Oct 26 (Reuters) - Hungary's parliament passed a bill late
on Monday to cut off payments to private pension funds from
November, which could save it about 360 billion forints next
year and help it to meet its budget deficit target.
It also allowed taxpayers to return into the state pension
system from private funds.
Here is a look at the pension systems of other emerging
European countries, including crisis measures similar to those
in Hungary. To see Hungary's pension system and private fund
assets please click on []
BULGARIA
* Started to overhaul its communist-era pension system in
2000 when it introduced a private second pillar. Five percent of
salaries go to universal pension funds, with an additional 7 to
12 percent going to a separate vocational fund for workers who
do especially hard work, such as miners.
The universal fund's total assets are about 3 billion levs
($2.13 billion), while the vocational funds control about 465
million levs. The government has said it is thinking about
taking over the vocational funds and transferring their assets
into a state fund. []
* The government last week decided to raise social security
contributions by 1.8 percentage points to 30.3 percent to patch
up the state fund's deficit.
CZECH REPUBLIC
* is the only central European country that has not reformed
its pay-as-you-go pension system in any significant way since
the fall of communism.
* the centre-right government that took office this year
wants to launch pension reform in 2013. It proposes to cut the
payroll social security tax by 3 percentage points to 25 percent
and give people an option to direct 3-4 percentage points of
that into either a private or a state-run pension fund.
ESTONIA
* established a three-tier pension scheme in 2002. The
scheme is mandatory only for people born after 1983. As of June
2010, more than 86 percent of workers had joined.
At the end of June 2010 the total assets of second tier
pension funds were 15.6 billion Estonian kroons ($1.39 billion).
* Employees pay 2 percent of their gross salary into their
accounts, and the government adds another 4 percent from first
pillar contributions, which amounts to 33 percent.
* The government suspended contributions to the second
pillar from June 2009 until end-2010. Contributions will resume
in 2011 at a 50 percent rate, and reach 100 percent by 2012.
LATVIA
* has three-pillar pension system. A 20 percent social
contribution is divided between the state and the mandatory
private second pillar. The third private pillar is optional.
* In 2008, before the financial crisis, 12 percent went to
the state pillar and eight percent to the second pillar. The
balance was recast at 18 to 2, favouring the state pillar, when
the economic crisis gripped Latvia in 2009.
The measure was designed to be temporary with contributions
to the second pillar scheduled to rise to four percent in 2011
and to six percent in 2012. But Prime Minister Valdis
Dombrovskis said that contributions to the second tier will stay
at two percent for another two years (in 2011 and 2012).
LITHUANIA
* Under a three-pillar system launched in 2004, 2.5
percentage points from 26.3 percent social security payments
were directed to private pensions, rising to 5.5 percent by
2008.
* Second-pillar payments were cut in two steps to 2 percent
in 2009 to reduce the social security fund's deficit, a source
of half of the public sector's total deficit.
* The initial plan was to return to 5.5 percent in 2011, and
raise contributions further to 6 percent for 2012-2014 to
compensate for the losses. The plan was abandoned earlier this
year with the parliament freezing 2 percent contributions until
after the crisis, without a specific timeframe.
* The net assets of 29 pension funds totalled 3.7 billion
lithuanian litas ($1.49 billion) at the end of September.
POLAND
* according to Polish law, passed in 1999, 7.3 percent of
workers' salaries go to private pension funds, which now manage
nearly 210 billion zlotys ($73.63 billion).
* Labour Minister Jolanta Fedak earlier this year proposed
to lower the contributions to private pension funds to 3 percent
to help finance the state-run pay-as-you-go system. Analysts
criticised the idea, saying it amounted to reversing the 1999
pension reform, and the government backed away from changes.
ROMANIA
* overhauled its pay-as-you-go pension sector in 2008 when
it set up a three-pillar system.
* Under the system, 2 percentage points from 10.5 percent in
social security payments were transferred to private funds. The
contribution was supposed to rise by 0.5 percent annually until
reaching 6 percent. However, the government froze contributions
at 2 percent in 2009. They rose this year, but only to 2.5
percent, prompting criticism from some pension fund managers.
* At the end of September, there were 5.1 million
second-tier contributors to the nine private pension funds whose
total assets stood at 3.9 billion lei ($1.26 billion).
SLOVAKIA
* aside from the pay-as-you-go state scheme, there is a
private second pillar and a voluntary private third pillar.
* 18 percent mandatory pension contributions are divided
equally between the state system and the private second pillar.
* previous leftist government said the funds had put
clients' money at risk and imposed rules on how funds can invest
contributions. The European Commission in January asked Slovakia
to remove certain investment restrictions.
* the new cabinet of Prime Minister Iveta Radicova wants to
scrap these restrictions.
* as of Oct. 15, Slovak pension fund portfolios totalled
3.55 billion euros ($4.94 billion).
SLOVENIA
* Slovenia's pension reform dates back to 2000. Placing
money into private funds is not obligatory, and only about 55
percent of employees have private pension insurance.
(Reporting by Reuters bureaus, writing by Marton Dunai,
editing by Stephen Nisbet)
