insurance contribution to the Teachers Pension Fund is paid entirely by the employer and amounts to 4.3%. The contribution to the Factory and Office Workers' Guaranteed Claims Fund is paid entirely by the employer and amounts to 0.5%. Other special contributions (Cont.) Public authorities'participation No other special contributions. 1. Sickness and maternity: Benefits in kind Contributions for pensioners are paid by the State Budget based on the amount of the pension or pensions. Contributions for recipients of unemployment benefits are paid by the State Unemployment Fund (Фонд "Безработица ) based on the amount of the benefit. A contribution of 0.5% of the minimum contributory income for the self-insured is paid from the State Budget (minimum contributory income is currently BGN 240 ( 123) per month) for: Persons under 18 years; students over 18 years until completion of secondary education. State Budget pays the health insurance contribution (currently 6% of half of the minimum contributory income for self-insured persons) on behalf of: students up to the age of 26 and persons taking a doctorate degree; persons performing their regular military service; socially vulnerable persons with a right to social assistance or accommodated in social care centres; persons under arrest or imprisoned; persons in the process of acquiring refugee status or right to asylum; war veterans and war invalids; invalids injured while performing their duty to the state; adoptive parents or spouses taking care of invalids with lost capacity for work over 90% who need permanent assistance; spouses of military servicemen participating in international operations and missions for the period of that mission. The State Budget covers 30% of the employer's contributions paid for people with disabilities working for employers contracted by the Agency for People with Disabilities (Агенция за хората с увреждания). 2. Sickness and maternity: Cash benefits State Budget pays contributions (3.5% of gross earnings) on behalf of: Civil servants, soldiers and other military personnel, the judiciary including judges, prosecutors, investigators, bailiffs, judges for the entries and court employees (covered by the "Judiciary Budget"). The State Budget covers 30% of the employer's contributions paid for people with disabilities working for employers contracted by the Agency for People with

5 Page 5 of Long-term care 4. Invalidity 5. Old-age 6. Survivors Disabilities (Агенция за хората с увреждания). No single discrete long-term care scheme. State Budget makes contributions (22% gross earnings + 3% for those working under 1st or 2nd category) on behalf of: Civil servants, soldiers and military personnel, parents (adoptive parents) or spouses for the period of taking care of a disabled person who has lost over 90% of their working capacity and need permanent assistance provided the parent (adoptive parent) or spouse was not insured and has not received a pension during that period, the judiciary including judges, prosecutors, investigators, bailiffs, judges for the entries and court employees (covered by the "Judiciary Budget"). The State Budget covers 30% of the employer's contributions paid for people with disabilities working for employers contracted by the Agency for People with Disabilities (Агенция за хората с увреждания). See "Invalidity". See "Invalidity". 7. Employment injuries and occupational diseases 8. Unemployment 9. Family allowances State Budget pays contributions (0.4 to 1.1% gross earnings) on behalf of: Civil servants, soldiers and other military personnel, the judiciary including judges, prosecutors, investigators, bailiffs, judges for the entries and court employees (covered by the "Judiciary Budget"). The State Budget covers 30% of the employer's contributions paid for people with disabilities working for employers contracted by the Agency for People with Disabilities (Агенция за хората с увреждания). State Budget pays contributions (3% gross earnings) on behalf of: Civil servants, soldiers and other military personnel, the judiciary including judges, prosecutors, investigators, bailiffs, judges for the entries and court employees (covered by the "Judiciary Budget"). The State Budget covers 30% of the employer's contributions paid for people with disabilities working for employers contracted by the Agency for People with Disabilities (Агенция за хората с увреждания). Entirely financed by the State Budget. 10. General non-contributory minimum Entirely financed by the State Budget. Financing systems for long-term benefits 1. Invalidity

6 Page 6 of 46 Current income financing ("pay-as-you-go"). 2. Old-age Current income financing ("pay-as-you-go") for persons born before 1 January 1960 and combined system (PAYG and fully funded) for persons born after the 31 December 1959 and those working under 1st and 2nd labour category. 3. Survivors Current income financing ("pay-as-you-go") for persons born before 1 January 1960 and combined system for persons born after the 31 December Employment injuries and occupational diseases II. Health care Applicable statutory basis Basic principles Field of application 1. Beneficiaries Current income financing ("pay-as-you-go"). Law on Health Insurance (Закон за здравното осигуряване) Law on Health (Закон за здравето) Law on the Medicines and Pharmacies in Human Medicine (Закон за лекарствата и аптеките в хуманната медицина) Law on the Professional Organisations of Doctors and Dentists (Закон за съсловните организации на лекарите и на лекарите по дентална медицина) Social Insurance Code (Кодекс за социално осигуряване) 1999 title amended Law on Integration of People with Disabilities (Закон за интеграция на хората с увреждания) National Framework Agreement (Национално рамково споразумение) between the National Health Insurance Fund (Национална здравно осигурителна каса) and Bulgarian Doctor's Association (Български лекарски съюз) and the Association of the Dentists in Bulgaria (Български зъболекарски съюз) for A scheme financed by contributions for Bulgarian citizens and for residents in Bulgaria and a scheme funded by taxes providing benefits in-kind, other than those provided by the contributions funded scheme, to all residents. Compulsory health insurance for: nationals who are not simultaneously citizens of another country; nationals who are simultaneously citizens of another country but are permanent residents of Bulgaria; foreign nationals and stateless persons with a long-term residence permit; recognised refugees, those with humanitarian status or those with asylum; persons who are subject to Bulgarian law under the rules for coordination of social security. For Bulgarian nationals and some of the categories of foreign nationals with a

7 Page 7 of 46 long-term residence permit the following treatment is provided by the tax funded scheme: medical aid in emergency cases; obstetric aid for all women without health insurance, regardless of the manner of birth, within the scope and by a procedure determined by an ordinance of the Minister of Health; psychiatric hospital aid; the provision of blood and blood products; the transplantation of organs, tissues and cells; the mandatory treatment and/or mandatory isolation; expert opinions and reports on the degree of disability and long-term loss of the ability to work; the payment for the treatment of diseases under terms and conditions set out by the Minister of Health; medical transport under terms and conditions set out by the Minister of Health. 2. Exemptions from the compulsory insurance 3. Voluntarily insured 4. Eligible dependants Conditions 1. Qualifying period 2. Duration of benefits Organisation 1. Doctors: Approval Remuneration Bulgarian nationals subject to compulsory insurance who stay abroad for more than 183 days in a calendar year are exempt from insurance contributions from the date of their departure (provided they make a prior application to the National Social Insurance Institute (Национален осигурителен институт)). After their return their health insurance rights are restored after 6 months of insurance or a one-off payment of 12 contributions. Not applicable. Not applicable. Insured persons who have not made more than 3 contributions in the last 15 months shall pay the provider for medical treatment. After the insured person pays all the due contributions their insurance rights are restored from the day of payment. The sums paid for the medical treatment previously received are not reimbursed. Unlimited. Contracted by the National Health Insurance Fund (Национална здравно осигурителна каса). Primary medical care: Capitation and fee-for-service. Specialised medical care: Fee-for-service.

8 Page 8 of Hospitals Contracted by the National Health Insurance Fund (Национална здравно осигурителна каса). Benefits 1. Medical treatment: Choice of doctor Access to specialists Payment of doctor Patient's participation Patients must register with a general practitioner (GP) who has a contract with the National Health Insurance Fund (Национална здравно осигурителна каса). Re-registration is possible twice a year (during the periods 1-30 June and 1-31 December). Upon GP referral. Benefits in-kind system. Any person covered under contributions funded scheme pays the physician, dentist or health-care facility (providing medical care) for each visit 1% of the national minimum (monthly) wage (minimum wage is currently BGN 220 ( 112) per month). Exemption or reduction of patient's participation 2. Hospitalisation: Choice of hospital Patient's participation Exemption from payment of the fees is granted to any person suffering from a disease as designated in a list appended to the National Framework Agreement; any family member who has not attained the age of 14, or who has attained the age of 14 but has not attained the age of 18, or who is a dependant; any member of the armed forces performing compulsory military service; any person who has sustained an injury in the course of or in connection with national defence; any war veteran and war-disabled; any person remanded in custody or any person arrested or persons deprived of his or her liberty; any indigent receiving income support under the Social Assistance Act; any person without an income, who has been placed in a child-care home, in a preschool child-care home, or in a public-care institution; any medical specialist. Patients are allowed to select any health care hospital in the country if they have a referral from their GP. Any person covered under contributions funded scheme pays the physician, dentist or health-care facility (providing medical care) for each day of hospital treatment: 2% of the national minimum (monthly) wage, but not more than ten days annually (minimum wage is currently BGN 220 ( 112) per month). Exemption or reduction of patient's participation Exemption from payment of the fees is granted to any person suffering from a disease as designated in a list appended to the National Framework Agreement;

9 Page 9 of 46 any family member who has not attained the age of 14, or who has attained the age of 14 but has not attained the age of 18, or who is a dependant; any member of the armed forces performing compulsory military service; any person who has sustained an injury in the course of or in connection with national defence; any war veteran and war-disabled; any person remanded in custody or any person arrested or persons deprived of his or her liberty; any indigent receiving income support under the Social Assistance Act; any person without an income, who has been placed in a child-care home, in a preschool child-care home, or in a public-care institution; any medical specialist. 3. Dental care: Treatment Dental prosthesis All health insured persons are entitled to receive the following dental treatment: Persons under 18: 1 diagnostic examination and up to 4 dental interventions per calendar year; Persons over 18: 1 diagnostic examination and up to 2 dental interventions per calendar year. The National Health Insurance Fund (Национална здравно осигурителна каса) pays for this treatment fully or partially as contracted in the National Framework Agreement and depending on the kind of the treatment and the age of the person. For the "visit fee" see Table II, Patient's Participation". Not covered. 4. Pharmaceutical products The National Health Insurance Fund (Национална здравно осигурителна каса) pays fully or partially for up to 3 listed pharmaceutical products per listed illness. The NHIF together with the associations of the doctors and of the dentists determine the prices of the products with the producers and wholesalers. The extent of National Health Insurance Fund payment towards listed products is included in the annual National Framework Agreement. Payment by the National Health Insurance Fund for very expensive pharmaceutical products is subject to case-by-case decision. 5. Prosthesis, spectacles, hearing-aids 6. Other benefits Disabled persons receive cash allowances for the purchase or repair of supporting devices according to a list set annually by the Minister of Labour and Social Policy (Министър на труда и социалната политика). Obligatory health insurance: Preventive examinations of children, dispensary observation of pregnant women, dispensary observation of other persons subject to dispensary registration. Tax funded treatment:

10 Page 10 of 46 III. Sickness - cash benefits Applicable statutory basis Basic principles Field of application 1. Beneficiaries 2. Membership ceiling working capacity expertise, medical transportation, compulsory immunisations, anti-epidemiological activities, access to activities under national regional and municipal health care programmes. Social Insurance Code (Кодекс за социално осигуряване) 1999 title amended Law on Health (Закон за здравето) Ordinance on the medical expertise of the working capacity (Наредба за медицинската експертиза на работоспособността) Social insurance contributory scheme providing earnings-related benefits for economically active persons. Compulsory insurance for: Employees working for more than five working days or 40 hours per calendar month, civil servants, judges prosecutors investigators bailiffs and court employees, soldiers and military personnel, paid and active members of co-operatives, persons working under a second or additional employment contract, management executives and those in control of commercial companies, employees in elective offices, servants of the Bulgarian Orthodox Church and other registered religions having clerical rank. The following persons may join voluntarily: registered free lance professionals and craftsmen, sole entrepreneurs owners or partners in commercial companies, registered farmers, working pensioners. No membership ceiling. 3. Exemptions from compulsory insurance Conditions No exemptions. 1. Proof of incapacity for work 2. Qualifying period 3. Other conditions Doctor or dentist certificate for up to 7 consecutive days and no more than 40 days per calendar year. Periods beyond this require a certificate from a medical consultative commission. Minimum period of insurance: 6 months.

11 Page 11 of 46 In case of termination of the labour contract or of the insurance, entitlement remains if incapacity occurs within 2 months after termination. Waiting period No waiting period. Benefits 1. Benefits paid by employers 2. Benefits of social protection Amount of the benefits Duration of benefits Employers pay the cash benefit for the first working day of the temporary disability, but for not more than 15 working days during one calendar year. The daily cash benefit is 80% of the average daily gross earnings or the average daily contributory income on which contributions have been paid for the period of six calendar months preceding the occurrence of the incapacity for work but no more than the average daily net remuneration for the period on the basis of which the benefit is calculated (for earnings ceilings see Table I "Financing"). Paid from the second day of illness until the recovery of capacity for work or the establishing of invalidity. Special conditions for unemployed Death grant Other benefits Payment of the cash unemployment benefit shall be suspended for the period during which the person receives a temporary disability benefit. Upon the death of the insured person, his or her spouse, children and parents shall be entitled to a lump-sum allowance equal to two minimum wages and to a survivor pension, divided equally between them. Cash benefit for quarantine (Парично обезщетение за карантина): Paid for temporary incapacity due to quarantine or suspension from work by the health authorities. Benefit is paid for: the time during which the insured person is under quarantine, the time of suspension from work in case the insured person cannot be reassigned to other suitable work during that time, but for no more than 90 calendar days during one calendar year. Sanatorium treatment: Sanatorium treatment is covered provided it is prescribed by the health authorities. Cash sickness benefit shall be paid for the whole stay including up to three calendar days for travel. Caring for sick family members (spouses and both ascending and descending relatives): Benefits for caring for a sick family member (Обезщетение за гледане на болен член от семейството) or accompanying them to medical treatment: sick family members over 18 years of age: up to 10 days per calendar year per insured person, sick family members up to 18 years of age: up to 60 days per calendar year as a total for all insured members of the family; this time does not

12 Page 12 of 46 include the time spent by children covered by the situations listed below, taking care of a child under quarantine up to 18 years of age: until the expiry of the term of the quarantine, taking care of a sick child up to 3 years of age who is hospitalised together with the insured person: for the time during which the insured has been in the hospital, taking care of a healthy child returned from a children-care establishment due to quarantine: till the termination of the quarantine. Reassignment benefit (Обезщетение за трудоустрояване): Cash benefit paid when an insured person is reassigned to a lower paid job because of temporary incapacity for work. Benefit is equal to the difference between the average daily earnings received within the 6 months prior to reassignment and the daily wage after reassignment. The benefit is paid for the duration of reassignment but for no more than 6 calendar months. There are no earnings ceilings or maximum amounts of benefit. Taxation and social contributions 1. Taxation of cash benefits Benefits are not subject to taxation. 2. Limit of income for tax relief or tax reduction Not applicable. 3. Social security contributions from benefits IV. Maternity/Paternity Applicable statutory basis Basic principles Field of application 1. Benefits in kind 2. Cash benefits No contributions. Social Insurance Code (Кодекс за социално осигуряване) 1999 title amended Labour Code (Кодекс на труда) Law on Health Insurance (Закон за здравното осигуряване) Law on the Budget of the State Public Insurance (Закон за бюджета на държавното обществено осигуряване) for Social insurance contributory scheme providing earnings-related (pregnancy and childbirth) and flat-rate (raising a small child) benefits for economically active persons. See Table II "Health care". Compulsory insurance: Employees working for more than five working days or 40 hours per calendar month, civil servants, judges, prosecutors, investigators, bailiffs, and court employees, soldiers and military personnel, paid and active members of co-operatives, persons working under a second or additional employment contract,

13 Page 13 of 46 management executives and those in control of commercial companies, employees in elective offices, servants of the Bulgarian Orthodox Church and other registered religions having clerical rank. Voluntary insurance possible for: registered free lance professionals and craftsmen, sole entrepreneurs, owners or partners in commercial companies, registered farmers, pensioners who perform work without entering into an employment relationship. Conditions 1. Benefits in kind 2. Cash benefits Benefits 1. Benefits in kind 2. Maternity leave See Table II "Health care". Pregnancy and childbirth benefit (Обезщетение за бременност и раждане) and Benefit for raising a small child (Обезщетение за отглеждане на малко дете): 6 months of insurance and a medical referral. Benefit in case of reassignment due to pregnancy or breast-feeding (Обезщетение за трудоустрояване поради бременност или кърмене): Medical referral. Prior to and after confinement See Table II "Health care". Female factory and office workers shall be entitled to pregnancy and child-birth leave of 315 days for each child, 45 days of which shall compulsorily be used before the confinement. After use of the pregnancy, child-birth or adoption leave, if the child has not been placed in a child-care establishment, the female factory or office worker shall be entitled to an additional child-care leave for a first, second, and third child until the child's attainment of the age of two years, and six months for each additional child. Continuation of payment by the employer 3. Cash benefits No statutory continuation of payment. Pregnancy and childbirth benefit (Обезщетение за бременност и раждане): An insured mother has the right to a cash benefit for pregnancy and childbirth for a term of 315 days commencing 45 of before anticipated date of delivery. The insured mother gets entitled to this benefit if she has 6 months of insurance for all insured risks except for unemployment, work injury or occupational disease. The daily cash benefit is 90% of the daily average contributory income for the six calendar months preceding leave.

14 Page 14 of 46 Benefit in case of reassignment due to pregnancy or breast-feeding (Обезщетение за трудоустрояване поради бременност или кърмене): In case of reassignment to another workplace due to pregnancy or breastfeeding the insured woman is paid a cash benefit equal to the difference between her new daily earnings and her previous average earnings of the 6 calendar months preceding the month of the reassignment. No earnings ceilings or maximum benefit amounts apply. Where a pregnant woman is insured for all social security risks less workplace accident, occupational illness and unemployment or for all social security risks insured less unemployment, but is not entitled to a pregnancy and childbirth benefit due to absence of the required length of insurance participation, the one-time allowance shall be paid in an amount proportionate to the number of days from the start of the maternity and childbirth leave and the time of reaching the required length of insurance participation, but not in excess of 45 days. The one-time pregnancy allowance shall be payable 45 days prior to the expected date of birth determined. Taxation and social contributions 1. Taxation of cash benefits Benefits are not subject to taxation. 2. Limit of income for tax relief or tax reduction Not applicable. 3. Social security contributions from benefits V. Invalidity Applicable statutory basis Basic principles Field of application No contributions. Social Insurance Code (Кодекс за социално осигуряване) 1999 title amended Labour Code (Кодекс на труда) Law on the Budget of the State Public Insurance (Закон за бюджета на държавното обществено осигуряване) for Law on Integration of People with Disabilities (Закон за интеграция на хората с увреждания) Decree No. 21 of the Council of Ministers (Министерски съвет) of on Determining the New Amount of the Social Pension for Old-age (Социална пенсия за старост). Regulation on Implementation of the Law on Social Assistance (Закон за социално подпомагане) Social insurance contributory scheme providing earnings-related benefits to economically active persons. Different system in operation for the provision of benefits for work related incapacity. Employees working under an employment contract,

15 Page 15 of 46 civil servants, Exemptions from compulsory insurance Risk covered Conditions judges prosecutors investigators bailiffs and court employees, soldiers and military personnel, paid and active members of co-operatives, persons working under a second or additional employment contract, management executives and those in control of commercial companies, employees in elective offices, servants of the Bulgarian orthodox church and other registered religions having clerical rank, free lance professionals and/or craftsmen, sole entrepreneurs, owners or partners in commercial companies, registered farmers, persons working without an employment contract who are not otherwise insured provided they receive net remuneration equal to or higher than the national minimum wage, persons working without an employment contract who are insured on other grounds during the respective month regardless of the amount of their remuneration. Persons sent to work abroad by a Bulgarian intermediary company may insure themselves for invalidity, old-age and death on a declared income between the minimum and the maximum amount of the monthly contributory income; Pensioners who perform work without entering into an employment relationship may insure themselves at their wish. The assessment of benefit is based on the percentage reduction in working capacity. For ease of reference incapacity can be categorised into three groups: 1. Minimum level of incapacity for work 2. Possibility of review Group I: Persons with reduced working capacity over 90%, Group II: Persons with reduced working capacity from 71% to 90%, Group III: Persons with reduced working capacity from 50% to 70.99%. 50% reduction in working capacity. An invalidity pension (Пенсия за инвалидност) is granted for the period of the disablement and the pensioner has to present himself or herself for recertification by the working capacity evaluation authorities if continuation of payment is claimed. 3. Period for which cover is given The invalidity pension (Пенсия за инвалидност) is granted for the term of the invalidity or for life when disabled persons have attained pensionable age. 4. Minimum period of affiliation for entitlement Minimum period of insurance varies according to the age of the claimant at the onset of permanent incapacity: Up to 20 years of age (and in the case of those born blind or who have lost their sight before starting work): no insurance period required. Up to 25 years of age: one year insurance period. Up to 30 years of age: 3 years insurance period. Over 30 years of age: 5 years insurance period.

16 Page 16 of 46 Those who are disabled at birth or who become disabled before starting work acquire the right to invalidity pension (Пенсия за инвалидност) after one year of insurance; see "Non-contributory periods credited or taken into account". Benefits 1. Determining factors for the amount of benefits Calculation basis, years of insurance, the difference between the age of the person and the pensionable age, degree of working incapacity, the minimum pension for the contributory old-age pension, monthly national average contributory income, individual coefficient (based on the ratio between the income of the person and the monthly national average salary for the same period. 2. Calculation method, pension formula or amounts The amount of the general-sickness invalidity pension is determined by multiplying the income on the basis of which the pension is calculated by the total sum of 1% for each year of contributory service and the relevant proportionate part of the percentage for the months of contributory service. The time counting as contributory service and the relevant proportionate part of the percentage for the months shall be multiplied by the following coefficient: Persons with working capacity reduced over 90%: 0.9; persons with working capacity reduced between 71% and 90%: 0.7; persons with working capacity reduced between 50% and 70.99%: 0.5. See "Non-contributory periods credited or taken into consideration". 3. Reference earnings or calculation basis "Calculation basis" is determined by multiplying the national average monthly contributory income over the 12 calendar months before the month of granting the pension by the individual coefficient of the claimant. The individual coefficient is determined using: the ratio between the average monthly contributory income of the claimant over 3 consecutive years chosen by the claimant from the 15 years preceding December and the national average monthly salary for the same period, the ratio between the average monthly contributory income of the claimant for the total period after December and the national average monthly salary for the same period. The individual coefficient is determined by multiplying each of the ratios above by the number of months for which it has been calculated and dividing the sum of the products obtained by the total number of months included in the two periods. 4. Non contributory periods credited or taken into consideration Where by the date of the invalidity the insured person is below pensionable age the difference between his age and the pensionable age is treated as periods of insurance. When determining the amount of the pension these credited years of insurance are multiplied by a coefficient as follows: Group I: 0.9 Group II: 0.7 Group III: 0.5

17 Page 17 of Supplements for dependants (spouse, children, other dependants) 6. Minimum pension 7. Maximum pension 8. Other benefits Adjustment No supplements. The amount of the general-sickness invalidity pension may not be less than: for persons with working capacity reduced over 90%: 115% of the minimum amount of the contributory old-age pension which is BGN ( 67); for persons with working capacity reduced between 71% and 90%: 105% of the minimum amount of the contributory old-age pension which is BGN ( 61); for persons with working capacity reduced between 50% and 70.99%: 85% of the minimum amount of the contributory old-age pension which is BGN ( 49). The minimum amount of the contributory old-age pension is determined by the Public Social Insurance Budget Act and until 30/06/2008 is BGN ( 53). As of 1 July 2008 it was adjusted by 10.35% and reached the amount of BGN ( 58). Total amount received from one or more pensions (excluding supplements) must not exceed 35% of the maximum contributory income for the preceding year. The maximum contributory income for 2007 was BGN 1,400 ( 716) so the maximum pension is currently BGN 490 ( 251) per month. A cash lump-sum benefit is available when the insured person has not completed the required insurance period for granting invalidity pension (Пенсия за инвалидност) this is equal to cash sickness benefit for 60 days (see Table III "Cash: Sickness Benefits"). The following are entitled to two return trips on the train or bus each year: those with disabilities of 71% or more, those with permanently reduced working capacity of 71% or more, military invalids, children under the age of 16 with permanent disabilities. Pensions granted before the 31 December of the preceding year shall be adjusted annually from 1 January by a decision of the Supervisory Board of the National Social Insurance Institute (Национален осигурителен институт) by a percentage equal to the sum of 50% of the increase of the contributory income and 50% of the index of the consumer prices during the previous calendar year. Accumulation with other social security benefits Following pensions may not be received at the same time: Personal pension for periods of insurance and old-age with survivor's pension (Наследствена пенсия) for periods of insurance and old-age; personal or survivor's pension for periods of insurance and old-age with personal or survivor's pension for invalidity; personal pension for invalidity with survivor's pension for invalidity; social pension for old-age (Социална пенсия за старост), personal pension (Персонални пенсии) and pension for special merits (Пенсия за особени заслуги) with any other kind of pension.

18 Page 18 of 46 Where the person has right to more than one personal pension for invalidity due to different diseases the highest amount is determined. In case of entitlement to more than one pension one of the pensions is received by choice in full and the others are reduced to 50%. Where one of the pensions is a social pension for invalidity (Социална пенсия за инвалидност) it shall be paid in the amount of 25%. Accumulation with earnings from work Return to active life 1. Rehabilitation, retraining Full accumulation with earnings permitted. Sanatorium and Resort Treatment Benefits Incapacitated persons who are referred to sanatorium and resort treatment by the health authorities shall be paid a cash benefit for the entire duration of the treatment, including up to three calendar days for travel, in the amounts determined for general sickness or for employment injury and occupational disease, respectively. Cash Benefit upon Occupational Rehabilitation Upon occupational rehabilitation by reason of temporarily reduced working capacity consequent to general sickness, employment injury or occupational disease, the insured person is paid a cash benefit if the new job carries a lower labour remuneration. The daily cash benefit amounts to the difference between the average daily labour remuneration received during the six months preceding the month of the occupational rehabilitation and the average daily labour remuneration received after the occupational rehabilitation. Where the insured person has worked for less than six months until the day of the occupational rehabilitation, the benefit is determined as a difference between the average daily remuneration and the average daily labour remuneration received after the occupational rehabilitation. Integration of people with disabilities is carried out through: Parents (adoptive parents) or spouses for the period of taking care of a disabled person who has lost over 90% of their working capacity and need permanent assistance provided the parent (adoptive parent) or spouse was not insured and has not received a pension during that period; medical and social rehabilitation; education and vocational training. 2. Preferential employment of handicapped persons Every employer with more than 50 employees is obliged to provide work places appropriate for reassignment of persons with reduced working capacity. The number of places varies from 4 to 10% of the total number of the employees depending on the branch of the economy. At least half of them must be for people with permanent disabilities. The employer can apply to the Agency for People with Disabilities (Агенция за хората с увреждания) for grants for the provision of access to the work place, adaptation of the work place or equipping the work place for people with disabilities. After receiving the grant the employer must hire people with permanent disabilities for a period of no less than 3 years. Such an employer is reimbursed by the State Budget for 30% of the social security contributions paid

19 Page 19 of 46 by him for the disabled employees. Taxation and social contributions 1. Taxation of pension benefits Pensions are not subject to taxation. 2. Limit of income for tax relief or tax reduction Not applicable. Pensions are not subject to taxation. 3. Social security contributions from pension VI. Old-age Applicable statutory basis Basic principles Field of application No contributions. Social Insurance Code (Кодекс за социално осигуряване) 1999 title amended Law on the Budget of the State Public Insurance 2007 (Закон за бюджета на държавното обществено осигуряване за 2007 г.). First Pillar: Public pension insurance, functioning as a standard pay-as-you-go system. It is mandatory and covers all individuals hired by employers as well as selfemployed, farmers, individuals working without a formal labour contract and other, near 30 insured types. Second Pillar: Supplementary compulsory pension insurance based on a defined contributory fully funded principle. There are two types of funds within this second pillar. The one is the so called Universal pension fund and covers all persons born after The second on is the Professional pension fund and covers the persons working under the first or the second labour category. See Table V "Invalidity". Exemptions from compulsory insurance Conditions See Table V "Invalidity". 1. Minimum period of membership See "Legal retirement age". 2. Conditions for drawing full pension 3. Legal retirement age First Pillar: There are two requirements to be met: reaching a minimum age and a fixed sum of years of insurance and age (the so called "points ). Second Pillar: Entitlement to a supplementary lifelong old-age pension shall arise when the insured person acquires entitlement to a pension for old-age and periods of insurance under the first pillar.

20 Page 20 of 46 Standard pension Early pension Deferred pension First Pillar: The conditions for acquiring a pension relate to a point system. Number of points = age + years of insurance. The current requirements are: Men: 63 years of age and 100 points. Women: 59.5 years of age and 94 points. The age and the number of points for women are increased each calendar year by 6 months and 1 point until they reach the following by 2009: 60 years and 94 points. If a person has insufficient points the right to a pension shall be acquired after 15 years completed period of insurance (out of which 12 years must be actual service as opposed to credited periods see "Benefits: Non-contributory periods taken into account") and upon reaching 65 years of age for men and women. Calculation of insurance periods: upon retirement periods of insurance are adjusted whereby 3 years of first category labour or 4 years of second category of labour are considered equivalent to 5 years of the third category of labour. Specific provisions exist for certain professions: Regular servicemen acquire a right to a pension upon discharge regardless of their age after 25 years of employment out of which two thirds are actually served as regular military service. Officers and civil servants of the Ministry of Interior acquire a right to a pension upon discharge after 25 years of service two thirds of which must actually have been served as civil servants in particular departments. Pension paid regardless of the age. Second Pillar: Entitlement arises when the insured person acquires right to a standard old-age pension under the First Pillar. Upon request of the insured person it is possible that the Supplementary Compulsory Insurance Fund grants a pension to the insured person 5 years before completion of pensionable age provided the amount saved in his individual account is sufficient to provide a benefit equal to the minimum pension. There exist two separate schemes for early retirement. The one is the so called Teachers pension fund, a public statutory PAYG scheme. The second one is a private scheme for supplementary compulsory pension insurance on a capital base under the second pillar for early retirement of persons working under hard labour conditions, a Professional pension fund. Apart from these two separate schemes there is a regime for early retirement in the frame of the general statutory scheme with universal coverage. Possible for persons who have worked 10 years under the first category of labour and have reached 47 years of age for women and 52 years of age for men or 15 years under the second category of labour and 52 years of age for women and 57 years of age for men. This regime is in force until Insured persons can work beyond entitlement to a pension and there is no

21 Page 21 of 46 maximum age applied. Benefits 1. Determining factors First Pillar: Reference earnings, period of insurance, monthly average contributory income for the country, the individual coefficient of the claimant. Second Pillar: the accumulated sum in the individual account, officially approved bio-metric tables (reflecting life expectancy) for the lifelong pensions and the term of receiving for the fixed-term pensions, the approved technical interest rate. 2. Calculation method or pension formula First Pillar: Calculation basis multiplied by 1% for each year of insurance and a proportional amount for each additional month of insurance. The calculation basis is multiplied by 3% for each year of insurance and a proportional amount for each additional month of insurance in cases where the persons have acquired calendar periods of insurance of 37 years for men and 34 years for women and still continue working after accomplishment of the standard retirement age, without having been granted a pension. The insurance period is adjusted to reflect whether it was performed in the first, second or third category of labour (for method of adjustment see "Legal Retirement Age: Standard Pension"). Second Pillar: The amount of the supplementary lifelong old-age pension shall be determined on the basis of: the resources accrued on the individual account; the biometric tables; the technical interest rate. The amount of the fixed-period early-retirement occupational pension shall be determined on the basis of: the amounts accrued on the individual account; the period of receipt; the technical interest rate. 3. Reference earnings or calculation basis First Pillar: Calculation basis: determined by multiplying the national average monthly contributory income for 12 calendar months before the month of granting the pension by the individual coefficient of the person. The individual coefficient is determined using:

22 Page 22 of 46 the ratio between the average monthly contributory income of the claimant over 3 consecutive years chosen by the claimant from the 15 years preceding December 31, 1996 and the national average monthly salary for the same period. the ratio between the average monthly contributory income of the claimant for the total period after December 31, 1996 and the national average monthly salary for the same period. The individual coefficient is calculated by multiplying each of the abovementioned ratios by the number of months for which it has been calculated and dividing the sum of the products by the total number of months included in the two periods. Second Pillar: Pension based on amount saved in each individual's personal account. 4. Non-contributory periods credited or taken into consideration First Pillar: The following periods are recognised as insurance periods even though the claimant has not made any contributions: paid and unpaid leave for raising a small child. paid and unpaid leave for temporary incapacity for work and for pregnancy and childbirth. unpaid leave for up to 30 days during one calendar year. during payment of unemployment benefit. during which a person due to be reassigned to a different job on medical grounds does not work because the insurer has not provided him/her with work suited to his/her medical condition. during which a parent (or an adoptive parent) or spouse has taken care of a disabled person who has lost at least 90% of their capacity for work and needs permanent assistance. conscription or peacetime national military/civilian service. during which a non-working mother has raised a child up to 3 years of age. Second Pillar: No special provisions. 5. Supplements for dependants (spouse, children, other dependants) Other dependants 6. Special supplements 7. Minimum pension No supplements. Upon the death of a spouse the surviving pensioner has the right to a supplement of 20% of the pension or the sum of pensions of the deceased spouse. This supplement it is granted for life but is terminated in case of remarriage. It may not be received together with a survivor's pension (Наследствена пенсия) from the same deceased. First Pillar: The minimum amount of the contributory old-age pension is determined annually in the Law on the Budget of the State public insurance. From

23 Page 23 of Maximum pension 9. Early pension 10. Deferment Adjustment Partial pension 01/01/2008 until 30/06/2008 it amounts to BGN ( 53). From 01/07/2008 until 31/12/2008 it amounts to BGN ( 58). Second Pillar: No statutory minimum pension but when the amount of the pension is up to 20% of the social pension for old-age (Социална пенсия за старост), the sum is paid to the pensioner at one time or deferred at the acquiring of the right. See Table V "Invalidity". There exist two separate schemes for early retirement. The one is the so called Teachers pension fund, a public statutory PAYG scheme. The second one is a private scheme for supplementary compulsory pension insurance on a capital base under the second pillar for early retirement of persons working under hard labour conditions, a Professional pension fund. Apart from these two separate schemes there is a regime for early retirement in the frame of the general statutory scheme with universal coverage. Possible for persons who have worked 10 years under the first category of labour and have reached 47 years of age for women and 52 years of age for men or 15 years under the second category of labour and 52 years of age for women and 57 years of age for men. This regime is in force until Provided that the persons have acquired calendar periods of insurance of 37 years for men and 34 years for women and still continue working after accomplishment of the standard retirement age, without having been granted a pension, for each year of insurance after this age the percentage by which is multiplied the calculation basis is 1.5 and the respective proportional part of this percentage for the months of insurance practice. See Table V "Invalidity". No partial retirement. Accumulation with earnings from work Full accumulation with earnings permitted. Taxation and social contributions 1. Taxation of pension benefits Pensions are not subject to taxation. 2. Limit of income for tax relief or tax reduction Not applicable. Pensions are not subject to taxation. 3. Social security contributions from pension VII. Survivors Applicable statutory basis Basic principles No contributions. Social Insurance Code (Кодекс за социално осигуряване) 1999 title amended Social insurance contributory scheme providing earnings-related benefits to