Just like Ireland with their recent bailout agreement, Hungary has also stolen the savings of the workers by using the pension fund cash to pay current pensions in order to reduce this years government deficit.

How that helps future years spending levels is beyond me but is probably one of the reasons why Hungary’s debt was downgraded today.

ZeroHedge has the following :

As America continues to keep its head firmly planted in the sand, if not somewhere much worse, Europe is falling apart. Hungary was just downgraded by Fitch to BBB-, and still kept its rating outlook negative, meaning the country is about to enter junk territory. And what is sure not helping is the record strength of the CHF, which is making life for borrowers in Hungary a living hell, whose debt is denominated primarily in Swiss Francs.

Whilst Bloomberg continues (emphasis mine) :

Orban’s plans “go in the wrong direction for further fiscal consolidation,” Fitch said in a statement. “The reversal of pension reforms and lack of a coherent medium-term fiscal strategy undermines confidence in the long-term sustainability of the public finances.”

…

With 3 trillion forint ($14.2 billion) in private pension fund assets, Hungary is following the example of Argentina, which in 2001 confiscated pension savings before the country stopped servicing its debt. The government in Buenos Aires nationalized the $24 billion industry two years ago to compensate for falling tax revenue after a 2005 debt restructuring.

…

“We are now only a step away from the abyss,” Gyorgy Barta, a Budapest-based economist at Intesa Sanpaolo SpA, said in a phone interview today.

Prime Minister Viktor Orban is bringing private pension funds under state control and imposed special taxes on banking, energy, telecommunications and retailing to narrow the budget gap below the European Union limit of 3 percent of gross domestic product next year and balance income tax cuts. Hungary is the EU’s most-indebted eastern member, with public debt estimated at 79 percent of GDP this year.

Elected in April on a pledge to end five years of austerity after the worst recession in 18 years, Orban plans to use the retirement fund assets to pay current government pensions and reduce debt as he seeks to cut the budget deficit.

As for why they are not “doing a Greece” there yet, a couple of comments at ZeroHedge probably cover it :

So they come for private pensions.  This act will not be lost on other workers and investors as the financial conditions in other EU states deteriorate.

…

If you surround the confiscation message in populistic socialistic rhetoric, the masses will support the measure wholeheartedly.

The rest of us are screwed.

Indeed.