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Econ minister sets January 31 deadline for decision whether to return to state pension system

Hungary's private pension fund members will have until January 31, 2011 to decide whether to return to the state pay-as-you-go pension system, Minister of National Economy György Matolcsy announced on Wednesday. The other option is to stay in the currently mandatory private pension fund system which will become voluntary after parliament's adoption of new pension legislation, he said.

Hungary's private pension fund members will have until January 31, 2011 to decide whether to return to the state pay-as-you-go pension system, Minister of National Economy György Matolcsy announced on Wednesday. The other option is to stay in the currently mandatory private pension fund system which will become voluntary after parliament's adoption of new pension legislation, he said.

Matolcsy said the new “pension-saving legislative package” is expected to take effect in the middle of December.

Matolcsy said that those who declare their intention to stay in the yet mandatory private pension fund system will not be eligible in the future for the so-called solidarity pension, funded by employers' 24% pension contribution, and making up 70% of a fully state-run pension, but will only have the 10%-of-gross-wage employee contribution on their account.

In a change to the three-pillar pension system launched by Hungary's pension reform in 1998, legislation passed in October made private pension fund membership optional for career-starters and has offered current fund members an option to return or transfer to the state system by the end of 2011. Conditions of the transfer are to be decided by a later government decree, according to the amendment. (MTI-Econews)