Prime Minister Viktor Orbán sees the fact that 97% of affected Hungarians opted not to stay with private pension funds a major success and a show of national solidarity.
Prime Minister Viktor Orbán sees the fact that 97% of affected Hungarians opted not to stay with private pension funds a major success and a show of national solidarity. The Stabilitás private pension fund association on the other hand stated it would challenge the law mandating the switch on constitutional grounds.
"It is a huge success but it was also a necessity," Orbán told reporters. "With the levels of state debt that we have, the country could not support a three-pillar system," he said.
Hungarians had until the end of January to declare if they want to stay with their private pension funds that were introduced in 1997. Unless they did, a government measure announced at the end of 2010 automatically transferred their savings to the state pension fund and reintroduced them to the state-run system.
The Stabilitás private pension fund association also expressed satisfaction over the 3%, approximately 102,000 people, deciding to stay with the private providers
"It was a battle of beliefs," the group's chairwomen Julianna Bába said. "We are very grateful to these people who took 15 minutes of their lives, weighed the pros and cons and made the decision to continue trusting us."
Stabilitás's secretary general Istvánné Juhász said that the asset volume of the 18 existing private funds rose from HUF 2,379.4 billion to HUF 3,036.1 billion in 2010, a 25.6% increase. PM Orbán on the other hand expressed doubts over the figures. "We will only now find out the actual numbers when we begin the takeover. We currently don't know how much the assets that the funds have that are not invested in state bonds are actually worth," he said.
Juhász also noted that considering that only 3% stayed in the private system, the current number of private funds will be reduced to four to eight, since the market will not be able to support any more.
It's not over yet!
"This is how we stand according to the present state of affairs, and I mean to stress 'present'," Bába said. Stabilitás declared earlier that it would challenge the law regulating the takeover of pension assets at the Constitutional Court. "In a state regulated by law, it is unacceptable to make a group of the population secondary citizens this way," she added.
"I will not argue with any private funds, this debate is over, it's decided," Orbán said, firmly rejecting that even the constitutional jurors would have any say in the matter. "We will have a two-pillar system, that's final."
He also noted that there is still plenty to be done in hammering out the actual operation of the new system. He declared that the scheme now being introduced would give contribution payers detailed individual reports on their savings and that the money placed into the state pension fund is not siphoned off to cover the expenses of other duties.
On the longer term, the government is aiming to establish financial balance in the pension fund, which according to Orbán may be achieved as soon as 2012.
Orbán and Bába both congratulated the "bravery" of those that stuck in the private system. "I am personally very happy to know there are 102,000 people who are confident they can care for themselves and their families and I congratulate them. However, the majority of Hungarians do not have such economic options," the premier said.
Bába on the other hand applauded what she deemed as courage to go against the unfair measure enacted by the government and to bear the consequences. (Gergő Rácz)