Retirement rules in Hungary: gainers and losers

Tibor Czegledi (), Endre Szabo (), Melinda Tir () and Andras Simonovits ()
Additional contact information
Tibor Czegledi: Databank of the Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences
Endre Szabo: Databank of the Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences
Melinda Tir: Databank of the Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences
Andras Simonovits: Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and also Mathematical Institute of Budapest University of Technology, Budapest

No 1631, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: Though the Hungarian pension system has been suffering from many erroneous rules, in the present paper we confine our attention to the rules of retirement in Hungary since 1990. In every pension system, there exist two rules which determine how the lifetime contribution (which is approximately proportional to the years of contributions) and the retirement age influence the benefit amount, respectively. As a benchmark, we use the system of nonfinancial defined contributions, simulating a mandatory life insurance and life annuity system. More generally, we speak of flexible retirement if adding a year to the contributions or the retirement age strongly increases the retirement benefit, opening the way to the flexible choice of the retirement age. Due to erroneous concepts, flexibility has only functioned in a very imperfect form in Hungary. Before 2011/2012, an exemption rule completed the two foregoing rules: if somebody had above the critical value (35–40) of years of contributions, he/she could use early retirement without significant benefit reduction. Since 2011/2012 two other rules have completed these rules: (a) as an exception, since 2011, rule Females 40 has rewarded any woman who had at least 40 years of rights with a full benefit; (b) as a rigid rule, since 2012, nobody could have retired before reaching the statutory retirement age except for category (a). Taking into account the dependence of monthly benefits on the lifetime average valorized wages, we assess the gainers and losers of the past and the present systems.

Keywords: normal retirement age; early retirement; years of contributions; rights; flexible retirement (search for similar items in EconPapers)
JEL-codes: H55 I14 J26 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016-09
New Economics Papers: this item is included in nep-age
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://econ.core.hu/file/download/mtdp/MTDP1631.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to econ.core.hu:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:has:discpr:1631

Access Statistics for this paper

More papers in CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies Contact information at EDIRC.
Bibliographic data for series maintained by Nora Horvath ( this e-mail address is bad, please contact ).