Part I — Situation overview

On the morning of Thursday 27 August 2026 Prime Minister Péter Magyar announced in a video message that, on the basis of Wednesday’s government decision, from 1 January 2027 the smallest amount of the old-age pension will rise to 120 thousand forints. The current value is 28,500 forints, unchanged since 2008. The prime minister called today’s amount “humiliatingly little”, and indicated that the preparation of further undertakings affecting pensioners has also begun. A few hours later finance minister András Kármán said on Kossuth Radio: there is as yet no government decision on whether the person receiving 120 thousand forints a month should share in the 13th and 14th month pension to the same extent as the one whose entitlement is 500 thousand forints. The abolition of the two extra benefits is not on the agenda, but their method of calculation may change. On the same day Fidesz disputed the figures of the announcement: MP Piroska Szalai told Magyar Nemzet that there is no question of several hundred thousand people being affected, and recalled that between 2010 and 2025 the average value of pensions grew by 32 per cent in real terms.

The background to the story is the freezing of the amount. The amount of numerous social supports and benefits was previously tied to the minimum pension, so raising it would automatically have raised other expenditures as well — this technical linkage explains why it did not move for eighteen years. The 2022 amendment of the social acts detached most benefits from the minimum pension and introduced the social reference base; this step in principle opened the way to a rise, but in practice neither the minimum pension nor the identical social reference base of 28,500 forints has risen since. According to the calculation of Telex’s G7, the 28,500 forints of 2008 would correspond at today’s price level to roughly 62,360 forints, that is, the amount has lost more than half of its value since its introduction. The announced rise is therefore at once substantial in magnitude and late. The debate is not about this either: the analyses of Telex, HVG and Portfolio all miss the details of the regulation, while Magyar Nemzet and Mandiner highlight the injury to the contributory principle and the situation of those with higher pensions.

According to MIAK’s reading today’s announcement can be summed up in a single sentence: the freezing of one fixed amount cannot be remedied by fixing another fixed amount. The 120 thousand forints is indeed a substantive improvement in 2027, but if it remains without a rule just as its predecessor did, then within a few years it will end up in the same place. The real policy question is therefore not the extent of the rise but whether the legislation contains automatic value tracking, whether it extends to the benefits of persons with changed working capacity, and whether the possible differentiation of the 13th–14th month benefit takes place on the basis of a formula promulgated in advance or of subsequent discretion.

Part II — Foundations in the literature

The interpretive framework of the topic is assembled from three sources. The European Commission’s European Semester factsheet lays down the dual requirement of pension systems: the system must at once provide an adequate old-age income and be financially sustainable, and principle 15 of the European Pillar of Social Rights likewise sets a dual standard — the pension should be proportionate to contributions and provide an adequate income. Friedrich A. Hayek (Austrian-British economist and political philosopher, one of the main figures of the theory of market order, awarded the Nobel memorial prize in economics in 1974) sharply distinguishes the subsistence minimum securable for everyone from that security which guarantees someone’s income position measured against others: the former he considers securable in a wealthy society without endangering freedom, the latter a privilege. And John Maynard Keynes (British economist, founder of modern macroeconomics) pointed out that redistribution directed towards lower-income households increases the propensity to consume, and thereby the incentive to invest as well — this is the source of MIAK’s SZ8 programme point. The three authors together yield exactly the structure of the Hungarian debate: the floor is due to everyone, while the relative position is a matter of dispute. The detailed treatment of the literature — author by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. All three can be fitted into the legislation now being prepared, none of them questions the announced rise, and none of them requires further budgetary resources beyond what has already been announced.

3.1 An automatic value tracking rule in the text of the legislation (by promulgation)

The minimum pension and the social reference base identical in amount to it should receive an obligatory annual value tracking rule before the entry into force on 1 January 2027. MIAK proposes a mixed index: the weighted average of the price increase calculated on the pensioner consumer basket and of the growth of net average earnings, with an asymmetry such that the amount cannot fall in real terms. This solution excludes the error which since 2008 has led to today’s situation, and against which Portfolio’s analysis expressly warns: the mechanical fixing of the threshold values of 120 and 140 thousand forints may within a few years devalue the effect of the measure. Building in the rule is the direct application of the SZ13 pension adequacy programme point, and it does not increase first-year expenditure, because its effect appears from 2028.

3.2 Stating the position of disability benefits and benefits for persons with changed working capacity (by the close of legislative preparation)

The prime ministerial announcement concerned exclusively the old-age pension, whereas — according to 24.hu’s compilation — the programme of the Tisza Party would have raised both the old-age and the disability minimum to 120 thousand forints, and this omission was raised both by the president of the National Association of the Pensioners’ Parliament and by pension expert András Farkas. MIAK proposes that in the course of legislative preparation the government should state unambiguously what will happen to the minimum of the benefits due to persons with changed working capacity: if the rule extends to them, then it should also quantify the funding for it; if it does not extend to them, then it should communicate the reason and the planned schedule. Maintaining uncertainty is the worst solution, because it keeps the most vulnerable group in uncertainty on a question that affects their daily livelihood. This is the basic requirement of the SZ7 dignity-based social policy.

3.3 A formula promulgated in advance for the differentiation of the 13th–14th month pension (by the 2027 budget debate)

If, on the basis of the government’s proposal, the National Assembly amends the method of calculating the 13th and 14th month benefit, MIAK asks that the differentiation be made public in the form of a statutory formula, simultaneously with the debate on the 2027 budget: income bands, a multiplier per band, and the automatic annual correction of the band limits. For two reasons. On the one hand the pension is a benefit based on the payment of contributions and resting on an acquired right — this objection is the most frequent in the comments quoted by the pro-government press — and therefore every solution departing from proportionality has to rest on an express statutory basis that can be read in advance. On the other hand differentiation based on discretion is the worst combination: the beneficiaries cannot calculate their incomes, while critics rightly raise the suspicion of arbitrariness. Publishing the formula is the direct application of the G1 data-driven budget programme point, and MIAK proposes in addition that the government should publish the full funding statement — together with the opinion of the Fiscal Council.

The three proposals are linked by a single principle: social provision is predictable if it is protected not by a single announcement but by a rule. The Hayekian subsistence minimum argument and the Keynesian consumption argument work only if the real value of the amount can be maintained — a freezing floor cuts the ground from under both justifications within a few years.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Social The income of those living on the lowest benefits grows substantially, in many cases several times over; the risk of old-age poverty falls The minimum pension is not a poverty threshold: according to the expert estimate quoted by HVG the poverty threshold is 145 thousand forints a month, so even the 120 thousand forints does not reach that far
Budget The funding of the rise can be planned in the 2027 budget, and the expenditure is a one-off step, not a rising path The estimates scatter within a wide band; without an automatic value tracking rule the long-term path cannot be modelled
Economy In the lower income band the additional income is spent almost entirely on consumption, so domestic demand expands measurably Alongside this year’s deficit target of 7.5 per cent and the EU excessive deficit procedure (EDP) there is little room for manoeuvre for further undertakings
Social fairness Raising the floor reaches those most in need in the greatest proportion If the differentiation of the 13th–14th month benefit takes place without a formula, the sense of arbitrariness injuring the contributory principle may weaken trust in the system as a whole

The main question for consideration is the tension between targeting and contributory proportionality. The analysis quoted by Telex warns that raising the minimum pension is not in itself a guarantee against impoverishment in old age, because a significant part of the poorest elderly either receive no benefit or receive a benefit not on an old-age title — that is, raising the floor does not reach precisely some of those in the worst situation. This is the classic targeting problem of MIAK’s SZ1 programme point, and it means that alongside the minimum pension rise there is still a need to address the lack of provision in old age separately.

The other tipping point concerns the systemic direction. If the 13th–14th month benefit is no longer due uniformly in proportion to one’s own benefit, then the Hungarian pension system moves from the insurance-principle logic towards a targeted, needs-based logic. This is a legitimate policy choice — in the words of the finance minister the needs principle receives a prominent role in the government programme, and according to Mandiner’s account the OECD’s country report on Hungary also proposed limiting the 13th month pension. MIAK’s position is that this shift should be decided not in announcements but in published model calculations and a formula promulgated in advance, because it is a systemic step with effects over a horizon of decades.

Part V — Measurability and summary

5.1 What is worth following? (proposed KPIs)

The performance indicators below (KPIs, Key Performance Indicators) are MIAK’s proposals, not governmental decisions. They are worth following:

  1. The relative income poverty rate in old age among those over 65. According to the data of the Hungarian Central Statistical Office (KSH) this indicator rose between 2018 and 2024 from 6.3 per cent to 13.8 per cent; the proposed target is a return below 10 per cent by 2029.
  2. Preservation of the real value of the minimum pension — the purchasing value of the amount should not fall in any year compared with the 2027 starting point. This indicator directly measures whether the value tracking rule under point 3.1 works.
  3. The ratio of the minimum pension to the poverty threshold — it is proposed that this ratio should approach 100 per cent from year to year, and that the value should feature in the justification of the budget.
  4. The itemised appearance of the funding in the 2027 budget and in the final accounts: the difference between planned and actual expenditure should remain within 10 per cent.

5.2 Summary

MIAK’s request to the government and to the National Assembly consists of three concrete steps: the legislation now being prepared should contain an automatic value tracking rule, should state the position of the benefits due to persons with changed working capacity, and — if the method of calculating the 13th–14th month benefit changes — the differentiation should take place on the basis of a formula promulgated in advance, together with a published model calculation and the opinion of the Fiscal Council. Without these the announcement carries the risk of repeating an eighteen-year freeze, only from a higher starting level.

Two MIAK foundational values are affected. Data-drivenness, because in a step affecting several hundred thousand people and of an order of magnitude of several hundred billion forints a publicly accessible impact calculation is not a formality but the only way in which the decision remains defensible in the coming years. And being ideology-free, because MIAK adopts the frame of neither side: the direction of the rise does not require ideological justification even according to the Hayekian argument, while the objection concerning the injury to the contributory principle still has to be answered, notwithstanding that it arrives from the pro-government press. The solution to both objections is the same: a rule, not discretion.

Part VI — Justifications and further sources

6.1 The framing of the press, spectrum by spectrum

The left-liberal band concentrated on the shortcomings of the measure, not on its extent. The article of Telex’s G7 column records the reservation already in its title — the rise is a quadrupling, but not a guarantee against poverty — and it also quotes the expert argument according to which the threshold value should at least track inflation, and optimally be adjusted to the growth of average earnings. HVG chose the same structure: with the opening “the devil is in the details” it highlighted the uncertainty concerning disability pensions and the problem of the rigid threshold, and it also communicated the poverty threshold level of 145 thousand forints. 444.hu carried the announcement essentially in full length, without commentary, supplemented with the finance minister’s statement of the same day.

The general public affairs and economic band placed the open questions of implementation at the centre. 24.hu carried two pieces: the factual report and a collection of expert reactions in which both the president of the Pensioners’ Parliament and the pension expert objected to the absence of disability benefits. Alongside the announcement Portfolio published its own calculation showing the magnitude of the catching-up, and recalled that a few days earlier it had criticised in a separate opinion piece the immobility around the pension promises; the same paper indicated that the announcement relates only to the old-age pension.

The pro-government conservative band used two mutually complementary frames. Magyar Nemzet highlighted on the one hand the finance minister’s words on the 13th–14th month pension (“what could be expected”), and on the other hand carried the statement of a Fidesz MP disputing the figures of the announcement, which referred to the real value growth after 2010 and to the introduction of the 13th–14th month benefit. Mandiner added to this the objection based on the contributory principle, quoting readers’ comments. It is noteworthy that according to Mandiner’s report the finance minister, counting the further band-based rises, spoke of more than 700 thousand people affected — this is a wider circle than the announcement in itself concerns, and the paper communicated this figure within the critical frame, not as evidence of the size of the measure.

6.2 Facts and data

Data Value Source
The current amount of the minimum pension HUF 28,500/month, unchanged since 2008 Telex, HVG, Portfolio, 27 August 2026
The new minimum pension HUF 120,000/month, from 1 January 2027 Announcement of Péter Magyar, 27 August 2026
The value of HUF 28,500 calculated at today’s price level approx. HUF 62,360 Calculation of Telex G7, 27 August 2026
The social reference base HUF 28,500, unchanged since its introduction in 2022 HVG, 27 August 2026
Number of persons affected (the minimum rise in itself) “more than 200 thousand” / “some 240 thousand” 24.hu and HVG respectively, 27 August 2026
Number of persons affected (together with the band-based rises) “more than 700 thousand” Mandiner, on the basis of the finance minister’s statement, 27 August 2026
The annual cost of the measure HUF 200–210 bn (HVG), approx. HUF 205 bn (András Farkas, Telex), “somewhat above HUF 100 bn” (Portfolio’s earlier estimate) three sources, 27 August 2026
Relative income poverty in old age (65+) 6.3% (2018) → 13.8% (2024) KSH data, as quoted by Telex
Poverty threshold approx. HUF 145,000/month András Farkas, HVG, 27 August 2026
The amended deficit target for 2026 7.5 per cent of gross domestic product (GDP), HUF 7,200 bn HVG, 27 August 2026

A methodological note on the divergence of the cost estimates. The three figures communicated are not mutually contradictory data but relate to different scopes of calculation. The estimates of 200–210 billion forints contain the full annual additional expenditure belonging to the raising of the minimum pension to 120 thousand forints at the current number of beneficiaries; Portfolio’s earlier, lower estimate took a narrower circle as its basis. And the figure of more than 700 thousand persons affected already includes the band-based supplementary rises, of which the announcement said nothing. MIAK therefore proposes that the government should publish its own, delimited calculation in the justification of the legislation, because without this the public sees three mutually incomparable figures about the same measure.

6.3 Policy dimensions

  • Social policy (programme points) — the triple pillar of pension adequacy and sustainability provides the framework of the value tracking rule and of the long-term path (programme point ID: SZ13); the targeting system for reaching elderly people without provision (programme point ID: SZ1); the dignity-based approach for clarifying disability benefits (programme point ID: SZ7); consumption stimulation in the lower income band (programme point ID: SZ8);
  • Economy (programme points) — an obligatory, published funding and impact model for every large expenditure item (programme point ID: G1);
  • Demography (background material) — the path of the dependency ratio and the forecast of pension expenditure measured against gross domestic product (GDP), which determines the long-term funding question of the value tracking rule.

A public law clarification: the amount of the minimum pension is established by the Government in a decree, while its funding is contained in the budget act adopted by the National Assembly. The announced rise therefore becomes complete with the adoption of the 2027 budget — this is why MIAK proposes that the formula and the funding statement should be public simultaneously with the budget debate.

6.4 Literature in detail

6.4.1 European Commission: European Semester Thematic Factsheet — Adequacy and Sustainability of Pensions

The starting point of the factsheet is that European pension systems face a dual challenge: they must remain financially sustainable and must provide an adequate old-age income. The document identifies the key task of the pension system as protecting the elderly from poverty and securing them a decent standard of living, and it treats financial sustainability as an indispensable instrument to this end, not as an independent objective. In connection with longer contribution requirements the factsheet expressly states:

“Specific measures will be needed to protect from poverty those who cannot meet longer contributory requirements. Such measures may include a minimum pension or other minimum income solutions for the elderly.”

From the point of view of the Hungarian decision this means two things. On the one hand the minimum pension as an instrument rests on an EU policy consensus, it is not an ideological choice — and principle 15 of the European Pillar of Social Rights prescribes at once proportionality with contributions and an adequate income, that is, both poles of the Hungarian debate can refer to it. On the other hand, according to the logic of the factsheet, the minimum is addressed to those who cannot fulfil the contribution conditions — this is precisely the circle to which the targeting objection quoted by Telex refers, and which raising the minimum pension does not in itself reach.

📖 Source: European Commission: European Semester Thematic Factsheet — Adequacy and Sustainability of Pensions

6.4.2 Friedrich A. Hayek: The Road to Serfdom

Hayek breaks the concept of economic security down into two sharply distinct types, and this distinction is the most precise analytical instrument for today’s Hungarian debate:

“the one is security against severe physical privation, the certainty of a given minimum of sustenance for all; the other is the security of a given standard of life, or of the relative position which one person or group enjoys compared with others”

Of the first Hayek — who is usually quoted as the most consistent defender of market order — expressly writes that in a society which has attained a general level of wealth such as his own there is no reason why it should not be guaranteed to all without endangering general freedom. Of the second type, however, he asserts that it can be provided only for some, and only at the price of restricting the market, and therefore cannot be a general entitlement.

Two elements of the Hungarian decision fall precisely into these two categories. Raising the minimum pension is the first type: a floor applying to everyone, which even within Hayek’s system of argument does not have to be defended on ideological grounds. The differentiation of the 13th–14th month benefit, by contrast, belongs to the second type, because it shapes the mutual proportion of income positions — and precisely for this reason, according to Hayek’s logic as well, it requires an express rule promulgated in advance, not case-by-case discretion. MIAK’s proposal 3.3 follows from this delimitation.

📖 Source: Friedrich A. Hayek: Út a szolgasághoz (The Road to Serfdom)

6.4.3 John Maynard Keynes: The General Theory of Employment, Interest and Money

In the closing chapter of the General Theory Keynes reverses the received argument of his age, according to which the accumulation of capital depends on the savings of the rich:

“measures for the redistribution of incomes in a way likely to raise the propensity to consume may prove positively favourable to the growth of capital”

The core of the argument is that below the level of full employment the growth of capital is not helped by a low propensity to consume but on the contrary held back by it. At the same time Keynes does not propose unlimited levelling: he separately emphasises that differences of income and wealth have a social and psychological justification, only their extent in his own time does not.

Applied to the Hungarian situation, this framework explains what MIAK’s SZ8 programme point also records: the additional income appearing in the lowest benefits is spent almost entirely on domestic consumption, and therefore raising the minimum pension brings back on the demand side part of the item appearing on the expenditure side of the budget. This is not an argument for omitting the funding of the measure — Keynes himself ties the proposition to a situation below full employment — but it justifies the impact calculation containing not only the gross expenditure but also an estimate of the demand-expanding effect.

📖 Source: John Maynard Keynes: A foglalkoztatás, a kamat és a pénz általános elmélete (The General Theory of Employment, Interest and Money)

6.5 International comparison

In European practice the automatic value tracking of the minimum pension is the rule, not the exception. The majority of member states tie the amount of the smallest benefit either to the price level or to a mixed price-wage index, precisely because the maintenance of fixed amounts across political cycles empirically does not work: raising a nominal amount always requires a current decision, which in times of crisis is the first to be postponed. The Hungarian freeze between 2008 and 2026 is an extreme case of this general phenomenon. The second international lesson concerns the systemic direction: in several member states a separate, tax-financed minimum pillar has been built in alongside the insurance principle forming the basis of the pension system, which the legislation treats separately from the contribution-based benefit. This solution resolves the tension expressed in the Hungarian debate by the objection concerning the injury to the contributory principle: if the floor is not a modification of the contribution-based benefit but a separate, expressly solidarity-based title, then it does not injure the proportionality between payment and benefit. MIAK considers this structural solution the cleanest, and proposes it for consideration in the course of preparing the legislation.

Social policy

  • SZ13 — Pension adequacy and sustainability
  • SZ1 — Targeted supports
  • SZ7 — Dignity-based social policy
  • SZ8 — Consumption stimulation in the lower income band

Economy

  • G1 — Data-driven budget
  • G15 — Countercyclical stabiliser

Proposed new programme point: Value tracking rule for the benefit floor — the obligatory annual indexation, laid down in legislation, of the minimum pension and of the social reference base, with an asymmetry excluding a fall in real value — for the Social policy area.

6.7 List of sources

Press sources (MIAK press monitor, 28 August 2026 — topic 2):

Knowledge base references (literature):

  • 📖 European Commission: European Semester Thematic Factsheet — Adequacy and Sustainability of Pensions
  • 📖 Friedrich A. Hayek: Út a szolgasághoz (The Road to Serfdom)
  • 📖 John Maynard Keynes: A foglalkoztatás, a kamat és a pénz általános elmélete (The General Theory of Employment, Interest and Money)

MIAK internal materials:

  • MIAK policy area: Social policy (programme points; programme point ID: SZ13, SZ1, SZ7, SZ8)
  • MIAK policy area: Economy (programme points; programme point ID: G1, G15)
  • MIAK policy area: Demography (background material)
  • MIAK press monitor, 28 August 2026 — topic 2, score: 92/100

Supplementary public data sources:

  • KSH — pension statistics and old-age poverty indicators
  • Eurostat — aggregate replacement ratio (the ratio of pension to earnings)
  • European Commission — Ageing Report, long-term pension expenditure forecast
  • Fiscal Council — opinion on the amendment of the budget

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