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Minister reviews changes in retirement, pension laws

The cabinet adopted a proposal that would require retirees receiving pensions who continue working to pay a social insurance contribution of 8.5% as of January of next year, said Welfare and Labor Minister Péter Kiss on Thursday, briefing the media on changes in retirement and pension laws.

In return for the contribution, pensions will be increased by 0.4% of earnings for each full year of work, Kiss said. Other moves are designed to discourage early retirement, for at present 94% of pensioners retire before they reach the retirement age of 62. The goal is to make it worth people's while to stay on the job instead of seeking early retirement. Short-term measures to limit early retirement should reduce the pension fund deficit by Ft 100 billion (about €385 million) by 2010, Kiss said. As far as seeking early retirement while continuing to work are concerned, Kiss said that as of 2008 people who choose early retirement and then continue to work will have to suspend pension receipt for the time they continue to work, unless it is ad hoc activity that does not exceed the minimum wage. As of 2010, this ruling will be applied retroactively to all early retirees.

At present, 30,000 of the 191,000 early retirees are working. As of 2009, he said, women will be able to seek early retirement at the age of 59, while men will be allowed to do so at 60. By 2012 it will be 60 for both genders. At the same time, for each year more than 40 years spent on the job, pensions will be increased by 2% as opposed to the current 1.5%. At the same time, the administration of disability retirement will be completely changed, focusing not on the level of disability, but on the level of remaining working ability and on rehabilitation possibilities. Instead of pensions, people will receive rehabilitation allowances combined with an extensive range of complex rehab services to return as many people to the workforce as possible.

The European Union will offer Ft 60 billion (about €230 million) in support of this project. Opposition Fidesz is opposed to the changes. Miklós Soltész, who heads the party's public welfare section, objected both to increasing the retirement age and to making working pensioners pay a social insurance contribution. Fidesz also objected to tightening up rules on early retirement and to changing disability funding allocation rules. He argued that people would not find jobs and would not be allowed to retire either. Soltész called the move a "brutal" attack on police who have been allowed to retire after 25 years of service and warned all police officers who can to retire quickly, before the new rules go into effect. (