EU concerned over "long-term sustainability" of pension fund changes

Budapest, November 25 (MTI) – The European Commission has raised concern over Hungary’s planned pension changes, Amadeu Altafaj Tardio, spokesman for Finance Commissioner Olli Rehn told MTI on Thursday.

Tardio said infomation on the latest plans suggests they may not serve sustainability goals in the long run, though he added that pension systems were in the responsibility scope of national governments.

    Brussels is concerned that the choice of shifting between the private and state-managed pension schemes “will not be as free as it had originally appeared.” A report soon to be published on the economic situation of member states will comment on Hungary’s pension plans, he added.

    Hungary’s parliament will vote on December 13 on the government’s plans to channel people’s private pension fund savings into the state fund in order to finance spending cuts and deficit-reducing measures, Gabriella Selmeczi, a commissioner for pensions, said on Thursday.

    Selmeczi repeated the economy minister’s Wednesday announcement that unless an opt-out is signed pension savers will automatically be transferred to the state system as of February 1 next year. Those who wish to stay in the private pension will lose pension eligibility on a 24-percent contribution paid by their employers. The economy minsiter offered compensation for any losses in yields suffered by the private-to-state pension shift, and insisted that “everyone would be better off”.

    Opposition parties, however, have voiced great disconcert, and called the initiative “blackmail”. Attila Mesterhazy, leader of the main opposition Socialist party called for the economy minister’s resignation over the pension changes and said his party would turn to the constitutional court for an opinion.

    He said “citizens don’t really have free choice over the two types of pension schemes if they know that choosing to stay in the private system means losing a part of their pension”.

    The green opposition Politics Can Be Different (LMP) party’s parliamentary group leader Andras Schiffer said it was “absurd” and costly to attack an existing system in this way, although the party had opposed its original setup.

    The radical nationalist Jobbik party said they welcomed “the nationalisation of private pensions” but did not agree with the way it was being delivered.

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