A good pension system can only be operated efficiently in a strong and stable economic environment, Minister for National Economy Mihály Varga said at a conference organized by business and financial news website Portfolio in Budapest.
In his presentation, the Minister pointed out that Hungarian reforms have been effective, they protect sound and steady economic growth and these factors facilitate as well as safeguard self-provisioning.
Predictable economic expansion helps Hungarian families make their future plans, he said. One of the most significant recent achievements is that the disposable income of households has increased. In comparison to 2010, the volume of savings soared by some 10 percent, totalling 118.1 percent of GDP at the end of 2014, he stressed. Mihály Varga also added that the Government has been promoting various forms of self-provisioning through the economic regulatory and support system.
Speaking of the sustainability of the pension system, the Minister emphasised that the Government’s economic policy has reinforced Hungary’s pension system all around in recent years. GDP growth, the massive increase of the number of people in employment and the reduction of general government debt and state budget deficit levels have all been favourable factors from the aspect of the long-term operation of the pension system.
The population pyramid also shows the necessity of further stimulating self-provisioning. The number of people above the age of 65 years is 1.8 million, while there are 2 million people who receive old-age pension benefits and the number of people in employment is 4.2 million. Pension benefit expenditures accounted for 9.1 percent of GDP and 17 percent of total fiscal expenditures in 2014.
Concerning the various forms of self-provisioning, he added, demand for pension and welfare funds and insurance policies as well as for building savings accounts increases from year to year, Mihály Varga noted. As the Government aims to promote these savings schemes, the law on personal income taxation was modified as of 1 January 2014 in order to provide tax reduction for investments in a pension savings account. In addition, the Government continues to support investment in voluntary private pension funds through tax incentives.
(Ministry for National Economy)
