An amendment to the Pensions Act has been published – this is how the pension calculation will change in 2021

2021. 03.26. 04:00

Many people were already waiting for the Hungarian Gazette, due to be published in mid-March of each year, in which the so-called multipliers of appraisal are called and are one of the most important pillars in calculating pensioners’ pension. What are the complications of valuation and how will pensioners’ pensions be affected in 2021 as well?

An amendment to the Pensions Act has been published - this is how the pension calculation will change in 2021

What does the valuation multiplier mean and how does it affect the pension calculation?

According to the current “Pensions Act” (more specifically Law LXXXi of 1997 on Social Security Pensions), the calculation of a pension is mainly based on two main pillars. What does it depend on who gets a pension? Before we get into the legal interpretation (which not many are curious about), let’s think common sense about what it’s called. state pension?

The essence of the state pension is common sense with the common sense of the peasantry

If we want to explain the essence of pension calculation quite simply, we need to consider the following.

To whom should the state give more pensions? Who has worked more in his life or who has done less?

To whom should the state give more pensions? Who earned more (ie paid more subscriptions per subscriber) or who earned less (and thus paid less subscriptions)?

Therefore, the current pension law is based on two pillars:

– one of the pillars of the amount of the pension is the amount of income and income (therefore, it is checked how much income the pensioner received from the so-called job, that is, the amount that he officially earned during his active life)

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– The second pillar of the retirement pension is the number of recognized years of service (that is, the number of years of service under the law).

What happens in March every year so far in 2021 as well?

We said in the previous point that one of the criteria for determining pensions is who earns the amount during his active life. That is, when calculating the pension, they look (from year to year) who earned how much in a given year.

Let’s look at an example and it will be understandable!

Let’s say (for example) Kálmán Mikorka retires in 2021 and I want to determine his pension. They see in “The System” that Kálmán Mikorka received the following income:

1980 – Ban: 13,650 feet

1981: 17,890 HUF

In 1982: 22,450 HUF, etc. etc. etc. (so that the income on which the pension is based is checked from year to year)

Here we see that per capita income varied from year to year, which was usually rising, which was largely due to wage inflation (of course, other influences may have affected wages, but inflation mainly contributed to the general rise in wages) .

This is where the exciting legislation comes in

Thus, in order to calculate the pension, according to the law, earnings in the calendar year must be taken into account, which must be increased by the value of multiples of the valuation in the specified year (this is now 2021). It is therefore important that the Hungarian Gazette be published, as the valuation complications for 2021 have been published, which are as follows:

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Valuation multiples in 2021 (for pensions this year)

What do all the appraisal values ​​in a given calendar year mean?

When calculating pensions, the earnings of a particular calendar year are adjusted by a multiplier corresponding to that year, thus – quite simply – bringing the income of previous years to its present value. Thus, in the case of the new pensioner Kalman Mikurka mentioned in our example, the income of HUF 17,890 in 1981 is multiplied by the value that can be read from the table (66,943) to get the estimated value of HUF 1,197,610, which is taken into account when calculating pension.

Isn’t that too complicated?

By clicking here, we’ve dealt with calculating a pension in 2021, understandably.

Here you will find a pension calculator.

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