Next year – and according to plans only next year – voluntary pension fund savings could be hacked tax-free residential use in case of Portfolio is to NGM’s announcement he wrote citing that the social consultation on the related draft legislation has already started.
The draft establishes some basic principles in this regard:
- the use of savings for housing will be an extra, optional possibility, which the person concerned can decide on at his own discretion and on the basis of his free choice,
- it would be possible to use the savings only in 2025, temporarily, for one year,
- residential use would be tax-free in this one year.
The tax exemption is important because voluntary pension fund savings could not be withdrawn before the end of 10 years, only if the fund member retired before the end of the 10 years (but even then there was a 15 percent cap on the capital). The savings could only be accessed completely tax-free after at least 10 years and upon retirement.
They would also clarify what residential use means (in Hungary):
- repayment of a housing loan or loan agreement, or subsidizing your deductible,
- modernization and renovation of apartments,
- the apartment must be at least partially owned by the fund member or his/her spouse or child.
In the case of modernization or renovation, the invoices for certain materials and devices could be settled afterwards, up to three times.
According to NGM’s MTI statement, as a result of the measure, on a voluntary basis, more than 1 million fund members and their families may have the opportunity to use even the entire part of their savings for housing purposes against their account balance of more than 2 million per person on average.
444 (also referring to the NGM announcement) also says that only that savings in voluntary pension funds could be used for housing purposes, other pension savings (for example, pension insurance, pension) cannot be used according to the current draft. On the other hand, we would spend the entire amount of money collected in voluntary pension funds, that is, all the savings accumulated from personal and employer contributions, as well as from the returns achieved on them and from state tax credits.
As we wrote earlier, the government expects HUF 300 billion (that is, approximately 14 percent of the HUF 2,100 pension fund assets) to move as a result of the measure.
Regarding the upcoming voluntary pension fund change, Bankmonitor compared the private pension fund reform in 2010 and the ÖNYP change expected next year, looking for the answer to whether now then again “will it be stolen” pension fund savings or not.
