Pension ABC

There is no special focus on the scientists in the Hungarian social security therefore the general scheme applies to them also.

In the first approach, service time is equivalent to insurance periods. According to general rules service time can be acquired by establishing various legal relationships with the purpose of working (i.e. performing gainful activity). Moreover, service time includes the disbursement period of child raising or unemployment benefits, and also periods covered by agreements concluded with the purpose of acquiring service time. As a basic principle, only insurance periods for which pension contribution has been paid can be recognized as service time.

However, the Pensions Act in force in view of acknowledging the rights obtained, renders it possible to deem certain periods acquired prior to 1 January 1998 as service time, even if no pension contribution was paid over such periods. Such periods are, first of all, those spent in full time higher education and compulsory military service.
Other important working relationships of researchers/scientists are the internship and doctorate, where the key determinant is whether there is gainful activity which serves as a basis for pension insurance contribution. Period of secondary school is not taken into account as service time.

The social security contributions are paid by both, employers and employees. Payment is automatically withdrawn from employees’ salary, whereas the self-employed pay the whole contributions themselves.

No, this is not an option in the Hungarian pension system.

As there is no special scheme for researchers or scientists, the general EU co-ordination rules apply, the service periods confirmed by the foreign institution are recognized in Hungary as well and vice versa.

Please collect and retain (possibly all) the documents received during your Hungarian employment referring to the Hungarian insurance relations – these may be useful when submitting the pension claim.

It is also beneficial to make inquiries at the Hungarian pension institutions before the pensionable age in order to know what the current situation of the pension rules is. Verification of service time prior to pensionable age is also possible (see in details under question "When can I claim for my statutory pension in Hungary?" below).

As of January 1, 2012 according to the newly adopted Hungarian statutory amendments, Hungarian pension-type benefits that may be awarded within the application of the EC regulations are as follows:

• Old-age pensions (inc. benefits prior to retirement age, miners’ temporary annuities),
• Survivors’ pensions (widow(er)’s pensions, orphans’ allowances, parental pensions, widow(er)’s annuities),
• Work-accident-related survivors’ pensions,
• Work-accident annuities.

One of the eligibility criteria of old-age pension is acquiring at least 15 years of service time. When the service time reaches 20 years, the awarding pension will be under the safeguarding net of old-age pension minimum.

As there is no special scheme for researchers or scientists, the general EU co-ordination rules apply, the service periods confirmed by the foreign institution are recognized in Hungary as well and vice versa.

Service time for partial/full old-age pension:

A person may enter into an agreement for the purpose of obtaining service time in order to achieve

the full old-age benefit where the prescribed service period is twenty years, or

fifteen years of service time as prescribed for partial retirement pension.

The period which may be obtained in this way cannot exceed five calendar years.

The actual amount is calculated by multiplying the number of missing calendar days by one-thirtieth of the minimum wage (prevailing on the day when the agreement is concluded – in 2013 HUF 98 000), and the pension contribution which is 34 per cent.

The number of calendar days that may be paid is included in the pension resolution of first instance. It is not possible to contract any other periods of service time.

Conclusion of the agreement may be requested within the time limit prescribed for remedy against any resolution of the first instance adopted in connection with pension claims, and the pension contributions shall be paid in one lump sum within 15 days following the signature of the agreement, whereof the deadline may be extended once within another 30 days.

Service time for covering full-time study in higher education after 1997:

Any person of legal age may enter into an agreement for the purpose of obtaining service time for the length of period of pursuing a full-time course of study in an institution of higher education as of 1 January 1998 as service time. The amount is calculated as 34 per cent pension contributions based on the minimum wage prevailing on the day when the agreement is concluded (the actual monthly amount in 2013 HUF 33 320).

Service time and income as pension base in case of lack of insurance:

Any resident natural person of legal age, other than pensioners entitled to draw pensions on their own right, and:

a) who is not engaged in a legal relationship that is subject to compulsory insurance, or who is not covered by the insurance, or

b) whose insurance is suspended,

may enter into an agreement for the purpose of acquiring income to be applied as a pension base and service time for the purpose of eligibility for pension benefits, subject to a commitment to pay 34 per cent pension contributions.

The contribution base shall comprise the income indicated by the person entering into the agreement; however, it may not be lower than the prevailing minimum wage in effect on the day the agreement is executed.

The agreement may not be concluded separately for obtaining the service time or the income to be applied as a pension base.

The amount of the benefit depends on the length of the service period and the average wage.

Pension award depends on one hand on the length of service time and on the other hand the age of the applicant. The Hungarian retirement age is 65 at the moment, which was gradually raised from 62 after 2010.

30 days before the actual eligibility to old-age pension.

The Hungarian retirement age is 65 at the moment, which was gradually raised from 62 after 2010.

Verification of service time prior to the pensionable age:

The pension insurance institution shall collate data notified for the records regarding the (formerly) insured person’s employment that is subject to compulsory insurance, and the incomes from such relationship.

The reconciliation procedure shall be opened at the request by the (formerly) insured person electronically, or ex officio. The client may request the opening of reconciliation procedure once in any calendar year.

Within ten days following the opening of procedure the pension insurance institution shall send a detailed statement of the data it has on record as per the following:

• insured periods, other periods of employment, and the periods of eligibility for „Women40” in case of women;
• the particulars of employers;
• the amount of income subject to payment of pension contribution as of 1988;
• the amount of pension contribution deducted by the employer, or paid for periods as of 1988; and
• other periods recognized as employment periods, for which no contribution or pension contribution had been paid.

The client shall - within ninety days of receipt of notice - disclose to the pension insurance the information in his/her possession relating to the above-mentioned data, which are not contained in the records, or which differ from the data on record.

In the event of any discrepancy, the pension insurance investigates the reason if the documents the client has submitted are found inadequate to ascertain the relevant facts of the case.

The pension insurance administration agency shall conclude the reconciliation procedure by a resolution. The resolution shall indicate the changes made in the data, or reason for any refusal to effect such changes, as well as the finalised records of the (formerly) insured person.

The pension application can be submitted at the foreign pension institution at the place of residence, and the request will be forwarded to the appropriate Hungarian pension institution

No, you cannot apply for a Hungarian old-age pension if you still work in an EEA state or a country pursuant to a bilateral agreement with Hungary (working in a 3. country has no importance in this regard).

See question "Can I apply for a state pension in Hungary if I’m still working in another country?" above.

Pension payment:

Option 1.
In case of persons living in the territory of a state of the European Economic Area (EEA), the amount may be submitted to a bank account managed by a payment service provider in one of the EEA states (without transferring costs).

Option 2.
The beneficiary living in a country pursuant to a bilateral agreement may decide that the benefit shall be transferred by the Pension Payment Directorate to the beneficiary’s own bank account managed in that given country (e.g. in Australia) in one of the currencies vended by the Hungarian Central Bank. The transfer cost (HUF 2 900 in 2013) is deducted from the Hungarian benefit and the receiver bank might also charge additional expenses.

As of 1 July 2013 for beneficiaries living in an EEA state, in a country pursuant to a bilateral agreement or in any other foreign countries, payment on a quarterly, half yearly or yearly basis posterior is also possible – if the Hungarian benefit is under the prevailing Hungarian old-age pension minimum (HUF 28 500/month in 2013).

Option 3.
Beneficiaries living outside the EEA states and countries pursuant to a bilateral agreement may choose the following options for payment of their (pension) benefit:

• to a representative who is resident in Hungary
  • via postal delivery (without transferring costs),
  • via bank account managed by a Hungarian payment service provider (without transferring costs),
• to an own bank account managed by a Hungarian payment service provider (without transferring costs).

Link: International application forms

https://www.onyf.hu/en/international-pension-cases/nternational-application-forms.html