The government on Wednesday gave 3 million taxpayers until the end of January to return to the state pension system from private pension funds created in a 1998 reform or face drastic cuts in their future entitlements under employer contributions.
Hungarians hold 3 trillion forints worth of assets in private pension funds.
The changes, which funds have said amount to attempted nationalization, are needed to balance the bleeding state pension fund, which will run a 900 billion forint ($4.35 billion) deficit in 2011 if no action is taken.
“I don’t really have a choice in this,” said Peter Szakacs, a 24-year-old law trainee in Budapest. “I can’t just give up my pensions. But I must say I have my doubts about what I get from the state once I retire.”
Throughout Europe, private and state pension schemes alike are struggling with deficits driven up by rising life expectancies and the broader effects of financial crisis.
A decreasing number of Hungarians think that the state alone should take care of the old, according to recent research by insurance firm Aviva. More than 80 percent think state pensions will not be enough to get by.
Two surveys published on Wednesday showed the Fidesz party, elected in April on promises to end years of austerity under the left, had increased its broader popularity in November.
But the heavy-handed way the that government promoted the pension changes has unnerved even those who supported it.
“I probably would have returned to the state system even without the government’s new rules,” said Veronika Kiss, 37. “I got scared of the crisis, the market. But I didn’t like the way they threatened people who don’t want to return.”
“I think they did the right thing,” said Andras Soltesz, a 35-year-old teacher. “But I wouldn’t penalize anyone. I would just make the state system mandatory, and allow private savings for those who want them. That’s more straightforward.”
With few exceptions, Hungarian newspapers and web sites said the government had overstepped the mark.
“Government to execute private pension funds,” a headline by the tabloid Bors said. Business daily Napi Gazdasag declared: “The private pension system is finished.”
“(Economy Minister) Matolcsy has made an offer nobody can refuse,” the daily Nepszabadsag wrote in an editorial.
“It’s either our signature on the contract, or our brains. The mafia does business this way — and our government.”
The right-leaning daily Magyar Nemzet was the only major paper to echo the government’s line, calling the move “a plan to save pensions.”
“While the 3 million private pension fund members probably aren’t thrilled with the government’s decision, the budget will benefit handsomely,” the tabloid Blikk wrote. “The government can put its hands on fund members’ savings.”
“The government’s decision violates constitutional rights, and even human dignity,” former Finance Minster Peter Oszko told left-leaning daily Nepszava. “If need be, I will be the last private pension fund member.”
