1. Legal Framework
The social security system in Hungary provides a wide range of benefits including maternity, unemployment and disability benefits, as well as sick pay and pensions.
2. Required Contributions
The social security contributions to be paid by the employees consists of the following items:
- Pension contribution 10 %
- Health insurance contribution 7 %
- Labour market contribution 1,5 %
The employer shall pay social security tax in respect of its employees. Social security tax is a newly introduced concept (adopted at the end of 2011). It does not grant social rights of allowances or subsidies (social rights are covered by individual social contributions).
The tax base is identical to the tax base of personal income. The tax rate is 27%.
Besides the required contributions employees can pay fee for private insurance companies. Employees can choose from two different types of private health insurances. One of them is voluntary mutual insurance fund and the other option is commercial sickness insurance. Voluntary Mutual Insurance Funds are non-profit, self-governing organizations, while commercial sickness insurances are offered by multi-national insurance companies that profit from their activity.
4. Required Maternity/Sickness/Disability/Annual Leaves
Maternity leave is a continuous, uninterrupted 24-week period in Hungary, from which maximum 4 weeks shall be used prior to the expected date of the child’s delivery, unless the parties agree otherwise. A maternity allowance is paid to employees on maternity leave.
Employees shall be entitled to fifteen working days of sick leave per calendar year for the period during which the employee is incapacitated to work.
5. Mandatory and Typically Provided Pensions
Persons who have reached the statutory retirement age and have at least 20 years of employment are eligible for old-age pension.
The statutory retirement age differs based on the employee’s year of birth, i.e. it increases gradually with every coming generation, e.g. employees born before 1952 may retire at the age of 62, while employees born in or after 1957 may retire at the age of 65.