Fewer tax payers to support rising number of pensioners in 15 years

Budapest, February 21 (MTI) – The number of people paying social contributions in Hungary is falling while the number of people qualifying for state pensions is rising, the chief executive of financial and insurance consultancy Consequit said.

It is estimated that in the next 15 years the number of people paying into the social funds will drop by 514,000, Andras Farkas said on Friday, citing a report. At the same time, 2.147 million Hungarians are expected to retire in the same period with only 1.633 million people entering working age, he said.

These data do not account for people who work abroad or those who will be of working age but not expected to pay contributions. This leaves the real number of contribution-payers lacking from the system at about 800,000, Farkas said.

Today two active workers are needed to finance the pension of one person, and this rate is continuously deteriorating with the gap between births and deaths around 40,000 each year, he said.

Farkas noted that adopting the Swedish pension model could be considered as an alternative. In that model, people are encouraged to stay in work beyond the pension age to increase their entitlements. While active workers provide the basis of payments there, too, contributions are tracked individually, he added.

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Source: http://hungarymatters.hu/