A fraction of Hungarians chose to hold on to their private pension funds despite losing out on future state pensions as the deadline to switch to Hungary’s state system passed on Monday night.
About 3% of the roughly 3mn Hungarians paying into private schemes decided to stick with their old pension funds, the spokeswoman for the Central Administration of National Pension Insurance, Zsuzsanna Szoke Lovas, said yesterday.
“Some 102,019 people declared they did not wish to transfer their pension savings into the state system,” she said.
The Hungarian parliament approved a bill in December that forcibly transfers most of the assets of private pension funds to the state. The law strips anyone, who continues paying into a private pension fund, of a state pension.
Hungarians had a month and a half to opt out of the move into the state system. Assets of those who did not appear in person at a local pension office to make the opt-out statement before January 31 were automatically transferred to the state coffers.
Around 3mn Hungarians paid into private pension funds until recently, with total assets estimated at 3tn forint ($14.7bn).
The government’s move reversed a previous pension reform dating back to 1998 when Hungarians with a job were obliged to pay 8% of their wages into private pension funds, plus 1.5% into the state system. Anyone in employment before 1998 had the option of remaining completely in the state system if they wished.
Critics have slammed the pension overhaul as a government attempt to plug the gaping hole in
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