This is what the new year has brought: the retirement age has risen

This is what the new year has brought: the retirement age has risen
This is what the new year has brought: the retirement age has risen

What is worth knowing about retirement?

The pension is funded by the contributions of the currently active workers, so as long as there is a sufficient working age, the contributions support the elderly. Conversely, if the number of people of working age decreases and many people prefer to work abroad, the system will become unsustainable. In Hungary, the proportion of retirees will increase from year to year, while the number of able-bodied young people will be much lower, so the state will respond to the economic challenges of an aging society by raising the retirement age.

What is the retirement age?

The retirement age is the age at which a full or partial old-age pension can be established.

We are entitled to a retirement pension if we have reached the statutory age and have a suitable length of service. The latter is the number of years we worked, that is, when we were insured, we paid the required pension contribution.

Based on the gradual increase in the age limit since 2014, the thresholds for each birth year have increased steadily from year to year. Retirement condition:

  • Born before 1 January 1952, 62 years of age;
  • Born in 1952, 183 days after reaching the age of 62;
  • Born in 1953, turns 63;
  • Born in 1954, 183 days after reaching the age of 63;
  • Born in 1955, turns 64;
  • Born in 1956, 183 days after reaching the age of 64;
  • He was born in 1957 or later, at the age of 65.

Retirement age for men

The retirement age for men is 65 years. The possibility of early retirement for men has been raised several times, but for the long-term sustainability of the pension fund it has been removed from the table despite the fact that the average life expectancy of men is lower than that of women.

Retirement age for women

The retirement age for women is also 65, but for women, the old-age pension can be calculated after 40 years of service, regardless of the age. A maximum of 8 years can be counted as child-rearing time, ie they must have completed at least 32 years of service through gainful employment.

The retirement age is rising at a fairly rapid pace, and many previous benefits have disappeared over the past decade.

According to Gergely Gulyás, the Minister in charge of the Prime Minister’s Office, if we do not want to raise the age limit further after 2030 and 2035, then

families and childbearing must be supported, family policy must be pursued.

Pension increase 2022 and 13th month pension

Pensions and pension-like benefits will increase by 5% on 1 January 2022, instead of the 3% planned in the budget, due to higher inflation expectations.

It is worth mentioning that the government expects 4.8% inflation next year, meaning the government is overcompensating in this regard. In addition to the initial 3% increase, 2 percentage points will cost the budget HUF 80 billion, and the payment of the 13-month pension will not cost an additional HUF 160 billion in two-week but one-month payments. This will improve the situation of pensioners by a total of HUF 240 billion at the beginning of the year compared to the adopted budget. Nearly 2.5 million people will be affected by this move.

How long is the pension system sustainable?

BASED ON THE 2016 STUDY OF THE MAGYAR NEMZETI BANK, THE FINANCING OF PENSIONS CAN BE CONSIDERED FOR 20 YEARS.

Cover image source: Getty Images

 
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