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A new government decree will keep in force the provisions on the minimum amount of the old-age pension and the minimum amount of the orphan’s benefit, which have not changed for 13 years – draws the attention of pension expert András Farkas.
As is well known, as of January 1, 2008, the minimum amount of the full pension and the minimum amount of the orphan’s benefit is only HUF 28,500.
These inherently freezing benefits have been confirmed annually by previous regulations, such as pensions and orphan benefits established last year for the period from January 1, 2008 to December 31, 2020, but the new regulation takes time and foresees a noble simplicity. that the minimum amount of the pension is HUF 28,500, the minimum amount of the orphan’s benefit is HUF 24,250, and the points can be read on the portal pensionguru.hu.
Why can this amount remain so blatantly low for more than 13 years, as a general rule the amount of a full pension (that is, at least 20 years of service) cannot be less?
The original purpose of the minimum pension is to establish a minimum amount for a full old-age pension, that is, to establish a lower limit below which a full pension cannot be less.
In the current old-age pension system, the minimum pension has not played a significant role for a long time, as the average “career” income that is taken into account in calculating the pension in many cases exceeds this lower limit while the average number of years of service is close to 38 in Hungary.
The situational average of the amount of pension benefits (the average pension amount, that is, the amount at which exactly half of the pensioners receive less and exactly half more) is around 127,000 HUF at the end of 2020, while the average pension (i.e. the total value in florins of all pensions divided by retirees) at the end of 2020 will be around 144,000 florins. Thus, the average pension is four and a half times the minimum pension and the average pension is almost five times higher.
In the last 13 years, those for whom a minimum (or less) pension amount has been established have acquired pension rights in states other than Hungary, and their Hungarian pension is only a pension proportional to time (partial international) according to the social security coordination regulations of the EU or with that state. under the existing bilateral social security agreement.
Why does this amount not increase if it has already lost its practical importance in relation to the determination of pensions, and the average net wage and the minimum wage in the national economy have been growing steadily since January 1, 2008 and particularly strong since 2015?
The only rational reason for not increasing it may be that, in addition to setting the old-age pension, the minimum amount of the old-age pension plays an important role in many other areas, and its overall budgetary impact is so significant that a substantial increase requires a substantial increase. serious consideration.
Equity benefits in the pension system
In the pension plan, the amount and conditions of the equity pension, the increase in the exceptional pension and the lump sum are linked to the amount of the minimum pension.
The amount of the capital pension can be at least half the minimum pension (14,250 HUF) and a maximum of one and a half times the minimum pension (42,750 HUF). The amount of the exceptional pension increase can be at least 10 percent of the minimum pension (2,850 HUF) and no more than 25 percent (7,125 HUF). The amount of the one-time subsidy is at least 15,000 HUF, but not more than one and a half times the minimum pension (42,750 HUF).
The Hungarian State Treasury Center may, in extremely justified cases, authorize a larger amount of one-time assistance, but even then the amount cannot exceed three times the minimum pension (HUF 85,500).
Social benefits
In the field of social benefits, the importance of the minimum pension is even greater, since the conditions and scope of the following benefits are determined in different percentages: active-age benefits (job replacement subsidy, subsidy for damage to the health and childcare), old-age subsidy, municipal subsidy, public healthcare. and access to health services.
Furthermore, an increase or decrease in regular monthly social benefits (old-age pension, health and childcare allowance and care allowance) is linked to a change in the amount of the minimum pension. The concept of wealth is also regulated by the Social Law to the extent of the amount of the minimum pension.
The minimum pension also plays a role in the terms of the reimbursement rate for personal care benefits and the reimbursement rate for institutional placement.
Child care benefits
The amount of the childcare allowance, the child rearing allowance (full-time maternity) and the maternity allowance are also determined by different percentages of the minimum pension in the Family Allowance Act.
Sick pay for accident
Among the health insurance benefits, the amount of the accident sickness benefit depends on the minimum pension in force.
Child protection benefits and subsidies
In the Child Protection Act, the terms of many benefits and allowances include different percentages of the minimum amount of the old-age pension, including the regular child protection allowance, the child support advance, the household allowance for children, tutor’s cash and the professional tutor’s remuneration rate.
Thus, raising the amount of the minimum pension can affect more than one hundred thousand benefits, subsidies and aid, that is, it will cause a surplus of expenses in the order of one hundred thousand million in the state budget. As long as this excess of expenses does not have permanent coverage, the request for an increase in the minimum pension is also unfounded.
Of course, this Gordian knot can be cut in one fell swoop: you simply have to deduct from the minimum amount of your old-age pension any benefits that need to be provided outside the pension system.
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