The European Union has sent a warning to Hungary regarding the government’s plans to eliminate private pension funds. “We are concerned by the latest announcement of Hungarian authorities about the pension system. This seems to reflect an intention to eliminate the entire mandatory private pension fund system,” said Amadeu Altafaj Tardio, spokesman for the EU’s top economic official, Olli Rehn.
Brussels has also raised its voice about long-term sustainability. “We would be concerned if the government used the money piled up in private pension funds for financing current account expenditures, as it is definitely suggested by the 2011 draft budget,” Tardio said.
The EU is also worried about the lack of free choice when returning to the state system. “Private pension funds have an important role in the development of local capital markets. If their operation was made impossible, they would not be able to fill this role,” the spokesman added.
At the same time, Hungary’s Stabilitás association asked the EU to appoint an ombudsman to investigate the Hungarian government’s decision. According to the association, the move contradicts EU law.
The government is standing by its plan, announced on Wednesday, to discontinue Hungary's mandatory private pension funds, Julianna Bába, head of fund association Stabilitás, said on Thursday, after meeting with National Economy Minister György Matolcsy. There is no talk of cooperation, Bába said. The nationalization of the funds goes beyond the boundaries of the rule of law – this is not just about the funds, but about the government not doing whatever it pleases, she added. The government announced on Wednesday measures aimed at bringing members of mandatory private pension funds back to the state pillar. (BBJ)