Hungary raises pensions by 5% to compensate for inflation

Pensioners shopping. (Magyar Nemzet/Zoltán Havran)
By Dénes Albert
3 Min Read

In order to compensate for inflation, the Hungarian government will bring forward the indexing of pensions and pay an extra 5 percent, minister without portfolio for families and social affairs Katalin Novák said on Sunday.

“Due to higher-than-expected inflation for next year, the government will increase the amount of the pension by 5 percent so that there is no need to adjust it later,” Novák said on national channel Kossuth Rádió on Sunday.

Novák emphasized that the government’s goal is to preserve the purchasing power of pensions, so the rate of pension increase always follows inflation. And if inflation is higher than planned, the government also reacts with back payments. This year, for example, the government paid a pension adjustment in two installments, she added. The politician pointed out that inflation is higher than expected this year, so the government is adjusting pensions earlier than required by law.

In addition, back in August, Hungarian Prime Minister Viktor Orbán said that the “booming” economy will allow the government to pay a pension premium of at least 50,000 forints this year, which turned out to be 80,000 forints (€219), which was paid in November.

Katalin Novák also pointed out that the increase in the performance of the economy is due to the fact that even in the worst times during the coronavirus epidemic in Hungary, many people decided to look for work and could find jobs.

The personal income tax of parents raising a child is also reimbursed due to the difficult period, she added, pointing out that the basis of the government’s policy is that those who take part in the common efforts should also benefit as much as possible from the results. This is what the personal income tax exemption for people under the age of 25 is about, as well as the fact that the 13-month pension will be fully restored next year, she added.

Novák said that while the opposition deemed it “unnecessary spending,” the government believes that extra payments to Hungarian working people was the best investment, and it was up to the government to do what was possible for this group, including with tax cuts, tax refunds and family benefits.

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