The Boomerang of Female40: Seniority Pensions in Hungary, 2011–2018
| Published date | 01 September 2019 |
| Date | 01 September 2019 |
| DOI | 10.1177/1388262719869527 |
| Author | András Simonovits |
| Subject Matter | Articles |
Article
The Boomerang of Female40:
Seniority Pensions in
Hungary, 2011–2018
Andr´
as Simonovits
Hungarian Academy of Sciences, Hungary
Abstract
In 2011, the Hungarian government introduced special seniority pensions (Female40): Females,
who have accumulated at least 40 years of eligibility (related to the length of contributions), can
retire at any age without actuarial benefit reduction. The elimination of other early retirement
schemes in 2012 and slowly rising real wages made the policy change even more popular: the
lifetime benefit was maximised at the earliest age of retirement. Since 2016, real wages have been
growing rather fast; making delayed retirement attractive. Without being noticed by the public at
large, Female40 has become a boomerang for its former beneficiaries as immediate retirement
from 2014 causes losses rather than gains to the foregoing retirees.
Keywords
public pensions, early retirement, seniority pensions, optimal retirement age
Introduction
This article scrutinises a Hungarian e arly retirement scheme that is commonly ref erred to as
Female40. The scheme was introduced in 2011 and allows any female who has accumulated 40
years of eligibility (related to, but not identical with 40 years of contributions) to retire before
reaching the benefit retirement age (also called the pensionable, normal or official retirement age)
without suffering any actuarial deduction. Almost parallel to the implementation of Female40, the
Hungarian government closed down all other early retirement schemes. As expected, if the average
real wage growth is slow, Female40 will be advantageous for its participants. However, the same
scheme becomes a boomerang with fast average real wage growth, which has occurred since 2016.
This conclusion may have relevance for seniority retirement systems in other countries.
Corresponding author:
Andr´
as Simonovits, Emeritus Researcher, Research Center for Economics and Regional Sciences, Hungarian Academy of
Sciences, 1097 Budapest, T´
oth K´
alm´
an u. 4, Budapest, Hungary.
E-mail: simonovits.andras@krtk.mta.hu
European Journal of Social Security
2019, Vol. 21(3) 262–271
ªThe Author(s) 2019
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DOI: 10.1177/1388262719869527
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