MEASURES TO THE SUSTAINABILITY OF THE HUNGARIAN PENSION SYSTEM

In Hungary a PAYG pension system, encompassing old-age, disability and survivor schemes, was set up around 1950. This scheme covered a growing share of the working population, reaching coverage of nearly 100 percent by 1975. The economic crisis that accompanied the transition to a market economy in the early 1990’s had adverse consequences for the pension system: the systemic dependency ratio grew from 51.4 % in 1989 to 83.9 % in 1996 due to both a fall in employment and an increase in the number of people drawing benefits, as an increasing share of people out of jobs chose early retirement and disability schemes instead of unemployment. The 1997 pension reform left open the retirement rules for the years following 2013. The government is expected to establish the rules to provide for retirement regulations for today’s young and middle- aged population, which ensure retirement to be financed securely, which is calculable in their old age, and ensures a decent living. Besides preparations for long-term work, however, the government has also passed several resolutions on changes to be valued as reforms and making current rules more equitable. The changes are not intended to reduce current budgetary spending, since the implementation of pension rises by law, that is, the four-year pension correction programme will also result in a rapid rise of pension expenses. Changes are intended to substantially improve labour market activity, the longer-term sustainability of the pension system, and the financial security of those to retire in the future by correcting the much too permissive and favourable rules of retirement today