Gov’t could extend pension bonuses and increases to retirees

October 10, 2017

Gov't could extend pension bonuses and increases to retirees
Photo: Facebook/Orbán Viktor

Pensioners could receive a one-time pension bonus worth an average of HUF 40,000 (USD 150) in November thanks to a pension premium that ostensibly aims to give them a share of economic growth, and an inflation-necessitated correction. This would be the first time such a dividend would be offered to pensioners. Meanwhile, employees in the public sector still have to wait for a pay raise, reports

Over 2 million pensioners are likely to receive the supplementary pension premium, according to the government’s market predictions. The monthly retirement pension is HUF 124,300 (USD 467) on average, and the one-time increase would be composed of a HUF 18,640 (USD 70) premium and a HUF 20,880 (USD 79) inflation correction in November.

The government predicted inflation of 1.6 points last November and raised 2017 pensions accordingly. However, the Ministry for National Economy now predicts inflation of 3 points for the year 2017. According to the law, pensions must be corrected following inflation as calculated by the ministry, and the difference must be added retroactively. The difference will be paid in one sum in November, and afterwards the minimum pension will be increased accordingly – in this case by HUF 1,740 (USD 6.50) on average.

Minister Overseeing the Prime Minister’s Office János Lázár announced last week that a pension premium could be given for the first time due to positive macroeconomic indicators. The government’s revenues are growing constantly, said Lázár, and they want everyone to get a share of the growth.

If the GDP growth exceeds 3.5 percent in 2017, then a premium must be paid to pensioners who reached retirement age in 2016. The Ministry for National Economy now predicts 4.1 percent GDP growth, which would result in payment of the one-time premium, the amount of which will be relative to the recipient’s pension level, and not to exceed HUF 20,000 (USD 75).

Lázár said the government would give another bonus to pensioners in December.  Details such as its value and whether it will be delivered as cash or gift vouchers (like last year) are still unknown.

Meanwhile, employees of the public sector will not share in the country’s economic successes and will have to wait for a pay raise. Ministry for National Economy vice-secretary Attila István Simon told that while the government acknowledges the need for a minimum wage for degree-holding employees in the public sector, he asks for patience because the current budget precludes any decisions on a minimum wage.

Politics Can Be Different (LMP) views the current system of inflation-based corrections unjust. The party handed in a proposal to the National Assembly last Thursday that contains the modification that such premiums should not be calculated relative to monthly pensions but that an equal sum should be sent to every pensioner. This would help to close the gap between higher and extremely low pensions, LMP said.

Pensioners will be an important voter base in the general election in spring 2018, and pension bonuses increases could play a major role in mobilizing voters. Pensioners can hardly afford to live from the money they receive, thus every forint of investment into them is money well spent.