Hungary – Retirement age to be increased to 72 years?!

According to a study carried out by Eurostat, the retirement age in Hungary should be increased to 72 years in order to maintain the living standards of pensioners. The topic was discussed with pensions expert András Farkas in a TV2 interview.

The founder of nyugdíjguru.hu emphasised: We are not talking about a pressing issue as it is almost 100% sure that in the next 1.5-2 decades there will be no such significant increase in retirement age.

Recently, in Hungary, there has been a much more modest growth regarding this question: from this year’s 64, it is expected to rise to 64.5 years within the next two years, followed by 65 in the forthcoming period. As a result of these changes, a sustainable pensions system can be realised in Hungary.

As Hungarian news portal napi.hu describes, this was necessary due to demographic reasons, as the so-called “Ratkó-generation” – representing a significant part of the Hungarian population – is falling out of the labour market.

An ageing population will aggravate the situation of the healthcare system; however, this study examines processes until 2100, which is quite far away. Currently, every 6th person is over 65 years of age, which is projected to change for every 4th person representing this group by 2030-2035. Preparation for this period is an important element; however, drastically raising the retirement age is not the appropriate solution.

As András Farkas said, “Today, increasing the retirement age to 72 years could lead to an immediate social explosion.”

There are more effective alternatives

According to the expert, there are more effective alternatives realised in certain states, where ‘smart algorithms’ are built into the system. For example, in Britain, the concept of pensions dependent upon the expected lifespan was introduced. What this means is that a fixed age limit is not so important. Instead, one-third of your life expectancy calculated when you turn 20 can be spent in retirement. That makes the system flexible, as the retirement age is dependent on average life expectancy in the country.

In Sweden, retiring is an option between 61 and 67 years; however, in the case of retiring earlier than 67, a lower pension is provided. This is to say that the earlier you retire, the lower pension you get. In the next five years, this timespan is projected to change to 62 and 68 years.

András Farkas emphasised that a ‘retired society’ in Hungary is not a unified mass, but a very diverse group, out of which a huge amount of elderly people – mostly in larger cities – lead an active and healthy lifestyle and still wish to work even if they reach the age of retirement.

Source: napi.hu