Hungarian government to seize remaining private pension fund assets
What little is left of the former Hungarian mandatory pension system is under threat again.
Under a bill submitted to Parliament by economy minister Mihály Varga, the four funds still in operation – Budapest Magánnyugdíjpénztár, Horizont Magánnyugdíjpénztár, MKB Nyugdíjpénztár and Szövetség Magánnyugdíjpénztár – must prove that at least 70% of their 60,000-odd members have been paying regular fees for at least two months over a six-month period, or face closure.
The law, if passed, could go into effect as early as January 2015.
Varga argued that the lack of inflows had resulted in the pension funds being unable to generate sufficient retirement income for their members, who would be better off forwarding all their contributions to the first pillar.
The pension funds warned that this would lead to the dissolution of the system.
The government would acquire some HUF200bn (€651m) in assets, although this has not apparently been factored into the 2015 Budget.
On 25 November, several thousand took part in a Facebook-organised march from the Ministry of National Economy to the Parliament building.
Prime minister Viktor Orbán’s increasingly illiberal government first took aim at the mandatory pension funds in 1998 by freezing contributions.
In 2001, membership of the system became voluntary.
On his return to power in 2010, he threatened those who refused to opt back into the state system with the loss of their state pension.
Although the move proved unconstitutional, the damage was done.
According to data from the National Bank of Hungary, some €12bn of assets were transferred to the state, while the number of members shrank to some 100,600 in 2011 from more than 3m the previous year.
As of the end of September, membership stood at 61,523 and assets at HUF205.4bn.