Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108212
Authors: 
Simonovits, András
Year of Publication: 
2011
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2011/12
Abstract: 
In 1998, the left-of-center government of Hungary carved out a second pillar mandatory private pension system from the original mono-pillar public system. Participation in the mixed system was optional for those who were already working, but mandatory for new entrants to the workforce. About 50 per cent of the workforce joined voluntarily and another 25 per cent were mandated to do so by law between 1999 and 2010. The private system has not produced miracles: either in terms of the financial stability of the social security system, or greatly improved social security in old age. Moreover, the international financial and economic crisis has highlighted the transition costs of pre-funding. Rather than rationalizing the system, the current conservative government de facto "nationalized" the second pillar in 2011 and is to use part of the released capital to compensate for tax reductions.
Subjects: 
social security reform
old age risk
defined contribution plan
privatization
political aspect
Hungary
JEL: 
H55
J26
ISBN: 
978-615-5024-43-6
Document Type: 
Working Paper

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