HUNGARY - Hungary’s constitutional court will decide on Monday whether to hear an appeal by the country’s pension fund association Stabilitas against legislation that has led to the abolition of the country’s mandatory second-pillar pension.
The appeal to the court represents a last-ditch attempt to reverse legislation depriving those who failed to return their accumulated private pension fund assets to the state of their right to a state pension.
In January, just 100,000 out of 3m second-pillar members, representing 10 to 13 per cent of the system’s E10bn in assets, chose to hold on to their assets.
Even if the court does hear the case, however, few expect the pension nationalisation to be reversed. Last month Viktor Orbán, the prime minister, implied that the constitution might be changed if the court ruled against the legislation.
Julianna Bába, president of Stabilitas, said that if the court chose not to take the case, funds would begin transferring members’ assets to the state debt management agency from May. “In the case of the larger funds, it could take until November to complete,” she said.
Bába had previously criticised the ‘discriminatory’ legislation that would see pensioners who refused to transfer assets continue paying into the first pillar, without earning the right to draw a state pension.
The debt management agency has said it will immediately cancel some Ft7.5bn (€27m) in government bonds. Lászlo Buzás, the agency’s head, told Bloomberg the cancellation would immediately lower Hungary’s debt by about 5.5 percentage points from its current level of 80 per cent of GDP.
Since Mr Orbán’s populist conservative government took power last April, it has adopted a string of eye-catching revenue-raising measures, including windfall taxes on primarily foreign-owned banks, retailers, telecommunications and energy companies. Plans for a structural reform of spending, originally promised for last autumn, have yet to be announced.
The nationalisation process will also leave the state with holdings of more than 5 per cent in some of Hungary’s largest listed companies, though no plans have yet been announced on how these holdings will be disposed of.
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