HHC: private pension law is unconstitutional | Magyar Helsinki Bizottság

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TAX NUMBER: 19013983-1-42

01 March 2011

The Hungarian Helsinki Committee requested the Constitutional Court to repeal the legal provisions setting out that those remaining members in private pension funds lose their future state pension. The private pension law was debated by the Constitutional Court for the first time this week.

According to the relevant legal provisions, the membership of those who joined private pension funds will cease and their assets in the funds will be automatically shifted to the state-run pension system, unless they expressly and personally declare otherwise. Those keeping their membership in private pension funds will not accrue any services from the state-run system in the future, even though they will contribute to the state-run pension system to the same extent as those who join it.

The Constitutional Court of Hungary declared in 2003 that amounts paid to the private pension funds should be protected as the property of those paying it. The legal provisions above violate the right to property, because persons who are members of private pension funds for more than a decade have no real chance to consider their possibilities, since keeping their membership in private pension funds goes hand in hand with losing their future state pension. Accordingly, joining the state-run pension system will not be a voluntary decision, but instead a forced occurrence. Furthermore, the provisions violate the requirement of equal treatment, since they discriminate between persons contributing to the state-run system to the same extent when deciding on future pension claims.


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