Private Pension Fund

On October 25, 2010 the Parliament accepted and on November 2, 2010 the President of the Republic signed Act CI of 2010 on the Amendments Relating to Private Pension Fund Payments and Act C of 2010 on the Freedom of Choice of Private Pension Funds, which were published on the latter date in the Official Gazette of the Republic of Hungary.

According to the changes, in the period between November 1, 2010 and December 31, 2011, private pension fund members temporarily pay pension contribution to the National Pension Insurance Fund instead of their membership fees. The rate of this contribution is identical with the 8 percent rate of the private pension fund membership fee and the 1.5 percent rate of individuals’ pension contribution, i.e. it is a total of 9.5 percent.

In respect of the payments made to the private pension fund members subject to Act CXX of 2005 on the Simplified Contribution to Public Charges, in the period from November 1, 2010 to December 31, 2011, 3.9 percent of the base of the simplified contribution to public dues payable by the individual will qualify as pension contribution.

On the basis of the modification of Act LXXV of 2010 on Simplified Employment, from November 1, 2010 to December 31, 2011, 91.8 percent, instead of the previous 69.9 percent, of the amount of public dues payable on private pension fund members is payable to the National Pension Insurance Fund.

In respect of October salaries the due date for the declaration and the payment of contribution liabilities is November 12, 2010. The private pension fund membership fees relating to this month are no longer credited to the individual accounts of the employees but transferred to the National Pension Insurance Fund.

The Act on the Freedom of Choice of Private Pension Funds enters into force at the same time. Pursuant to this act, the obligation of career starters to join a private pension fund is eliminated and the choice of returning to the state pension system will also be available.

The act gives people the chance to return to the social security pension system until December 31, 2011.

The specification of details of the above mentioned acts is still in progress. The payroll administration of employees is uninterrupted. Changes are expected in terms of contribution returns and transfers of which we will inform our clients later.

Source: www.rsmdtm.hu