Expert says Hungarian pension system headed for collapse

Hungary's pension system is storing up economic and social conflicts for the future, CEU economics professor László Csaba told a Wednesday conference.

More than one in three Hungarians over age 45 are headed for old-age poverty, with a lack of pre-pension savings, according to a survey by Median. This segment of the population will have no disposable assets, nor additional savings upon retirement.

The study also revealed that only one-third of the population takes savings other than state pensions seriously during their active years on the labour market. In order to lead a care-free life after retirement, one should save Ft 30-40,000 a month for at least 20 years, whereas most people pay less than Ft 10,000 a month to pension funds.

Annual pension payments from the social security funds rose from Ft 1,128.4 billion in 2000 to Ft 2,052.7 billion in 2004.

Reforming the pension financing scheme will be inevitable, as pension payments will rise as contributions decline, Csaba warned.

The government did not change the pension system in its recent austerity measures, but is hanging on to the 13th-month pension.

The above story is just one of more than two dozen published today by Hungary Around the Clock, the most comprehensive source of daily English-language news about Hungary. For a free trial of HATC, click here. Hungarian news sources include Népszabadság; Magyar Hírlap; Világgazdaság; Napi Gazdaság; Magyar Nemzet; Népszava; Kossuth Rádió news and Hungarian television's nightly news broadcast.

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