Hungarian Tamas Merei thinks his government will withdraw the € 20,000 he has in his pension fund.
“It’s stealing,” the 39-year-old software developer said as he marched with around 3,000 other protesters outside Parliament on the banks of the Danube this week to protest against changes planned by Prime Minister Viktor Orbán pension fund rules.
Orbán’s government denies stealing anyone’s pension, but the proposal is part of a wave of financial policies that have critics accusing it of trampling on property rights and economic freedoms to fill the coffers of the state.
In recent weeks, the government has proposed an Internet traffic tax that has pushed around 100,000 people onto the streets in protest; he imposed a tax hike which a German broadcaster says is designed to kick him out; and it introduced new levies which foreign supermarkets claim discriminate against them.
>> To read: Hungary will suspend its Internet tax project for the moment, according to Orbán
>> Read: Foreign supermarket chains threatened by Hungary
Before Orbán came to power, Hungary had a hybrid pension system, with some funds kept in the public system, while a portion of savers’ pension funds were kept in private funds. Employers and workers made mandatory contributions to both.
Shortly after his election in 2010, Orbán’s government ended compulsory payments into private funds and nationalized most of the money they contained. This effectively enabled the government to take 9.6 billion euros in private pension assets. Poland has since made a similar change to its pension system.
Economists and investors were alarmed by the Hungarian decision, but the government has mitigated the impact. He said savers could choose to stay in private funds, although mandatory contributions would not go to them.
About 60,000 people remained in the funds. The change the government has now submitted to parliament is that the funds will be shut down and their assets absorbed into the state pension system, unless at least 70% of savers pay contributions to private funds each month.
Right now, only around 10% pay these monthly fees, which means the funds would have to close, according to Horizont, Hungary’s largest private fund.
The private funds between them have around 200 billion forints (650 million euros) in assets, according to Horizont.
Economy Minister Mihály Varga told state radio people were “dumb” to suggest the government was stealing pensions.
Government spokesman Zoltán Kovács said legally the relevant pension funds belong to the state, not to the savers.
“It is an illusion to have their own money,” he said.
The government did not want money for the budget, he said, adding that it had to act to protect savers who risked having their pensions wiped out because the new contributions do not come in.
According to Péter Krekó, director of the Political Capital Institute think tank, this is a cynical argument used to mask the government’s real motivation. “Basically it’s about plugging the budget holes with this money,” he said.
The number of people affected by the change in pensions is too small to mount a large protest movement and in any case Orbán’s grip on power is firm. He was re-elected in April in a landslide, and the left-wing opposition is in chaos.
Protesters say they don’t trust the government to pay the full amount when they retire and fear the money will simply disappear into the budget.
Zoltán Vajda, a businessman father of three young daughters, holds 3.5 million forints (€ 11,000) in private pension funds.
“These are my last savings,” he told protesters outside Parliament. “Representatives are about to pass a law that will likely wipe out our last investments.”