The Role of the Second and Third Pension Pillar in the Hungarian Pension System

Abstract

The sustainability of pension systems is a highly topical issue across Europe, and increasing the role of supplementary occupational and voluntary pension schemes to complement the mandatory state pillar is on the agenda in almost every country. Following a brief introduction of the Hungarian pension system, our article analyses the historical development and the current role and state of retirement savings based on the most recent data available. Although all three pillars exist in Hungary, data reveal that the Hungarian pension system continues to rely far too heavily on the first pillar, the sustainability of which is surrounded by risks. Retirement plan products can only partially fulfil the ultimate role of providing significant and regular supplementary pension for future retirees. Old-age financial security can be improved substantially by systematically increasing the role of voluntary pension pillars and incentivising annuity products.