Minister floats introduction of 14th month pension in Hungary

At a forum in Kaposvár, the Minister of Construction and Transport gave a detailed presentation on the current state of the Hungarian pension system. János Lázár explained that the pensions of approximately 2.4 million pensioners are not covered by previous savings, but by the contributions of current employees.

The minister also pointed out the significant differences between pensions. Of the 2.4 million pensioners, half a million receive less than HUF 240,000, while 250,000 receive less than HUF

In many villages in Somogy County, where retired farmers live, benefits range from 100,000 to 130,000 forints,

Lázár highlighted.

The government had already reinstated the 13th month pension, but inflation necessitates further measures. The minister announced that at the end of November and in December, all pensioners will receive a pension supplement of approximately HUF 50,000 and a food voucher worth HUF 30,000.

Although attempts had been made to increase smaller pensions in 2001, according to Lázár, when smaller pensions were increased more significantly, this caused political difficulties and a sense of injustice. "Where is the appropriate limit in this regard, at 140,000 forints or 145,000 forints?" he asked.

According to János Lázár, the most appropriate solution is a 14th month pension. In his opinion, this is the only solution.

If there is a 13th month pension, then the 14th month is the next step. We are working on this, calculating, working hard to make it happen.

The minister's announcement is surprisingly specific and, given the current state of the budget and its prospects, somewhat surprising. However, it is not entirely unexpected that, in the run-up to parliamentary elections, politicians are keen to target social groups that are easily identifiable with welfare measures in order to boost their popularity. Many details are unknown from the minister's words: for example, the timing, the method of implementation, and the budgetary coverage of the measure. However, we do know that an extra month's pension would cost the state coffers nearly HUF 600 billion in additional expenditure.

This is not entirely unexpected, given that current opinion polls show a close race between the ruling parties and the Tisza Party, and the opposition party presented its specific program for pensioners a few weeks ago (the opposition party's tax reduction plan has also been announced since then). In our detailed article on the opposition party's program, we already pointed out that it is not self-evident that the generous promises made to pensioners will be covered, while the expenditures would place a heavy burden on the budget from the moment of introduction, which means that the sustainability of the budget and the pension system could deteriorate significantly. We have also previously pointed out that the tsunami of promises ahead of the 2026 spring parliamentary elections has not only begun but has also gained momentum, and János Lázár's latest announcement may be an important milestone in this process.

It is worth remembering that the ruling parties began spending and making promises before the parliamentary elections (the Home Start program, food vouchers for pensioners, income tax exemption for mothers, tax exemption for CSED-GYES support for mothers, housing subsidies for public employees, government official salary increases, promised social security contribution reductions, extra SME subsidies) in order to boost their popularity, but with János Lázár's latest announcement, the potential budgetary expenditure has reached a new level. The government measures described so far do not typically cause a sharp budgetary reversal due to their incremental nature (phased income tax exemption for mothers, loans granted under the 3% Home Start program, etc.), and some of the expenditures can be recouped over time, "only" limiting the room for maneuver in the budget. The current ministerial announcement, however, can be considered "helicopter money" with a significant budgetary impact. Therefore, the method of its introduction and implementation is not insignificant.

Cover photo: Portfolio