Gov’t adopts bill to clarify impact of pensions shift

Budapest, November 24 (MTI) – The government on Wednesday adopted a package of bills designed to clarify the impact of switching from a private to a state-managed pension scheme.

The bill will “save pensions”, for pensioners and future pensioners, as well as people currently in the private system, Peter Szijjarto, the prime minister’s spokesman, told reporters.

    Economy Minister Gyorgy Matolcsy said that members who currently pay their compulsory contributions into private pension funds must decide by January 31, 2011 if they want to switch to the state system. Those who remain in the private system will not receive “solidarity payments” – which make up 70 percent of the pension total – from employers’ contributions, he said.

    Matolcsy added that private pension accounts will be converted into a voluntary pension scheme where those who opt-out of the state system can continue to save for a pension, but will not receive state benefits. He vowed the government would compensate for the payments stopped to private pension funds in November for 14 months.

    Szijjarto said the new legislation would ensure that accrued savings in private pension funds are transferred to the state system with earlier yields added. Employees switching to the state pension system by the end of January next year will even be granted yields at the rate of inflation in past years if their private fund was loss-making, Szijjarto said.

    ”This package will have benefits for all,” he added.

    As for pensioners already receiving state pensions, Szijjarto said their pensions would be guaranteed by making sure that pension funds can only be used to finance pension payments.

    Matolcsy said the shift to the state pension system will be automatic as of February 1, unless an opt-out notice is given, but individual accounts will be transferred and kept separately in the state system, too. He added that a surviving spouse can inherit state pension savings.

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