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Home World The purchase value of pensions has been growing steadily for seven years

The purchase value of pensions has been growing steadily for seven years


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In the last twenty years – with the exception of 2008, 2009 and 2013 – the real value of pensions in Hungary has increased every year, the Oeconomus Economic Research Foundation states in its analysis. The upward trend in the living standards of retirees will be further strengthened from this year with the gradual restoration of the 13-month pension introduced in 2009.

The general aging of the population in the new millennium is typical of the whole of Europe, including Hungary. While in Hungary the share of people aged 65 and over in the total population was 16.7 percent in 2011, by 2020 this rate had risen to approximately twenty percent. In Hungary, the average monthly nominal pension was HUF 33,000 in 2000, then in 2010 the same amount reached HUF 86,000, and in 2020 it was HUF 136,000.

The general pension increase at the beginning of the year has been 17 times higher than the inflation expected for the retired consumer basket in the last two decades, which means that, in principle, more and more consumer items can be taken from an average pension.

However, the consumption structure of pensioners differs from that of the average population, Oeconomus’ analysis points out, so that inflation for them is measured with a different weighting. In their case, items related to childcare and care, such as school, kindergarten, nursery meals, tuition fees, school supplies, and durable consumer goods, were also less included in the products and services observed in the inflation calculation. In contrast, the share of food, medicine and housing-related expenditures has risen: it is 60 per cent among pensioners and only 45 per cent among the total population.

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At the beginning of the year, the nominal value of pensions always increases with the inflation planned for the given year. Based on this, pension increases have exceeded inflation nine times in the last decade, meaning that the purchase value of pensions has crawled higher. In addition, if the average rate of money deterioration in the first eight months of the year exceeds the pension increase at the beginning of the year, the government will also make a correction (pension supplement), according to the expert material. They highlight this year’s example: inflation is projected to be 3 percent by 2021, so from January 1 this year, all retirees ’salaries will increase by three percent.

The pension premium and the 13-month pension, which will be continuously restored from this year, will further help to raise the living standards of the older age group
photo: Zoltán Havran (HZ)

The salary of the age group in question may even be boosted by the pension premium. According to this, since 2009, if the expected value of GDP growth in the current year exceeds 3.5 percent and the general government deficit target appears to be met, in November all those who received a pension on at least one day of the previous year will receive a pension premium. The amount of the pension premium may not exceed twenty thousand forints. In addition, the 13-month pension, which was abolished in 2009, will be gradually reinstated from this year, which could further improve the purchase value of salaries.



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