From ideal point system to human capital based pension system – a potential transition

Abstract

In my paper published in the autumn of 2023, I wrote about how the current Hungarian pension system could be transformed into an ideal point system, for which the German pay-as-you go point system would serve as a model, but I suggested `improving' it at some details. In this study, I have indicated only briefly that, although the implementation of an ideal point system would be an ambitious undertaking in itself (but one that would be worthwhile), for me it is not the goal to be achieved, but a human capital based pension system, the many details of which I have already explained in several places. In this article, I show that the ideal point system is a good basis for the human capital based scheme, and that it is relatively easy to move from it. Of course, the underlying considerations are not simple, as we will see here.