Hungarian pensioners rely almost exclusively (89%) on the state for pensions, according to the latest data of Bank of America Merrill Lynch. Which is a problem, because the state cannot pay from 2026 onward.
So they legislated that any institution, church, or neighbour can sue an adult child for parent keeping – in case the parents were shy.
Until 2010, there have also been private pension funds. They were mandatory – and their investments were legally prescribed by the state. Naturally, that didn’t work very well, they were legally obliged to invest into government bonds up until 2008. By 2008, the parliament finally pushed through a law that mandated them to reorient themselves toward the stock markets… The rest is history.
In 2010, when the current Fidesz government with PM Orbán came to power, they quickly nationalized the pension funds – blaming it on their poor performance (see above) and shamelessly high admin fees. Fun fact: both the private pension funds and their shamelessly high admin fees have been created and made into law by the previous Fidesz government, also with PM Orbán at the helm.
But in 2010 they wanted to spend – but nasty Brussels insisted on keeping the deficit target. So keep the deficit target they did. They took the entire pension savings to plug the hole.*
The government promptly spent the 10 billion euros it took from the pensions on vanity projects, re-nationalizing privatized state companies at eye-watering prices from the gleeful Russians.**
And this is how the world record 89% exposure on the state came to be.
But it’s not over. Our pension contributions are not ours either. By renaming pension “contributions” to “contribution tax” they have turned it into a 100% pay-as-you-go-system, where our contributions do not entitle us to pensions in the future. They are given to pensioners today – and that is that. Given their poor investment record it is not such a bad thing – but the problem still remains. Who is going to pay our pensions?
During the nationalization of the private pensions they have also (unilaterally) rewritten the constitution (into a basic law) and made sure to include that adult children are responsible to keep their parents. It is only making headlines in 2016, but it proves that they knew what was going to happen.
By 2026, the balance of the state pension fund will turn negative (supposing no more emigration, etc.) and by 2036 it will be in 8% deficit.
This is where parent-keeping comes into play. Family law always included a parent’s right to sue an adult child for parent-keeping (without the option for disowning parents, and limited options to claim inadequate care during upbringing – whereas parents can disown their adult children). But this only became obvious for many, when the obligation made it to the basic law in 2011. In June 2016 parliament also extended the right to sue adult children to anyone, who cares for the parent – i.e. church, hospice, institutions or even the neighbours.
In the immortal words of our government, if you come to Hungary, bring your own pensions.
The consequences are starting to sink in.
There is a shameless fertility campaign (targeted exclusively at women because in Hungary women make babies alone) where assorted Christian democrats and shockingly sexist Fidesz vice presidents spew insults at childless women and suggest punishments for them – including a single-woman tax. These communication bombshells are also a great distraction because everyone feels addressed – sexist men and women feel self-righteous, sane people feel threatened, and childless women are apologetic. Childless men are fine.
Lately, there is also a new communication line to set generations against each other based on the parent-keeping clause of the basic law. Once again, everyone feels threatened, attacked – and thus attacks back. That leaves less bandwidth to discuss corruption.
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* Minus a few thousand renegades, who took a day off from work to queue at some remote government office. They were made to sign threatening declarations that they’d lose their rights to a state pension by holding onto their private pensions – despite continuing paying into the state pensions. They are the 2% on the chart. (Later court decision restored their rights to state pensions – hence the “contribution tax”, to punish them for resisting – and everyone else to make them hated. Basic authoritarian tool: resistance MUST BE futile.
** Back then it was important to Orbán to be independent from Russia. Orbán did – and still does – hate them, but a few years later he was made to sign the Paks 2 deal with Putin. Ever since then stupid analysts keep rambling on how he is pro-Putin – but he is not. Putin is his feudal overlord – just as Orbán is the overlord of his domestic oligarchs.