Hungary's Orbán announces 14th-month pension (again)
Here comes the 14th-month pension
Speaking more decisively than ever before, Prime Minister Viktor Orbán addressed the introduction of a 14th-month pension.
Although it will take several steps, we will introduce it,
said the head of government.
Although members of the cabinet have spoken several times in recent weeks about the possibility of introducing a 14th-month pension, none of them have communicated as clearly or set such a definite date as Viktor Orbán has now done.
Last week, Gergely Gulyás, the PM's chief of staff, confirmed that the government intends to introduce the 14th-month pension. They are currently examining how this expenditure would fit into the budget.
Introduction in several stages
It seems highly likely that the cabinet believes the full 14th-month pension will not fit into the budget in 2026. This is indicated by Viktor Orbán's reference to a 'multi-step' approach.
This aligns with what the Economy Minister Márton Nagy, said last week. According to the minister, depending on economic performance, the government will introduce the 14th month's pension gradually over two, three or four years, potentially on a weekly basis.
Based on this, it is reasonable to assume that next year, one or two weeks' worth of the monthly pension will be paid out.
If we proceeded in weekly increments, it would take four years to restore the full 14th-month pension. However, it is also conceivable that we could give one week's worth of pension in the first year and an additional amount in the following year. This would enable us to achieve our goal more quickly.
The important thing, he said, is to start, and the pace can be dictated by the strength of the economy. Prime Minister Viktor Orbán has already spoken about a similar gradual introduction in a radio interview.
According to our calculations, the 14th-month pension could cost the budget nearly HUF 600 billion. However, based on this, pensioners are expected to receive only a portion of their monthly pension in 2026, meaning this amount could be much less. For example, if pensioners receive a week's worth of pension next year, this would cost the budget HUF 150 billion.
The method and timing of implementation are also important in terms of next year's budget. While the expenditure side of the 2026 budget, 'set in stone' in the summer, did not include the 14th-month pension, according to the latest expectations, the government will miss its original deficit target of 3.7% of GDP even without this expenditure. Current analyst expectations range from 5.5% to 6%. Depending on how much of the extra expenditure on the 14th-month pension is built in next year, this higher deficit would be added to.
Expert views
According to András Farkas, a pension expert and the founder of NyugdíjGuru, the issue of pensioners becoming impoverished could be addressed by
- reforming the method of valuation and
- changing the principle of inflation-linked pension increases.
In this regard, András Farkas believes that neither a raise to the minimum pension nor the 14th-month pension represent a real solution.
Gergely Gulyás believes that the 13th and 14th month pensions cannot mitigate the inequalities of the pension system. He believes that some people will certainly feel that this benefit is unfair.
Nevertheless, András Farkas believes that, since pensions in the Hungarian pension system only increase in line with inflation each year, their value is actually falling behind that of wages, which typically rise at a faster rate. He thinks this should change so that pensions do not lose their value in relation to wages.
Cover photo: EU
