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Tentative plans for a ‘retirement bond’

March 23rd, 2021

A left-wing commentator supports the idea of a government bond that would stimulate savings to complement future old-age pensions.

In Népszava, Miklós Bonta sees an open rift within the government over plans to issue a new bond that would support today’s working generations when they retire. He welcomes Finance Minister Mihály Varga’s proposal to launch the ‘retirement bond’ and doesn’t understand why Gergely Gulyás, the Minister in Charge of the Prime Minister’s office, said such a bond will not be issued. (Half of Hungary’s old age pensioners get less than 124 thousand Forints /344 Euros/ per month. As the working-age population is shrinking while the old-age cohorts are swelling, Hungary like most European countries has regularly raised the retirement threshold for the past 25 years. The retirement age at present is 65 years.) Bonta believes that, in order to be attractive, a retirement bond ought to guarantee a yield well above inflation. If it is introduced, he suggests, it might help channel citizens’ savings towards their own future, while in the short run, it would be instrumental in financing the budget deficit.

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