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Pensions raised by 15 percent

January 14th, 2023

Even as old-age pensions are increased to follow the inflation rate forecast for 2023, a left-wing columnist sees no reason for the elderly to thank the government.

Hungarian law requires the government to raise pensions in January based on the consumer price index forecast for the given year. If the inflation rate proves higher than expected, pension hikes must be adjusted in November. This is the system introduced by the Orbán government in 2011. The earlier one, whereby pensions had to follow both the average wage increase and inflation, was advantageous for pensioners in years of prosperity but caused loss of purchasing power for them in years of crisis. Conversely, the current system is meant to preserve the purchasing power of pensions but offers no bonuses in years of prosperity.

In Népszava, Erika Gulyás doesn’t believe that the 15 percent pension hikes will be sufficient to preserve pensioners’ living standards. Her main concern is that foodstuffs weigh more in pensioners’ baskets than in those carried by the rest of the population. Therefore, she writes, the 15 percent hikes will fall far short of compensating an almost 50 percent increase in food prices. She also finds it unjust that during the pre-Covid years, when real wages grew substantially, pensions only followed the inflation rate and thus the gap between wages and pensions grew ever wider. All in all, she writes, pensioners have no reason to thank the government.

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