Hungary Agreement and foreign pension information 106-04017000

In Hungary, national legislation needs the compulsory payment of social security contributions .The pension insurance covers most workers and the self-employed.

Contributions insure individuals against death and provides for income in the form of a pension once the person reaches retirement age. Separate legislation covers disability, unemployment and health insurance and family and maternity benefits.

The legislation is the responsibility of the Hungarian government but administration and payment of insurance pensions is the responsibility of the central pension insurance institute.

The various local governments manage social assistance for those with low incomes.

The Agreement with Hungary started one 1 October 2012. There are no previous versions.

For Australia:

Department of Social Services (DSS)

For Hungary:

Ministry of Human Resources - Emberi Erőforrások Minisztériuma

For Australia:

Australian Government Agency, Services Australia

For Hungary:

Government Office of the Capital City Budapest, Department of Pension Insurance - Budapest Főváros Kormányhivatala, Nyugdíjbiztosítási Főosztály

For Australia:

Centrelink International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for anything about double coverage. See Double coverage/Taxation and Healthcare.

For Hungary:

For all claim related works:

Government Office of the Capital City Budapest, Department of Pension Insurance (Budapest Főváros Kormányhivatala, Nyugdíjbiztosítási Főosztály)

For all current customers:

Hungarian State Treasury, Pension Payment Directorate (Magyar Államkincstár, Nyugdíjfolyósító Igazgatóság)

Under the Agreement with Hungary, information held about customers may be exchanged between the Liaison Agencies to determine entitlement to payments under the Agreement and under either country's domestic legislation (Article 23.1).

Note: Hungary can only provide Hungarian pension details from 1 October 2012. If needed, customers will need to get details of their Hungarian pension before this, directly from the Hungarian pension fund. See Authorities, Institutions and Liaison Agencies.

For more information on bulk data exchange, see International Data Exchange Program and auto indexation of foreign pensions.

These forms are completed by Hungary and are returned to International Services (CIS)

ADATKÖZLŐ NYOMTATVÁNY - COMMUNICATING FORM (HU/AUS001)

• Section 1 - Institution
• Section 2/3 - Information concerning the insured person: provides personal details
• Section 4 - Claimant:
• SUR details only: provides personal details about the survivor
• Section 5 - Part A: details information requested by Hungary
• Section 7 - Part B: details information provided by Hungary, including Hungarian pension details
• Section 10 - Hungarian institution: certification by the Hungarian competent institution

IGAZOLÁS A MAGYARORSZÁGON SZERZETT BESZÁMÍTHATÓ IDŐSZAKOKRÓL - CERTIFICATE OF CREDITABLE PERIODS IN HUNGARY (HU/AUS205)

• Section 1 - Institution
• Section 2/3 - Information concerning the insured person: provides personal details
• Section 4 - Claimant: SUR claims only: provides personal details about the survivor
• Section 5 - Hungarian creditable periods
• Section 7 - Hungarian institution: certification by the Hungarian competent institution

Australian claims under the Hungarian Agreement cannot be lodged in any other Australian social security agreement countries.

Hungary will accept claims for Australian benefits under other Australian social security agreements. Note: the customer must also satisfy any other rules under the other agreement and other social security law provisions.

See Claim Lodgement Matrix (CLM)

Samples of forms, foreign documents and translations are available through the International Programme. See the Resources page for a link.

Disability pensions are not covered by the Agreement. However, the Agreement allows the exchange of existing medical information and to undertake medical examinations on request (Article 23.2 and 23.3).

Forms:

If needed, the Detailed Medical Report (E213) may be used. See Foreign pension medical assessments.

Any enquiries about Double coverage or certificates of coverage should be directed to the Australian Taxation Office (ATO) website.

The Agreement with Hungary includes Double coverage provisions. Certificates of coverage are used to confirm exceptions.

See Double coverage/certificates of coverage information in International Social Security Agreements.

Taxation and health insurance is not covered by the Agreement. Any queries should be directed to:

• In the other country - the tax/health authority in the other country directly
• In Australia - the Australian Taxation Office (ATO) website

For general information on taxation, including issuing Australian Payment Summaries, see the Taxation information in International Social Security Agreements.

Australia has a double tax agreement with Hungary. Pensions are only taxable in country in which the person is resident. Any tax deductions from one country may be used as a credit against any tax payable in the other country.

Tax deductions

Hungarian pensions do not usually have deductions for tax.

Hungarian tax year

Hungary generally uses the calendar year (1 Jan - 31 Dec) as the tax year.

Any queries about:

• Health insurance coverage in the other country - the customer should be directed to contact the health insurance authority in the other country, and
• Medicare coverage - should be directed to Medicare, see Medicare phone numbers

For general information on health insurance and Medicare coverage, see Health Insurance/Medicare information in International Social Security Agreements.

Australia does not have a reciprocal health agreement with Hungary.

Pensioners in Hungary usually have a health insurance deduction taken out of their Hungarian pension (Egészségbiztosítás).

The gross rate of Hungarian pension (before deductions) is maintained.

For Australia, the Agreement with Hungary (Article 2.1) covers:

• Age Pension

Note: additional child amounts, also known as Overseas Child Component and Additional Child payment, are not included in the proportional rate calculation. See Rate Calculation.

Claims for Australian payments under agreements use the same methods and processes as domestic claims. See Claims for Australian payments under International Agreements.

Forms to claim an Australian payment in Hungary can be obtained by contacting the Hungarian authorities or International Services (CIS). Forms can also be downloaded from the Services Australia website. See the Resources page for a link.

Forms needed:

For all payments:

• AUS140HU - Australian pension claim - Agreement with Hungary
• Mod(iA)HU - Income and assets - Hungarian

Forms can be lodged at any Hungarian social security office.

Under the Administrative Arrangements, the Hungarian Liaison Agency will verify the customer's identity and send the claim to CIS with a completed Liaison Form including periods of coverage in Hungary and Hungarian pension details. See the Exchange of information and liaison forms on the General information tab for the Hungarian liaison forms.

If a person is not an Australian resident and in Australia on the date the claim is made, they may use the Agreement to meet the residence rules for claims if, on that date, they are:

• an Australian resident or a resident of Hungary (Article 12(a)), and
• physically present in Australia or Hungary (Article 12(b))

The normal rules for working out the date a claim is 'made' and the start day apply to claims under the Agreement with Hungary. However, the Agreement also allows:

• the date of lodgement of a claim for an Australian payment in Hungary to be used as the date of lodgement in Australia (Article 20.2), and
• the date of lodgement of a claim for Hungarian old age pension to be used as the date of lodgement of a claim for Australian Age Pension if:
• the customer declares periods of residence in Australia on the Hungarian claim and
• the Australian claim is received in Centrelink International Services (CIS) within 12 months of the date of lodgement of the Hungarian claim

See Claims for Australian payments under International Agreements) and Start Day (CLK) for coding help.

The Agreement allows:

• totalisation of periods of qualifying Australian residence and creditable periods in Hungary to meet any minimum periods to qualify for an Australian pension , for example, 10 years for Age Pension (Article 13.1)
• the total of any non-continuous Hungarian creditable periods to be considered to be continuous to meet any continuous residence requirement to claim an Australian pension (Article 13.2)

Notes:

• Overlapping periods are only counted once (Article 13.3)
• Policy advice is that adjoining periods of Australian qualifying residence and Hungarian creditable periods, with a break of up to 3 months in between, can also be considered to be continuous

To be able to use the totalisation provisions, a person who is not an Australian resident at the date of lodgement must have at least 12 months Australian Working Life Residence (WLR) in Australia of which six months must be continuous (Article 13.4(a)). Note: unlike WLR for rate, this period cannot be rounded.

No minimum WLR is needed if the person is an Australian resident at the date of lodgement (Article 13.4(b)).

The Agreement with Hungary (Article 14.1) refers to the overall rate calculation contained in the Social Security (International Agreements) Act 1999 (S12(1)Article 12.1) but specifically excludes additional child amounts.

This means:

• customers paid under the Agreement who are outside Australia are paid a proportional rate according to their Australian Working Life Residence (WLR), and
• the Rate Limiter/Limited Rate applies

The Hungarian Agreement does not include the proportionalisation of any Hungarian pension in the income test (Randisi Concession).

Although a person may be qualified for an Australian payment or portable outside Australia, if the customer has no WLR the rate of payment outside Australia will be nil.

Note: In some circumstances, their partner's WLR may be used. See Working Life Residence (WLR).

When a person is paid a proportional rate under an agreement, Rent Assistance (RA) cannot be paid. Other add-ons such as Energy Supplement and Pension Supplement are payable under normal add-ons portability rules. See Portability of Add-ons.

Examples of when a customer is paid a proportional rate includes (but not limited to):

• permanently overseas
• temporarily overseas longer than 26 weeks for age pension
• former resident transferring to the agreement for portability

Returns to Australia:

The proportional rate continues to apply for the first 26 weeks of a temporary return to Australia (Article 14.2).

If there is no change to the country of residence, any movement is considered temporary and a review is set to automatically change the rate after a continuous period of 26 weeks. If a delegate determines that a person has changed their country of residence, coding the information on the Country of Residence (CRES) screen will automatically apply the correct rate calculation.

For returns to Australia before 9 June 2018, manually code Temporary Return to Aust Ind on the Residence Savings (RSS) screen.

Customers in Australia under the Agreement are paid a direct deduction rate (Article 14.3). That is, all Hungarian payments covered by the Agreement, including social welfare payments, are not assessed as income but will be deducted dollar-for-dollar from the maximum rate of the Australian payment before the application of the income or assets test.

Departures from Australia:

The inside Australia rate continues to be paid for the first 26 weeks of a temporary departure from Australia (Article 14.4).

Payments exempt under the Agreement are generally exempt for autonomous customers (section 8(8)(zc) Social Security Act 1991).

See Assessment and exempt payments on the Hungarian payments tab.

Under the Agreement, provided the customer remains qualified, Australian Age pension is payable indefinitely in any country provided the person remains a resident of Australia or Hungary (Article 5.1). There is no portability for a permanent departure to a third country for a customer paid under the Agreement.

If necessary, a customer receiving an autonomous payment covered by the Agreement may be able to transfer to the Agreement if they are in Hungary when their normal portability period expires. The portability under the Agreement then applies, see Portability.

Note: the customer must meet the transfer requirements.

Once a customer transfers to the Agreement, they are then considered to be paid by virtue of the Agreement and all provisions of the agreement apply, including the rate of payment. See Rate Calculation.

See Transfers to international social security agreements.

A person who has sufficient Australian qualifying residence (or an exemption) can only transfer from the Agreement to autonomous if they are an Australian resident and in Australia.

On return to Australia, system processing will automatically transfer from the Agreement to autonomous if the person is an Australian resident who has only used the Agreement to extend their portability while outside Australia,

The former resident provisions may affect customers who transfer to autonomous if they leave Australia again within 2 years of becoming an Australian resident. See Former resident provisions.

If a customer intends to be outside Australia for less than 12 months, payment will generally continue to their normal Australian bank account every 2 weeks. See Delivery of payments to Centrelink customers outside Australia.

For Australian payments made into bank accounts outside Australia, see Overseas Bank Account Details (OBAD).

• Öregségi nyugdíj - Old Age Pension (AGE)
• Hozzátartozói nyugellátás - Survivors Pensions (SUR)
• Özvegyi - (Widow/er)
• Árvaellátás - (Orphan)
• Szülői - (Parent)

The requirement to claim Hungarian pensions applies to Hungarian AGE and SUR.

Note: the requirement to claim SUR only applies to widows/ers. Customers may voluntarily claim SUR for other family members using the SUR claim pack. See Claims, forms and processes.

Hungarian creditable periods

Contributions paid by employers on behalf of employees. May also include deemed periods for child rearing, study and military service.

The Eligibility and coding tab has detailed information on Hungarian payments that are subject to CFP legislation.

Claim packs available: AGE and SUR.

Claim packs for Hungarian payments can be issued through the Foreign Pension System (FPS).

Specific requirements for Hungarian claims:

The customer is to complete and provide the following:

AGE only:

• CLAIM FORM FOR THE HUNGARIAN OLD-AGE PENSION -IGÉNYBEJELENTŐ LAP MAGYARORSZÁGI ÖREGSÉGI NYUGELLÁTÁSHOZ (AUS/HU202)
• Hungarian workbook (Munkakönyv) or other evidence

SUR only:

• CLAIM FORM FOR THE HUNGARIAN SURVIVOR'S PENSION - IGÉNYBEJELENTŐ LAP MAGYARORSZÁGI HOZZÁTARTOZÓI NYUGELLÁTÁSHOZ (AUS/HU203)
• Death certificate

Requests for Additional Information

If information provided with the claim for Hungarian pension is incomplete, Hungary will send requests for information in Hungarian direct to customers.

Return of foreign pension claim:

Under the Administrative Arrangements, Hungarian forms can be lodged in Australia at any service centre.

• All foreign pension claims and supporting documents must be scanned, and
• The original foreign claim form and (copies of) supporting documents must be sent in paper form by internal mail to International Services (CIS). See Processing a foreign pension claim

International Services (CIS) only:

CIS will complete the following and attach to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

All claims:

Australia/Hungary Agreement on Social Security - Liaison Form (AUS187HU)

For help with creating and completing the liaison form. See Agreement liaisons, NZ CICs and exchange of information.

Enquiries about claims for Hungarian payments in Hungary or a third country should be directed to the Hungarian social security authorities. See the Authorities, Institutions and Liaison Agencies on the General information tab.

Hungarian payments may be paid by direct deposit in Australia.

Any queries about the non-payment of Hungarian pension should be directed to the Hungarian pension authorities, see the Authorities, Institutions and Liaison Agencies General information tab.

Note: customers who request help with any issues about previous requirements for Hungarian pensions to be paid into a Hungarian bank account should be referred to International Services (CIS). See the Resources page for a link.

Customers receive 12 regular monthly payments. There are no bonus payments. Coded as Freq: 'MTH'.

Payments are made in AU dollars. However, foreign income must be recorded in source currency - Hungarian Forint (HUF). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

Hungarian payments are generally increased for cost of living (CPI) in January each year.

For more information on bulk exchanges of information with other countries, see International Data Exchange Program and auto-indexation of foreign pensions.

Hungarian AGE/SUR are:

• ordinary income in all cases except direct deduction if paid under the Agreement in Australia (Article 14.3)

Note: Widow/er pensions are usually paid for at least one year with continuation dependent on meeting certain criteria for example, dependent children or disability. A review must be set to check and, if necessary, zero the amount at the end of the 12 month assessment period. In Customer First, create a manual review on the Review Registration (RVR) screen and complete the fields as follows:

• Service Reason: customer's payment type
• Review Reason: OSR (Overseas)
• Due Date: 12 months from date Hungarian Survivor Pension is granted
• Source: INT
• Date of Receipt: today's date
• Notes: 'Hungarian Survivor Pension granted xx/xx/xxxx. Zero payment on FPD.'
• Keywords: IATREV
• Workgroup: leave blank
• Position: leave blank
• Transfer to Region: leave blank

The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action.

Each member of a couple is deemed to receive half of the total amount received by the couple (Article 14.5).

Note: the 26 week temporary departure and return provisions apply (Article 14.2 and 14.4).

Also, see Other known payments.

Amounts that are treated as a direct deduction under an agreement are exempt from the income test (section 8(8)(zc) Social Security Act 1991).

Note: payments that are exempt from the income test are included in a direct deduction rate, for example, under an agreement rate calculation or for Special Benefit (SpB).

There are no exempt payments under the Agreement with Hungary.

The Eligibility and coding tab has detailed information on the coding of Hungarian payments covered by the Agreement.

The Agreement does not include embargo provisions.

Arrears debts for customers and their partners are raised under s1228A Social Security Act 1991, and recovered by normal methods under the Act. See Comparable foreign payment lump sum arrears.

Note: if an arrears period is not provided, the end date can be assumed to be the end of the month before the date on the official notice or liaison form.

A contravention debt may also occur if the customer does not advise of the grant of their Hungarian payment within their notification period. See Foreign Pension coding.

Hungary issue forms to verify personal information (Nyugdíjbiztosítási adategyeztetés) each year in February.

These statements can be certified by an officer of the department.

For general information about helping customers with life certificates and other requests, see Assisting customers to maintain an existing foreign pension.

Customers in Australia are sent notices at grant, and will receive an annual statement each year.

Customers may also receive an annual request to verify personal information each year in February.

Currency

Payments are made in AU dollars. However, foreign income must be recorded in source currency - Hungarian Forint (HUF). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

Assessment: Ordinary income.

Coding: Type: 'INV' on Foreign Pension Details (FPD) screen.

Any other income from Hungary

For help with coding other generic benefits paid by the Hungarian Government (including by funds not covered by the Agreement), see Foreign Pension coding.

For help with any other income received from Hungary, see Foreign income and assets.