Hungary's Private Pensions Are a Success

October 7, 1999

Pensions International, a journal covering the global restructuring of government pension systems and its effect on financial markets, reports in its October edition that in the first year of Hungary's privatized pension system fully 60 percent of Hungarians have opted out of the state-run, pay-as-you-go plan in order to save and invest in their own personal accounts.

August 31 was the last day on which members of the government-run program could transfer to a private pension plan, and thousands of Hungarians crowded pension offices to make the change. "We had 9,000 new members yesterday. We are open till eight tonight, but I don't know if we'll be able to close the doors," reported a representative for Nationale Nederlande, a pension fund operating in Hungary.

It is a bitter irony that as thousands of Eastern Europeans make the leap to retirement freedom, Americans are still confined to a government-run, one-size-fits-all Social Security program that will soon go bankrupt. During the Cold War, Eastern Europeans longed for the freedom of the West. But unless Social Security is reformed to give workers the choice of personal retirement accounts, it will be Americans who envy the freedom of their neighbors.

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