Hungarian Pension Funds Shocked By Nationalisation

  • 20 Oct 2010 1:00 AM
Hungarian Pension Funds Shocked By Nationalisation
"Pension fund association Stabilitas expressed deep shock at government plans to withhold social security payments to private pension funds for one year.

Prime Minister Viktor Orban announced that the government will suspend the transfer of pension contributions to private pension funds from November 1, 2010, until the end of 2011.

Under the current system, employees pay 8% of gross earnings to private pension funds, which amounts to Ft 30 billion a month. This money goes to the Tax Authority, which then transfers it to private pension funds.

The change means that no transfers will be made to the accounts of private pension funds, and that any change in retirement savings will be a result of gains on assets, Nepszabadsag writes.

Some industry experts say the government plan raises constitutional concerns. As with social security contributions, the government can not use the proceeds – roughly Ft 360 billion in this case – to fill the budget gap.

The timing of the tax is disadvantageous for private pension funds, which must now find ways to scale back operating costs, according to Nepszabadsag. "

Source: Hungary Around the Clock.

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