Towards the “Child-to-Parent” Based Pension Allowance (“C2P”). Proposal for the Reduction of the Population and the Finance Twin-Deficit

Giday, András and Szegő, Szilvia (2018) Towards the “Child-to-Parent” Based Pension Allowance (“C2P”). Proposal for the Reduction of the Population and the Finance Twin-Deficit. POLGÁRI SZEMLE: GAZDASÁGI ÉS TÁRSADALMI FOLYÓIRAT, 14 (Spec.). pp. 302-319. ISSN 1786-6553

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Abstract

Our basic assumption is that the pension reform, paid employment and child rearing (including housework) are inextricably interlinked and a policy for one “life stage” cannot be reformed without consideration to the entire family life. The proposed child-to-parent based pension allowance (“C2P”) aims at remedying the worsening interconnectedness of two different deficit types: population and financial deficit in the pension regime. The demographic basis of a sustainable population and pension scheme necessarily includes children. We discuss a model which can improve interaction between child-rearing and the pension scheme. The current pension schemes typically allocate only a minimal allowance (about 2-3 per cent of the total pension budget) to those who raise children. We propose that the “regular” pension should be supplemented with a child-to-parent based (“C2P”) element. This would be a fixed amount of about HUF 20,000 per month per child raised by the parents. This extra allowance would be financed from contributions paid by working children to the central budget. Parents would be entitled to this pension element if their child has worked a sufficient number of years and has paid contributions.

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