Retirement age in Hungary is 65 years, after which everyone can receive pension from the state. However, people are allowed to work even if they pass that age. In fact, employing pensioners is encouraged by various tax benefits.

Employing pensioners at your Hungarian company

While retirement age in Hungary is 65 years, employing someone who has already retired once offers various benefits to the employer as well as the economy in general. If you employ a retired person, their accumulated expertise stays in the work force, and you as the employer can benefit from their experience for an extended period.

Pensioners also tend to be less mobile, meaning that they are less likely to be job-hopping, as is more often the case with younger workers. This means that older employees are usually more loyal to their employers, and you will be able to save on recruitment costs.

At the same time, doing at least some work (even in a part-time job), feeling appreciated, and improving their financial stability helps pensioners maintain their physical and mental health. Keeping people healthier lightens the strain on healthcare and social systems, and as such, on domestic economy.

Tax benefits promote the employment of retired people

In addition to the above mentioned benefits, you as an employer can directly benefit from the employment of pensioners. Since they are retired, they only pay the personal income tax, while they do not have to pay the social security contribution, and you as the employer do not have to pay the social contribution tax.

• Only personal income tax (15%) is to be paid
• No social security contribution (18.5%), so with the same gross salary, you can offer them a higher net salary
• No social contribution tax (13%), which lowers your company costs related to employment

The only drawback of employing pensioners is relevant to the employee themselves: since they are not paying the social security contribution, their salary will not be increasing the base of their pension.

What to watch out for before employing a pensioner?

There are various types of pension and pensioners in Hungary. The above benefits are available only to employees who receive retirement pension (“öregségi nyugdíj”) or the widow’s or widower’s pension (“özvegyi nyugdíj”).

Please note: women might be receiving a retirement pension even if they are under 65 years. This is possible if they had spent at least 40 years working in Hungary.

If your candidate receives a pension under retirement age (“korhatár előtti ellátás”), the social security contribution and the social contribution tax must still be applied to their salary. Moreover, their salary will be limited if they want to keep receiving their pension. The yearly limit on their salary is 18 times the minimum wage, which is HUF 4,802,400 (ca. EUR 12,200) in 2024.

If your candidate receives a pension related to being disabled or rehabilitated (“rokkantsági ellátás” and “rehabilitációs ellátás”), the social security contribution must still be applied to their salary, but you will be eligible for benefits on the social contribution tax. At the same time, there is no cap on their salary.

Is your new candidate for a position a pensioner?

If you are next Hungarian hire is a pensioner, you can achieve significant savings with their employment while your business will be able to take advantage of their accumulated experience. Before you decide, make sure to ask them about their status, and consult your accountant about the available savings.

Helpers Finance offers accounting, bookkeeping, and payroll services in Hungary, with a focus on small and medium-sized companies. We would be happy to help you achieve your goals by providing precise and up-to-date reports that help you make informed business decisions.

Did you like this article? Follow us on Facebook and find out more about doing business in Hungary.