Back to social security – market effects

Gábor Orbán
macroeconomic analyst and bond portfolio manager

Members of private pension funds who turned 52 years of age by the end of last year have the opportunity until the end of this year to quit their private pension fund and re-enter the state social security system (TB), taking their accumulated assets with them. The final deadline for making a declaration to this effect is the end of the year, but some members have already taken advantage of the opportunity. In the following I will look at how large an item these assets returning to the state will represent and what impact it might have on the market.

Based on the distribution of private pension fund members by age group, the potential proportion of those returning to the state system is approx. 4% of the total, which means around 130,000 of the almost 3 million-strong membership. We’re talking about a little more than 6% of total assets, given that older citizens have certainly spent at least 10 years in the mixed system (as opposed to younger people who have entered since 1998), while earnings are typically higher in the older age groups – albeit not by as much as we might expect. Total assets of private pension funds reached around HUF 1,850 million at the end of last year, and we can count on considerable yields and new payments into the funds since then, potentially increasing this figure to HUF 2,400 million by the end of this year. The total affected assets may thus reach somewhere around HUF 150-160 billion at the end of the year.


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