IDEAS home Printed from https://ideas.repec.org/p/has/discpr/9901.html
   My bibliography  Save this paper

The New Hungarian Pension System and its Problems

Author

Listed:
  • Andras Simonovits

    (Institute of Economics, Hungarian Academy of Sciences)

Abstract

In January 1, 1998 a new, three-pillar pension system was introduced in Hungary. It will replace about a 1/4 of the existing unfunded public system by a funded private system from 2013. This transition is obligatory for people entering the labor market after June 30, 1998 and optional for others. Meanwhile the public pillar is also reformed. Pensionable age is increasing significantly but smoothly, wage index-ation is replaced by a combined wage-price indexation and the link between earnings and benefits will be rectified between 2009–2013. The official view is that it is this reform package which will make the Hungarian pension system sustainable in the long run and will contribute to the development of capital markets. The critics of the reforms, including the author, underline several remaining and new problems: the public pillar retains its weak points until 2013, the consolidated balance may deteriorate rather than improve under the partial privatization and the welfare of the old population will be relatively lower due to the decreased security.

Suggested Citation

  • Andras Simonovits, 1999. "The New Hungarian Pension System and its Problems," CERS-IE WORKING PAPERS 9901, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:9901
    as

    Download full text from publisher

    File URL: http://econ.core.hu/file/download/mtdp991/mtdp991.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peter Diamond, 1998. "The Economics of Social Security Reform," NBER Working Papers 6719, National Bureau of Economic Research, Inc.
    2. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    3. Laurence J. Kotlikoff, 1996. "Privatization of Social Security: How It Works and Why It Matters," NBER Chapters, in: Tax Policy and the Economy, Volume 10, pages 1-32, National Bureau of Economic Research, Inc.
    4. Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters, in: Privatizing Social Security, pages 215-264, National Bureau of Economic Research, Inc.
    5. Benjamin M. Friedman & Mark J. Warshawsky, 1990. "The Cost of Annuities: Implications for Saving Behavior and Bequests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(1), pages 135-154.
    6. Martin Feldstein & Andrew Samwick, 1997. "The Economics of Prefunding Social Security and Medicare Benefits," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 115-164, National Bureau of Economic Research, Inc.
    7. Kornai, Janos, 1997. "The Reform of the Welfare State and Public Opinion," American Economic Review, American Economic Association, vol. 87(2), pages 339-343, May.
    8. Benjamin M. Friedman & Mark Warshawsky, 1985. "The Cost of Annuities: Implications for Saving Behavior and Bequests," NBER Working Papers 1682, National Bureau of Economic Research, Inc.
    9. Palacios, Robert & Rocha, Roberto, 1998. "The Hungarian pension system in transition," Social Protection Discussion Papers and Notes 20048, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter Eso & Andras Siminovits, 2002. "Designing Optimal Benefit Rules for Flexible Retirement," Discussion Papers 1353, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. András Simonovits, 2000. "Partial privatization of a pension system: lessons from Hungary," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(4), pages 519-529.
    3. Katharina Müller, 2000. "Pension privatization in Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(4), pages 507-518.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simonovits, András, 1998. "Az új magyar nyugdíjrendszer és problémái [The new Hungarian pension system and its problems]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 689-708.
    2. Martin Feldstein, 1997. "Transition to a Fully Funded Pension System: Five Economic Issues," NBER Working Papers 6149, National Bureau of Economic Research, Inc.
    3. Damjanovic, Tatiana, 2003. "The possibility of Pareto-Improving Pension Reform: More Arguments," Royal Economic Society Annual Conference 2003 53, Royal Economic Society.
    4. Martin Feldstein & Elena Ranguelova, 1998. "Individual Risk and Intergenerational Risk Sharing in an Investment-Based Social Security Program," NBER Working Papers 6839, National Bureau of Economic Research, Inc.
    5. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    6. Shiller, Robert J., 1999. "Social security and institutions for intergenerational, intragenerational, and international risk-sharing," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 165-204, June.
    7. Rocha, Roberto & Vittas, Dimitri, 2001. "Pension reform in Hungary : a preliminary assessment," Policy Research Working Paper Series 2631, The World Bank.
    8. Michele Boldrin & Juan J. Dolado & Juan F. Jimeno & Franco Peracchi, "undated". "The future of pension systems in Europe. A reappraisal," Working Papers 99-08, FEDEA.
    9. Peter Diamond, 1998. "The Economics of Social Security Reform," NBER Working Papers 6719, National Bureau of Economic Research, Inc.
    10. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Social Security in Theory and Practice (I): Facts and Political Theories," NBER Working Papers 7118, National Bureau of Economic Research, Inc.
    11. Fernando Perera-Tallo, 2012. "Optimal Retirement Age and Aging Population," 2012 Meeting Papers 728, Society for Economic Dynamics.
    12. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 781-863, Elsevier.
    13. Disney, Richard, 2000. "Declining public pensions in an era of demographic ageing: Will private provision fill the gap?," European Economic Review, Elsevier, vol. 44(4-6), pages 957-973, May.
    14. Roman Arjona, "undated". "Gradually Capitalizing the Spanish Retirement Pension System," Studies on the Spanish Economy 81, FEDEA.
    15. Gumus, Erdal, 2005. "Benefit-Cost Analysis of Turkish Social Insurance Institute Gradual Privatization Proposal," MPRA Paper 42372, University Library of Munich, Germany.
    16. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Social security in theory and practice (II): Efficiency theories, narrative theories and implications for reform," Economics Working Papers 385, Department of Economics and Business, Universitat Pompeu Fabra.
    17. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    18. James M. Poterba & David A. Wise, 1998. "Individual Financial Decisions in Retirement Saving Plans and the Provision of Resources for Retirement," NBER Chapters, in: Privatizing Social Security, pages 363-401, National Bureau of Economic Research, Inc.
    19. Georg Hirte, 2003. "The Political Feasibility of Privatizing Old‐Age Insurance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 507-525, September.
    20. Martin S. Feldstein & Jeffrey B. Liebman, 2002. "The Distributional Effects of an Investment-Based Social Security System," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 263-326, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:has:discpr:9901. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nora Horvath (email available below). General contact details of provider: https://edirc.repec.org/data/iehashu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.