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Brief Introduction to the Hungarian Pension System

Brief Introduction to the Hungarian Pension System. Presentation for New CEU Employees February 22, 2012. 1. Our main topics. A Brief Outline of the Hungarian Pension System Different CEU Employee Groups in the Hungarian Pension System. State pension: Mandatory contributions

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Brief Introduction to the Hungarian Pension System

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  1. Brief Introduction to the Hungarian Pension System Presentation for New CEU Employees February 22, 2012 1

  2. Our main topics • A Brief Outline of the Hungarian Pension System • Different CEU Employee Groups in the Hungarian Pension System

  3. State pension: Mandatory contributions How to calculate your state pension? Private pension options: Private Pension Funds Voluntary Pension Funds NYESZ-R Pension Insurance Other Long-Term Investment Possibilities The Hungarian Pension System

  4. Mandatory Contributions • To be paid to the state • Employee’s pension contribution: 10% in 2012 • up to an annual income of HUF 7,942,000 - that is, a maximum ofHUF 794,200 this year. • Employer’s social contribution tax: 27% in 2012 • 88.89 % of this tax goes to the State Pension Fund • State pays current pensioners from the contributions of current mandatory contributions

  5. How to calculate your state pension? To calculate your pension the following should be known: • Your service years – at least 20 years (w/in EEA) • Your monthly average salary during your service years • As of January 1, 2013 gross average monthly salary should be calculated Pension calculators on the internet vs. Claiming your service period certificate once a year The importance of your monthly payslips

  6. Difficulties in calculating your monthly pension • Determineyour total salary during your service period by calculating your annual salaries: • Summarizeyour annual income (gross salary, bonus etc.) • Deduct your social security contributions, personal income taxand tax credits used in the given year – from next year on? • Take into account the pension cap in the given year – future caps? • Valorise your salary (except your last 3 years) with the multiplicators given for each year– future multiplicators? • Calculateyour monthly average salary: • By dividing your total salary by the number of days you spent in service, multiply by 365 and divide by 12 and • By using the degression factor in case of salaries above HUF 372 000 (90% between HUF 372 000 – 421 000; 80% above HUF 421 00) – future degression? • Finally, calculate your monthly pension: By applying pre-defined percentage to determine your monthly pension - currently the maximum % is after 40 years of service and is 66%

  7. CEU contribution to VPF Voluntary pension fund contribution: ? • 3.5 % of the monthly gross base salary/month • BUT: capped at 39,000 HUF/month • Preconditions: • 6 months of employment • Account number is communicated to HRO – no retroactive payment is possible! 7

  8. CEU employee groups • EEA country citizens • Non-EEA country citizens • Non-EEA country citizens with bilateral social security treaties

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