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Thursday, June 28, 2007

Hungary To Raise Retirement Age

Portfolio Hungary reports on a new plan agreed by the government parties to raise the retirement age. I basically agree with the central bank experts that this plan is too little, too slowly, but even the central bank alternative doesn't seem anything like decisive enough.

Hungary‘s junior governing coalition party, the Free Democrats (SZDSZ), has compiled a reform list with ten conditions that its senior ally, the Socialist Party (MSZP), would need to comply with if it wants the liberals to remain in the coalition, broadsheet Népszabadság reported on Thursday. Coalition talks are set to continue on Sunday. One of the points says the parties have already agreed that retirement age would be hiked gradually.

The government is to raise retirement age from 2010 onwards but only cautiously, by one month every year, the paper said.

The parties also agreed to tighten rules on early retirement and that families with annual revenue of over HUF 8 million would not be entitled to family allowance.

A pension model elaborated by two central bank (NBH) experts last year suggested taking the retirement age (62 yrs currently) higher when life expectancy increases. They urged a raise of six months every three years, double the pace suggested by the parties. According to this model, retirement age in Hungary would be 64-65 years by 2020 and 68-69 years by 2050 for women and men, respectively.

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