The modification of the law on private pensions and pension funds practically means all private pension funds operating in Hungary will have to close down, market-leading fund’s operator Horizont Private Pension Fund told Reuters in an emailed statement on Monday.

The Hungarian government announced plans on Friday to require private pension schemes to show at least 70 percent of members have been paying monthly fees in the past six months or to close down. The law could take effect on 1st of January.

Mandatory private funds, running alongside the state pension system and elective private pension funds, were central to a 1997 scheme to reduce state spending. But Viktor Orbán’s government went on to nationalise more than 90 percent of their assets, worth about $12 billion. Members could declare an intent to keep their savings with the funds, but few did so.

New regulations affecting private pension funds will have no retroactive effect, the economy ministry said on Monday. According to statistics from the National Bank of Hungary, only a few thousand private pension fund members now pay their mandatory monthly fees.

Members paid 10,000 HUF (33 EUR) a month on average in 2011, but this amount has by now fallen to 500 HUF. This is asset depletion on the part of private funds, jeopardising future pension payments, Economy Ministry added.

via reuters.com and hungarymatters.hu

Source: hungarytoday.hu