The government is working on the introduction of the 14th monthly pension, which could be done in 2-4 years, said Sándor Czomba, the state secretary responsible for employment policy.
The government is working on the introduction of the 14th monthly pension, which could be done in 2-4 years, but this requires economic strength, which is related to peace, said Sándor Czomba, the state secretary responsible for employment policy, in the Parliament.
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In this regard, András Farkas was previously a pension expert he told the Pénzcentrum: the measure would mean roughly HUF 585 billion in extra money for the budget.
It can be implemented, for example, it was done in Poland not so long ago, the beneficiaries also receive a 14th monthly pension, but that system is not an actual 14th monthly pension, not everyone receives the same amount as the amount of their own pension, but the beneficiaries receive a uniform benefit corresponding to the average pension every 14th month. This way, the poor will do well, the middle-aged pensioners will also receive significant help, but the 14th monthly benefit will obviously be much smaller for the richer pensioners. I think Hungary should also think in a similar system
– said the Pension Guru.
Relative income situation of Hungarian pensionershas deteriorated significantly in the last decade. While in 2014 the average pension accounted for nearly 68% of the average salary, by 2020 this had decreased to 51%. The introduction of the 13th month pension improved the situation somewhat, but according to the latest data, the average benefit still only accounts for 54.6% of the average salary.
The introduction of the full 14-month pension would significantly increase the budget’s pension expenses. The HUF 7,816 billion pension expenditure planned for 2026 (8.2% of GDP) could increase to HUF 8,400 billion, which would represent 8.8% of GDP. The 14th monthly allowance is expected to cost nearly HUF 600 billion annually.
It is important to highlight that, while the primary funding for the 12-month retirement benefit is provided by the social security contribution and the social contribution tax, the 13th-month benefit does not have such clear coverage in the budget. What’s more, the contribution and social security incomes are not even enough to pay the 12-month pension, so the central budget must regularly provide hundreds of billions of dollars in support to the Pension Insurance Fund.
With the introduction of the 14th month pension, the country’s budget would take on another huge, unfunded expenditure item, which could further worsen the budget balance and the sustainability of the pension system in the long term. This is particularly problematic in light of the fact that the government is currently working on reducing the social contribution tax, which may further weaken the income side of the pension system.
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Cover photo: Zoltán Kocsis, MTI/MTVA
