Pensioners will receive significant additional income in November, thanks to the pension adjustment and pension premium, which are not new benefits, but are given depending on the economic situation, Dániel Molnár told Magyar Hírlap.

The Makronóm Institute's macroeconomic expert stated that the pension adjustment is required by law in Hungary, with the aim of ensuring that pensions maintain their purchasing power in the event of higher-than-expected inflation.

Basically, pensions rise at the beginning of each year by the same rate as the inflation expected by the Ministry of Finance for the given year. If inflation is lower than expected, pensioners' benefits will increase in real terms, which was the situation before 2019. If it is higher than expected, the government must make a pension adjustment and pay the difference to the pensioners, explained the expert.

As it turned out, pensions rose by five percent at the beginning of this year, but after the outbreak of the war and the runaway energy prices, it soon became clear that the price increase would be faster than previously predicted, so the government paid an additional pension increase of 3.9 percent in July retroactively until January , which also applied to the 13th month pension received in February.

The analyst pointed out, among other things, that the rate of price increase has accelerated since then, so that, in accordance with the law, pensioners will once again receive a pension adjustment, the amount of which was set at 4.5 percent, and again retroactively until January, and also valid for the 13th month's pension .

So this year, pensioners will receive a total pension increase of 14.0 percent in order to ensure that the purchase value of their allowance does not decrease. This additional increase means a total of HUF 217 billion in income for the almost 2.5 million beneficiaries, he added.

Dániel Molnár emphasized that another source of additional income is the pension premium, the amount of which depends on economic growth. Here, the underlying goal is for pensioners to benefit from economic growth, as it does not affect the value of pensions. The condition for this is, on the one hand, that the rate of economic growth exceeds 3.5 percent, and that the government's deficit target is expected to be met, which according to the Budget Act is 5.9 percent from the ESA point of view, although in government communication since then it has first decreased to 4.9 percent, and then 6 increased to .1 percent.

According to him, the amount of the pension premium depends on economic growth above 3.5 percent (two thousand forints per tenth of a percentage point, but no more than 20 thousand forints). The Ministry of Finance expects an increase of 4.0 percent this year, which is one of the lowest among the forecasts, so the pension premium will be smaller than usual in previous years due to the lower increase, it will be a maximum of ten thousand forints per beneficiary, and a total of 23.5 billion forints.

The expert explained that pensioners, who are particularly severely affected by the rise in energy and food prices, also need the HUF 240 billion in additional support, and a significant number of them have very little savings, which is why they may need support from their families in extreme cases.

Source: Magyar Hírlap

Featured image: MTI/György Varga