Migration and Social Protection in Europe and Beyond (Volume 1) by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9783030512415
Publisher: Springer International Publishing

14.2.3 Pensions

Hungary has a two-pillar pension system with a pay-as-you-go state pension scheme in its frontline. The second pillar consists of voluntary private pension funds in which participation is influenced mainly by tax allowances. As a third pillar, a mandatory private pension scheme operated in the country between 1998 and 2011 and the number of private pensions fund members reached 3.1 million of which 60.000 thousand people have kept their membership by 2014 (Szikra 2009; Szikra and Kiss 2017). One of the severe shortcomings of the pension system is the lack of a ‘zero-pillar’ that should provide a minimum state pension for those who do not have the contribution record for being entitled to a PAYG state pension. People with poor contribution record may apply for means-tested social assistance.

The contributory pension scheme was set up in 1928. The original fully-funded pension scheme was transformed into a pay-as-you-go one after WWII. Pension entitlement is conditional on reaching the statutory pension age (increasing gradually until 2022 when it will reach 65) and adequate (15/20 years long) contribution record. The pension scheme covers both employees and the self-employed, and it is not restricted to national citizens. Employees from abroad may establish membership in the state pension scheme, and pension rules do not contain a mandatory residence period in the country. However, the possibility to join the public pension scheme voluntarily is restricted to ‘domestic persons’. This category includes Hungarian and citizens of the European Economic Area (EEA), stateless persons, refugees, and those who have settled status in Hungary.7

Consequently, Hungarian and EEA citizens who are not staying in Hungary and non-EEA citizens who do not have a special status in Hungary are not allowed to join the pension scheme voluntarily. Another point where foreigners suffer disadvantage is the retrospective payment of pension contributions because the law offers this possibility only to ‘domestic persons’. Claiming and exporting pensions from and to abroad is possible.

The amount of the public pension is dependent on claimants’ previous earnings calculated over the whole career but not earlier than 1 January 1988. The government determines the amount of the minimum pension, but given its meagre amount it is instead used as a benchmark of income tests in the social assistance system. The social policy agreement between Hungary and the Soviet Union (applicable for Ukraine) offers access to contributory pensions by aggregating the periods of contributions that citizens of the two states completed in each other’s countries. Similar rules apply to Serbia. The agreements with the USA and Canada offer equal treatment to citizens of the contracting parties in each other’s pension system, and pension benefits are exportable to the contracting party. The agreement with Australia also concerns the old age, survivors’ and disability pensions. Hungarian citizens are treated equally with national citizens in Australia, pension benefits are exportable and the creditable periods can be accumulated under the host country legislation.

Hungary does not have a universal old-age non-contributory pension. The task to provide financial support to people who do not meet

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