World Bank loan for Hungarian pensions

The World Bank is loaning $150m to the Hungarian government to support the introduction of the new mandatory pension system.

Roberto Rocha, principal economist in the World Bank regional office in Budapest says: We are giving them a loan because this transition is going to have some costs. We are helping to fi-nance this transition while continuing to give them technical support in the areas of regulation and supervision.”

Rocha adds that the system had imported some elements from Eur-ope and some from South America.

“The fund boards operate very much like the trusts in the Anglo-Saxon world or like the Swiss foundations while the ability to switch be-tween funds is a South American feature designed to increase competition,” he adds.

The Hungarian government was due to begin discussions of supplementary regulations for the new pension funds at the time of going to press.

A draft government decree envisages the new compulsory funds being given greater freedom of investment than the currently operating voluntary funds which can hold 30% of their assets in equity.”

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