We compare the pre- and post-2010 Hungarian political regimes through the lens of pension policies. We label the pre-2010 regime as democratic populist because it was characterized by fiscally irresponsible policies, yet it maintained the system of checks and balances and the rule of law. In contrast, we call the post-2010 regime authoritarian populist as it has employed authoritarian political techniques while maintained popular legitimation through regular elections. To substantiate the difference between the two periods from an economic viewpoint, we compare pre- and post-2010 pension policies to find important differences as well as surprising similarities. In particular, we analysed the following five policy aspects: (a) reform and partial privatization of the government-run pension system, (b) policies on the statutory (normal) and the effective (average) pension age, (c) indexation, (d) progression in benefits calculations and progressivity in the personal income tax, and (e) contribution rates. Based on ideological preferences, we argue that one would expect the pension system to become financially more sustainable but less redistributive after 2010 in comparison to the preceding period. Yet, we find that although pro-poor redistribution through the pension system has indeed been curtailed, fiscal sustainability has not improved due to the erratic policies.
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The system paradigm revisited
Clarification and additions in the light of experiences in the post-socialist region
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