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Extending the Premium Years Programme to the Business Sector

Country of implementation
Hungary
General short description of the innovation
The possibility of gradual retirement in the framework of the Premium Years Programme was extended to the private sector from October 1, 2005. To take part in the programme, employees need to have an employment record of at least 25 years and be within 3 years of retirement age. The employer agrees to provide part-time work of at least four hours/day.
Target group
Older Workers
Policy Field
  • pension
Type of Policy
  • public
Duration of the policy
2005-2009
Scope of innovation
  • Scope: temporary
  • Spatial coverage: national
General description of (intended) objectives and strategies
The possibility of gradual retirement in the framework of the Premium Years Programme was extended to the private sector from October 1, 2005. To take part in the programme, employees need to have an employment record of at least 25 years and be within 3 years of retirement age. The employer agrees to provide part-time work of at least four hours/day. As for his or her part the employee agrees to renounce the severance payment and to receive a monthly salary reduced according to the working time. Given the fact that employers need to ?nance part-time wages, it is left to the discretion of the employer to introduce the programme. / The Ministry of Employment and Labour regulation gives the possibility to the participants of the Premium Years Programme to retire under the same conditions as full-time employees. The employment sub-fund of the Labour Market Fund supplements the pension contributions up to the level of the full-time salary. Therefore, part-time employment has no negative impact on the amount of the future pension of the participants of the Premium Years Programme. Supplementary pension contributions can be granted for employers in case when the Premium Years Programme involves 10% of the workforce but at least 5 people and at the same time they: / ? carry out a restructuring involving either the upgrading of the produc-tion or the introduction of new services, and which involves the job of at least 30 employees, or / ? hire new workers and as a result the headcount increases by 10% but by at least 5 people. / / / http://econ.core.hu/file/download/HLM2005/TheHungarianLabourMarket_2005_onefile.pdf, p220 /
Nature of the innovation-short-term perspective
Gives a fair opportunity to older workers to retire gradually
Nature of the innovation-long-term perspective
Maintain older workers on the labour market
Type of innovation
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • leave schemes (fair opportunity to older workers to retire gradually)
Intended target group
Older workers
Working age population
  • main source of income: paid work
Employers-private institutional actors
companies
Actors involved in policy-making/implementation and/or evaluation
  • agency or national social insurance body (local job centers)
  • beneficiaries/users (older workers)
  • central state (financing)
Clarification of the role of various actors
Employers who bene?t from the programme sign a contract with the job centre, and their compliance is checked regularly. If an employer is found guilty of breaching the terms set out in the contract, the job centre informs the Employment O?ce and the subsidy is terminated.
Intended output
  • leave schemes (fair opportunity to older workers to retire gradually)
Did the innovation have any outcome related to job quantity?
lay-off costs distributed over 3 yearsmaintained
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The extended Premium Years Programme gives a fair opportunity to older workers employed in the private sector to retire gradually. / The prolongation of the transition between working life and retirement on the one hand is positive for the employee, but on the other hand it is also favourable for companies because the costs of lay-o?s are distributed over a three-year-period and do not incur all at once as would be the case with normal redundancy and severance payments. Despite being based on a part-time employment, the Premium Years Programme gives the possibility to the participants to retire under the same conditions as full-time employees. /
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