Those who have reached the age of 62 years and accumulated at least 20 years of service are entitled to old age pension. The retirement age was increased to 62 years in 1997 (before that, it was 60 for men and 55 year for women), but it was introduced after a transition period: this is applicable to men from 2001 and to women from 2009. The 62-year retirement age limit is considered to be low in international comparison (in general, it is 65 years in the EU), but for the time being, this is justified by the bad health status of the Hungarian population as well as their life expectancy, which is several years less than for the citizens of other Member States. Until 2008 it is possible to determine a so-called partial pension for those who have reached retirement age and accumulated at least 15 years in service.

The amount of old age pension is determined, depending on years in service and the monthly average income that may be taken into account. In addition to service time, the period for which income is taken into account and the income earned during this period are important for the purposes of determining pension. The starting date of the period for taking into account income is 1 January 1988, and the monthly average of gross income earned (paid) until the starting date of pension serve as the basis of the pension determined. The period for which income is taken into account is extended by one year every year, so in a few decades, income earned during the person's complete lifetime will serve as the basis of determining pension.

The method for the regular annual increases in pension was determined in the scope of the pension reform in 1997, and after a few years of transition, the increase will be made by the so-called Swiss indexing: pensions determined more than one year ago are increased by a rate equivalent to the unweighted average of planned consumer price increase for the given year and the planned increase in national net average income.

The second pillar

For career beginners, it is mandatory to join one of the private pension funds, which constitute the second pillar of the pension system; for non-beginners, it is optional (until 31 August 1998 and from 1 January 2003 for those who have not reached the age 30 years on that date). The rules for determining pension under the first pillar valid from 2013 differ for those who pay only to the first pillar and those who pay to both the first and second pillar in that for the former, 1.65% and the latter, 1.22% of the monthly gross average income is added to the monthly pension after each year of service.

The number of persons receiving pensions increased by 394,000 between 1990 and 2003; it was 2,770,000 in 2003, though this figure was higher at times within the period (the peak was 1999, with 2,836,000 persons). The increase is characteristic of all categories except for pensions for relatives (excluding orphan?s allowance). The most dynamic increase was seen in disability pension before retirement age, which doubled over more than a decade. Despite the government?s efforts disability pension is related to unemployment: the proportion of those declared to have disabilities is higher in places where unemployment is higher.