Under EU coordination regulations

19 October 2017.

Individuals under the scope of the coordination regulations of the EU/EEA

Hungary joined the EU and the EEA on May 1, 2004, therefore Community regulations governing social security shall be applied when evaluating applications for pensions in relation to Hungary and another EU/EEA country.

These include:

  • Council Regulation (EEC) No. 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community
  • Council Regulation (EEC) No. 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71
  • Regulation (EC) No 883/2004 on the coordination of social security systems
  • Regulation (EC) No 987/2009 down the procedure for implementing Regulation (EC) No 883/2004 

The coordination regulations governing Community social security apply to the following persons:

  • citizens of EU member states falling within the scope of one or several member states’ social security systems
  • refugees and displaced persons residing within the EU falling within the scope of one or several member states’ social security systems, and
  • family members and surviving relatives of the aforementioned persons.

The Community’s coordination regulations governing social security deal with provisions offered within the framework of the statutory social security system, that is, with sickness and maternity benefits, invalidity benefits, old-age pensions, pensions due to survivors, provisions available upon industrial injuries and occupation-related diseases, death, unemployment benefits and family benefits.

On May 1, 2010 Council Regulation (EEC) No. 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No. 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71(hereinafter referred to as former regulations) were replaced by Regulation (EC) No 883/2004 on the coordination of social security systems and Regulation (EC) No 987/2009 down the procedure for implementing Regulation (EC) No 883/2004  (hereinafter referred to as new regulations) with regard to EU member states. With regard to Switzerland, the new regulations shall be applied as of April 1, 2012, whereas they have been in force as of June 1, 2012 with regard to the three EEA Member States (Iceland, Lichtenstein, Norway). 

From the date of accession, the former bilateral social policy and social security agreements Hungary had concluded with Member States and countries that joined the EU along with Hungary (special Hungarian-German, Hungarian-Austrian, Hungarian-Polish, Hungarian-Czechoslovakian, Hungarian-Holland bilateral agreements and, in respect of Slovenia the Hungarian-Yugoslavian agreement) have been replaced by the coordination regulations of the Community. 

On January 1, 2007, Romania and Bulgaria and on 1 July 2013 Croatia also became members of the EU, thus the coordination regulations must be applied in respect of these countries as well, replacing the Hungarian-Romanian and the Hungarian-Bulgarian and Hungarian-Croatian social security agreements.

Coordination aims at eliminating disadvantageous situations that may arise from the differences of the systems operating in Member States as well as acknowledging and maintaining the rights obtained, and implementing cooperation between the Member States.

With the entry into force of the new regulations, the practical implementation of a regulation system stipulating increased cooperation, in line with the requirements of the 21st century and based on fundamental principles ensuring social security rights, and the maintenance of such rights, for migrant workers that have determined the coordination of social security systems for decades began.

  • Service time accumulated in member state pension systems shall be taken into account in order to acquire eligibility for pensions in the context of pension assessments.
  • Competent member state institutions shall determine and disburse the amount based on the total service time accumulated by the applicant/insured person and the portion of the pension, calculated based on the provisions of national legislation (theoretical pension), determined in proportion to the service time accumulated in the member state at issue and the total service time (pro rata pension).
  • The pension determined for pensioners residing in EU member states, and if an application to this effect has been submitted, such pensions shall be disbursed in the member state of residence, different from the member state obliged to make the pension payment (direct transfer).
  • The insurance facts occurring on the territory of EU/EEA and relevant from the perspective of eligibility for benefits and the amount of benefit shall be taken into account as if they had occurred on the territory of the member state that established the pension benefit or within the scope of its insurance system.

Within the application of Community regulations, the following Hungarian pension benefits may have been awarded prior to January 1, 2012 :

  • Old-age pension (advanced pension, advanced pension with reduced sum, early retirement pension, artists’ pensions, miners’ pension),
  • Disability pension,
  • Rehabilitation pension,
  • Dependent’s benefits (widow’s/widower’s pension, orphans’ allowance, parents’ pension),
  • Accident disability pension,
  • Accident benefit.

As of January 1, 2012 according to the newly adopted Hungarian statutory amendments, Hungarian pension-type benefits that may be awarded within the application of the EC regulations are as follows:

  • Old-age pensions (benefits prior to retirement age, miners’ temporary annuities),
  • Survivors’ pensions (widow(er)’s pensions, orphans’ allowances, parental pensions, widow(er)’s annuities),
  • Work-accident-related survivors’ pensions,
  • Work-accident annuities.

 
In accordance with the provisions of the coordination regulations, applications for the various benefits must be submitted at the competent institution of the Member State of residence. This Member State institution will send the forms filled in according to the application, along with the certificate proving the service/insurance time acquired in the given Member State, to the competent institution(s) of the Member State(s), in which the applicant has accumulated additional service/insurance time. Via a single application, the applicant will be entitled to the given benefits in all Members States, in which he or she has met the eligibility criteria. In the case of claims for old-age pension, the postponement of the settlement of claims may be requested from the institution of the Member State in which the applicant would otherwise be eligible for the benefits. In this case, or, if one became entitled to benefits in another Member State only at a later date, a new application must be submitted.

The competent institution of each Member State evaluates applications in accordance with its own internal laws and the provisions of the coordination regulations. If an applicant is eligible for benefits on own right in line with the internal regulations of a given Member State, the benefits must be calculated according to a so-called double settlement procedure:

  1. The benefits due according to national regulations must be calculated on the basis of the service time acquired and the salary received in the given Member State.
  2. The proportionate pension must be calculated according to the following:
  • the theoretical amount of the pension must be calculated, that is, the pension amount that would be due if the applicant had acquired all his or her service time (actually accumulated in several Member States) in this Member State;
  • the proportionate pension must be then calculated so that the ratio of service time acquired in the given Member State to total service time shall be applied to the theoretical amount.
  1. Of the two benefits, the one that is more advantageous i.e. the higher amount will be awarded and disbursed.

If the claimant is not eligible for national benefits on own right, only the proportionate pension may be calculated.

Benefits due from different Member States is disbursed to the beneficiary separately, in accordance with the regulations in force in the Member States involved.