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The last multipliers needed to determine pensions for 2021 have been completed, according to the recent Hungarian Gazette.
The monthly pension of retirees in a given year is determined by a complex calculation, the most important parameters being the so-called valuation multipliers established for each year, which are adjusted to the evolution of average net earnings.
The latest multiplication table was published in the Hungarian Gazette on Wednesday as a government decree, and will take effect on Friday, according to which, for example, wages earned in 1950 are subject to a multiplier of 411,364 (!), A 4.83. So, for example, for 2010 net wages, this value is 2,026. During the last five years, the multiplier is 1,655 for 2015, 1,536 for 2016, 1.36 for 2017, 1,222 for 2018 and 1,097 for 2019. The multipliers of the previous legislation were lower, so here you can also see the high dynamics of net earnings. Not surprising, as 2019 was the last year of peace before the coronavirus epidemic and the subsequent economic crisis.
Appreciation multipliers are necessary because they can be used to adjust wages earned in the years prior to retirement to earnings during retirement. During the working years of the persons concerned, not only do the factors determining wages change, but also the old remuneration cannot be directly included in the pension in the amount. For example, a monthly salary of a few thousand florins earned in 1980 would obviously be small today.
At the beginning of each year, even for pension applications submitted between January and March 2021, only a pension advance is established, since the valuation multipliers necessary to calculate the final amount of the pension are published in the third month, this was Wednesday night. The amount of the pension will be determined based on the income received between January 1, 1988 and the date the pension was determined. This period means taking into account the income of thirty-three years in the case of pensions established with a start date of 2021, that is, salaries and other income obtained in more than half of the active earning period are already included in the pension.
The main reason for the appreciation is that the income underlying the pension has undergone a major change. It is not possible to credit one pension at the same time, for example, a salary paid in 1998 with an income achieved in 2021. The leveling is done with the so-called valuation multipliers, which are determined annually.
| Year | Multiplication number |
| 1950 | 411,364 |
| 1960 | 180,288 |
| 1970 | 131,004 |
| 1980 | 71,294 |
| 1990 | 26,867 |
| 2000 | 4,830 |
| 2008 | 2,204 |
| 2009 | 2,164 |
| 2010 | 2,026 |
| 2011 | 1,904 |
| 2012 | 1,866 |
| 2013 | 1,778 |
| 2014 | 1,726 |
| 2015 | 1,655 |
| 2016 | 1,536 |
| 2017 | 1360 |
| 2018 | 1,222 |
| 2019 | 1,097 |
Source: Hungarian Gazette
The new valuation multiplier was hit exactly by pension expert András Farkas earlier this month, who wrote that they could increase by 9.7 percent in the case of 2021 pension statements.
The valuation coefficients in force in the year in which the pension is determined are determined by government decree issued in March of that year. For this reason, the administrative deadline to claim a pension in the first quarter of 2021 to determine their final pension amount expires only on April 15, 2021, until then, only a pension advance can be established for them.
The main elements of the pension calculation:
- net,
- valorization, that is, leveling,
- decrease,
- Fee for seniority in service.
The new valuation multipliers for each year since 1950 can be found in the government decree available here. You can read more about the process of calculating and valuing pensions in this article.
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