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Half-Million Hungarians May Be Shut Out of Pension System, Paper Says

By MTI, Realdeal.hu


September 10, 2008




Within a couple of decades hundreds of thousands of Hungarians could go without their pensions under the current system because they will not have fulfilled the minimum working period for entitlement, business daily Vilaggazdasag said on Tuesday. 

The rising poverty of pensioners poses a serious threat to the whole of Hungarian society, said the paper.

The main reason is that many people have become unemployed or inactive since the 1990s. 

While the current pension system totally covers the retired segment, around half a million Hungarians face being squeezed out of the pension system by 2030, according to a recent national strategic report on social protection and cohesion.

Furthermore, around a third of workers pay contributions based on the minimum wage, and will therefore only get a minimum pension.

The average number of years worked is expected to fall to 33 years against the current 37-38 years by 2030. Consequently, the value of pensions will be reduced by a tenth in relation to average earnings.

At the same time, the ratio of pensioners to workers is expected to rise. Today every fourth employed person pays for one pensioner. The ratio is estimated to be two to one by 2050. This will put a corresponding strain on the state budget.

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