Report: Income gap widens among pensioners

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A total of 11,800 Hungarians draw monthly state pensions of more than HUF 300,000, while a million pensioners receive a third or less of this amount, reports business daily Világgazdaság, citing data from the Central Administration of National Pension Insurance (ONYF).

The data reveals that around a million pensioners – or half of the total – receive between HUF 50,000 and HUF 100,000 a month, while at the bottom end of the scale, more than 72,000 people receive less than HUF 50,000 monthly.

The Világgazdaság article, cited by index.hu, notes that pensions in the several hundreds of thousands of forints may tend to go to those who, on the one hand, earned a high income during their working lives and, on the other hand, who continued to work considerably beyond the retirement age. The highest amounts are therefore received by pensioners who only retired once they reached the age of 75–80. The evolution of higher pensions is also helped by the government’s abolition of the cap on pension contributions in 2013, which means that, even those with high earnings, pay the 10% contribution on their full salary.

Although the data show a great many people earn very low pensions, Világgazdaság observes that Hungarian pension levels are not unfavorable by international comparison. The replacement rate is 90%, meaning that retirees receive pensions worth 90% of the monthly income they earned at the end of their working lives – an amount roughly equivalent to the rate in Austria or the Netherlands, and considerably higher than the European average of 71%.

The fact that the wages that serve as the basis for calculating these pensions remain so low in Hungary is another matter, as in most cases this means that the pension replacing the wage is also relatively low, notes Világgazdaság. Moreover, experts believe that this 90% rate cannot be sustained as the number of pensioners rises, so that state pensions can be expected to sink even lower in future.

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