- What country other than the United States, Mexico, Canada, or China did you analyze?
This paper focuses on Bulgaria’s employee benefits, specifically, the pension scheme. The Republic of Bulgaria is a country located in the Southeastern part of Europe bordering Romania and having a population of over 7 million people, of which 49% are working (United Nations, 2014).
- What specific benefit did you analyze? Describe it.
Pension schemes in Bulgaria and the U.S. form the focus of this paper. In its simplest definition, a pension scheme is a program allowing employees to save into a fund. Often, it is arranged by the employee and with the employee’s consent to provide the later one with a pension upon retirement. In other words, a pension scheme is an investment endeavor to save for the future after retiring from one’s job. In most countries, the pension is mostly available to government employees, and in some states, there are pension schemes for privately employed personnel.
Bulgarian pension system has been evolving steadily. Gradual reforms have been undertaken over the last two decades. The first notable step was taken in 1995, the year when private voluntary pensions were introduced into the scheme. Five years later, Bulgarian government implemented reforms in the first pillar, and later the same year, an obligatory second pillar system was introduced, specifically for workers in dangerous working environments. The mandatory second pillar was extended in 2002 to all employees. Pension systems in Bulgaria are categorized into Public pensions and Social pensions. Before the 2000s reforms, the retirement age for women in Bulgaria was set at 55 years, while men could retire at the age of 60 (Mitchell & Hustead, 2001). However, Bulgarian government introduced a strategy reform, setting women’s retirement age at 60, and that of men at 63. The pension system in Bulgaria works on a basic formula and the current contribution rate for workers is 8.05% of the total income. Employers’ contribution rate stands at 14.95% of gross income. These contribution rates are adjusted every year depending on the average real wage growth and the preceding year’s inflation. For one to qualify for a government pension in Bulgaria, the sum of their number of years in pension contribution and the age must add up to 100 for male workers and 91 for female employees. Furthermore, there is a social pension system in Bulgaria, which covers people aged 70 and above, and whose yearly earnings per family head were below the national minimum income for a year.
- How does the benefit work in the United States?
In the United States, both privately employed and state employees are under some kind of pension scheme. Most pension schemes regulations in the U.S. are normally set by the Tax Collection agency and the Internal Revenue Service. The government offers several pension systems to its employees, including the maimed war veterans, members of the disciplined forces and the civil service. The state administers the Social Security system, a program which benefits government employees. U.S. employees qualify for state pension depending on their age and the number of productive years in service. The Minimum Retirement Age (MRA) in the United States varies from one person to another, depending on the year of birth. Those born before 1948 would retire at 55 years, while those born between 1953 and 1964 would retire at the age of 56 years. Employees born in 1970 would retire at the age of 57. The U.S. pension system is categorized into four subsystems. The first is Immediate Retirement Benefits created for people aged 62 and having 5 years of service or aged 60 and having 20 years of service. The second category is called Early Retirement Benefits, it serves people aged 50 possessing 20 years of service. The third, Deferred Retirement Benefits, covers those aged 62 and having 5 years of service. Finally, Disability Retirement Benefits is for employees of any age who have 18 months of service (Turner & Beller, 1992).
- How is the benefit in the country identified in #1 similar to the benefit in the United States?
Both the U.S. and Bulgarian governments have their employees covered by a particular pension scheme. People working under hazardous conditions in the United States and Bulgaria have pensions. Besides, there is a set minimum number of years an employee must attain in both countries to qualify for a state pension.
- How is the benefit in the country identified in #1 different from the benefit in the United States?
Whereas the Minimum Retirement Age (MRA) in the U.S. is stratified depending on the year one was born, the same in Bulgaria is set at 60 years for women and 63 years for men, their year of birth notwithstanding. Moreover, the total sum of an employee’s age and the number of years one has worked determines whether they can qualify for a state pension or not (Genov, 2002). However, this is not the case in the United States, where the pension is only based on the number of working years and the age of the employee.
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