A rational pension reform package: Hungary 2025

11  March 2024    4:00 pm CET

Unlocking the Future: A Glimpse into Hungary's Pension Reform Journey - Insights, Challenges, and Solutions with András Simonovits

Venue

wiiw Souterrain, Rahlgasse 3, 1060 Vienna, Austria

Description

As part of the Recovery and Resilience Plan (RRP, 2023), the Hungarian government pledged to reform the pension system. The main themes are sustainability and adequacy. The pension plan is to be discussed publicly and put into law by March 2025. The last detailed official pension study was the 2016 discussion paper of the Hungarian National Bank  which should have been updated. The present study is a private work that may contribute to the improvement of the current pension system and help other EU countries avoid similar design and policy errors. The current and projected states of the Hungarian pension system are outlined, and then simple and complex reforms are formulated. Simple reforms include the public availability of relevant data, eliminating the erratic variation of marginal accrual rates, reestablishing the contribution base cap, making the progressivity brackets independent of inflation, and diminishing inequality. Complex reforms include the introduction of a downwardly variable retirement age, phasing-out unfair seniority retirement, raising the lowest benefits, and improving the indexation of initial and continued benefits.

The following points will be addressed:

  • András Simonovits has doubts if the Hungarian government has the will and the capacity to work out the pension reform package promised to the EC
  • He proposes a pension reform package which would reduce tensions accumulated in the Hungarian pension system

Speaker

András Simonovits worked at the Institute of Economics of the Hungarian Academy of Sciences between 1970 and 2023. He has taught at various Hungarian and foreign universities since 1984. András studied the dynamics of shortage economies until 1990 and since 1990 he has been analyzing the models and practices of pensions systems.

The presentation will be in English.
Participants will have the opportunity to ask questions.

Keywords: Pension Systems, Pension Policy, Pension Reforms, Hungary

JEL classification: H55

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