When can we talk about a pension case under an agreement?

 Hungary has concluded social security agreements with several countries, in which the countries undertake to cooperate and mutually take into account the service period in the territory of the other party. From a pension insurance point of view, the purpose of such agreements is to ensure that persons who have completed part of the service required for entitlement to benefits outside Hungary abroad are not disadvantaged when their pension entitlement is assessed.

Thus, in the context of a pension under an agreement, both Hungarian and foreign periods of insurance completed in the state party to the agreement play a role.

With which countries does Hungary have social security agreements?

 Hungary has bilateral agreements with the following countries: Albania, the United States of America, Australia, Bosnia and Herzegovina, North Macedonia, the Republic of India, Japan, Canada, separate agreement with the Canadian province: Québec, the Republic of Korea, Kosovo, the Republic of Montenegro, the Republic of Moldova, Mongolia, Russian Federation, the Republic of Serbia, the Republic of Turkey, the successor states of the former Soviet republics, except Estonia, Latvia, Lithuania, Moldova and the Russian Federation.

What principles are used to distinguish between types of agreements?

Hungary has concluded bilateral agreements with other countries based on the principle of proportional burden and the territorial principle.

I. Agreements based on the proportional burden

In the case of proportional burden, countries take into account the service period acquired in the other country for the purposes of entitlement to benefits, but pay pensions only in proportion to the acquisition of rights recognised in their own insurance scheme.

Accordingly, both Hungary and the other state party to the agreement will therefore determine the pension if the conditions for entitlement laid down in their own legislation are met. The amount of the pension is calculated on the basis of national legislation and the pension is paid according to the rules of the country that determines the pension.

All bilateral social security agreements follow the principle of proportional burden, and the Hungarian-Yugoslav social policy convention applicable to Kosovo also falls in this category.

Common features of the agreements based on the principle of proportional burden:

  • Both countries determine pensions on the basis of the eligibility criteria laid down in their legislation.
  • If the entitlement to benefits is based on the Hungarian service period, a separate Hungarian benefit is determined, and the insurance period acquired in the other country does not need to be taken into account in Hungary
  • The insurance periods completed in the other state party country are taken into account only if the Hungarian service period is not sufficient to establish entitlement to the benefit. In this case, the Hungarian period is added to the service period in the other country and the Hungarian pension is determined as a proportion of the Hungarian service period and the whole, summarised service periods. This is the proportional Hungarian benefit.
  • The amount of the Hungarian pension is determined only on the basis of earnings and income in Hungary, even if the entitlement is based on the total of the insurance periods completed in the other state party country. Therefore, earnings and income earned in the other state party country are not taken into account at all in the Hungarian pension calculation.

II. Territorial reciprocity

In contrast to the above, in the case of agreements based on the territorial principle, only the country in whose territory the person claiming benefits is resident establishes the conditions of entitlement under its legislation. If the beneficiary moves to the territory of another country, the other country takes over the payment of benefits. Such an agreement is the Hungarian-Soviet Social Policy Agreement, which is applied in the case of Ukraine.

An essential aspect is that a pension awarded on the basis of a territorial agreement can only be paid as long as the beneficiary lives in the country which awarded the pension.

Any service periods completed in a country to which the agreement applies is taken into account for the determination of Hungarian benefits.

The amount of the Hungarian pension is based on:

  • Hungarian income and earnings, if the applicant has such income and earnings on the basis of Hungarian service period, or
  • the statutory average professional earnings, if the applicant has not acquired Hungarian earnings and income on the basis of Hungarian service period.

Which Hungarian pension insurance body decides on pension claims under the agreements?

The Government Office of the Capital City of Budapest has national jurisdiction to assess pension cases under the agreements. Address: 1081 Budapest Fiumei út 19/a., postal address: 1916 Budapest. However, pension claims can be submitted to any government office acting as a pension insurance administration body.

The Government Office of the Capital City of Budapest is in contact with all the foreign pension administration bodies concerned:

  • it forwards claims for foreign benefits, the documents submitted by the clients necessary for the establishment of the foreign pension,
  • it certifies the Hungarian service period and other data to the foreign pension insurance bodies.

For more information on the benefits available under each agreement, how to apply for them and how to take into account the period of insurance under the agreement, see the description of the respective agreement.