Szebelédi Ferenc: Some challenges of the Hungarian pension system in the EU  Sofia, 16-17 February, 2005

1. Structure of the Hungarian pension system Usually in the EU Hungary Major relevant EU legislation Pillar I.: Social security system (PAYG) Pillar I: Social security system (PAYG) 1408/71 Reg. (=883/2003. Reg) „Coordination Regulation” Pillar II: Mandatory pension funds „magánnyugdíjpénztár” Pillar II. Occupational pension schemes - 1998/49 Dir 2003/41 „IORP” Dir Pillar III. Individual pension schemes Pillar III: Voluntary Individual pension schemes „önkéntes nyugdíjpénztár” 1998/49 Dir

2. Pillar I. issues Traditional PAYG social security system 1408/71 Reg Calculation rules (pro rata and theoretical benefits) Coordination and clearing rules →Little experience, seems not to have serious problems

3. Pillar II: Mandatory pension funds Under the scope of Reg. 1408/71 (which has PAYG logic) Main challenges: Theoretical benefits → funded systems are not able to manage theoretical benefits 2) Coordination among state competent institutions, clearing systems → pension funds are private insitutions: coordination mechanism and clearing system are not applicable

4. Pillar III.: voluntary schemes Voluntary individual pension funds „Önkéntes nyugdíjpénztár” Under of scope 1998/49 Dir →Seems not to have major problems

5. Occupational schemes: Challenges regarding the 2003/41 Dir. – 1. 41/2003. Dir is applied for occupational pension schemes - Home state: - rules for the activies of IORPs - supervision - Host state: - make it possible to pay contribution to an IORP - giving information about social and labour law - limited supervision

6. Occupational schemes: Challenges regarding the 2003/41 Dir - 2. Hungary as Home state: → It seems, that Hungary has no occupational schemes, so there is no need to deal with regulation for IORPs

7. Occupational schemes: Challenges regarding the 2003/41 Dir - 3. Hungary as host state: Have to make it possible for Hungarian undertakings to sponsor IORP – possible tax problems Have to determine Hungarian social and labour law relevant to occupational pension – Hungary has no specific regulations Investment rules, other options – seems not to have any problem Have to determine procedure for the notification process – task of CEIOPS WGOP

Conclusions Pillar I. Little experience, no serious problems Pillar II. No experience at all, major challenges: - theoretical benefits - coordination and clearing system among competent institutions Pillar III: Seems not to have major problems Occupational pensions: difficulties because of the lack of occupational pillar

Conclusions – 2. →Mentioned challenges are not only the problems of Hungary →EU regulations and directives do not cover all existing pensions schemes

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