anonimouse

Came across this today, it doesn't affect Expats but I was astonished when I read it.

Watch out if the UK get hold of this idea.

http://www.businessweek.com/news/201...ultimatum.html

tomasc

Although this has been done long time ago it is interesting thing. Whether it is right thing to do or not, is long discussion, just please note that it is not question of private pension funds put part of the compulsory pension funds that has been managed by private funds - this is very critical difference.

Most countries actually do not have these at all but compulsory pensions have been managed by state from the beginning. One of the key arguments Hungary had together with Sweden, Poland, Czech and some others that have or had the system who were jointly appealing to EU comission on the accounting these pensions was that these should be counted as state assets together with the "state managed" part, however, EU comission decided against the appeal and Hungary decided to move all the money to state so there is no question mark anymore. As you can see some of the others are doing similar (estonia, latvia etc) things although not with the same extent.

Fundamentally the problem is that for countries who are struggling with maastricht and other targets having significant amount of money out of balance sheet makes the comparison difficult with countries that did not implement this kind of pension system (most EU countries do not have this system).

For real private pension funds (which you pay from your net income) there is no change.

John Gilbert

Thanks for the clear explanation - this raises a number of issues, one of which is who is best placed to provide stable long term basic "state" pensions. On the basis of the explanation the EU ( and / or perhaps the OECD ?) left Hungary little choice.

tomasc

Indeed EU comission got surprised based on Hungary decision and when Poland threatened do the same they agreed with Poland to relax their accounting rules for Poland. That was already too late for Hungary and Bulgaria.

To be honest the situation was created by way too stiff EU accountants as ALL the countries that had the same system (=old communist countries + Sweden) had appealed to change the accounting rules used by Eurostat.

At the same time all EU countries are having issues with pension systems as the number of tax payers is declining while populations are getting older, living longer and retiring earlier. Kind of impossible equation.