International Economic Crisis and the Hungarian Pension Reform

Andras Simonovits ()
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Andras Simonovits: Institute of Economics - Hungarian Academy of Sciences

No 1111, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: By 2008, the Hungarian pension system has become too generous and the implied contribution rate hindered growth. When the international economic and financial crisis deprived Hungary from normal credits, its government turned to international organizations for help. The most spectacular element of the conditions attached to the bail-out package was the short and long-run reduction of pension benefits. Within months, the Hungarian government eliminated the unsustainable 13th month benefit, reduced health-insurance contribution rates, replaced wage-price indexation with price indexation and worked out a drastic rise in the normal retirement age in the medium-run. The newly elected conservative party has practically closed the second pillar and plans to use up the released capital to reduce the government deficit, debt and finance public expenditures.

Keywords: international economic crisis; Hungary; pension reform (search for similar items in EconPapers)
JEL-codes: F34 F44 H12 H55 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2011-02
New Economics Papers: this item is included in nep-age and nep-tra
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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