Parliament Approves Bajnai Government Pension Changes

Hungary's Parliament on May 11 approved pension changes proposed by the Bajnai government that replace annual bonuses with a premium linked to economic growth.

MPs voted individually in alphabetic order as it was claimed by the opposition.
The amendments eliminate pensioners' annual bonus, equivalent to a full month's pension, and replace it with a premium up to HUF 20,000 if the annual economic growth exceeds 3.5 pct or up to HUF 80,000 if GDP growth reaches 7.5 pct.
Hungary's economy grew 0.5 pct in 2008.
The amendments change the way pension increases are calculated. Pension payments will rise at the rate of inflation as long as GDP growth remains under 3 pct. If growth is between 3 pct and 4 pct, the pension rise will be indexed to both CPI and the net wage increase in a proportion of 80 pct to 20 pct, respectively. If growth is between 4 pct and 5 pct, the increase will also be indexed to CPI and net wage growth, but in a proportion of 60 pct to 40 pct. If GDP growth exceeds 5 pct, the rise will again be linked only to CPI.

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