Varga: Private pensions have time to reform

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The new rules regulating private pension funds allows sufficient preparation time as members' fee payments would not be scrutinized before the six-month period preceding September 2015, Hungary’s Economy Minister Mihály Varga said late yesterday, speaking on the news program of state-funded TV channel M1.

The National Economy Ministry on November 24 submitted proposed private pension regulations that it says would protect assets. Industry observers say the rules would essentially eliminate private pension funds.

The recently submitted bill would force private pension funds to close down if at least 70% of their members are not paying into the fund – as of January 1. Previous legislation dramatically reduced the number of people who are still paying in to private pensions, though the funds exist as investors and they are paying pensioners.

Nearly all private pension fund members returned to the state pillar under a government initiative in 2011, bringing more than HUF 2.9 trillion in assets with them. 

Varga said the private pension funds to be wound up will pay the real yield on the assets to their members as their members return to the state pension system, or else the pension fund can also decide to merge with another pension fund.

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