The European Union regulated the EU rules concerning the performance of activities and supervision of legal entities offering occupational retirement provisions in the 2003/41/EK Directive of the European Parliament and the Council of Europe. (Directive of the European Parliament and the Council of Europe 2003/41/EK (3rd June, 2003.) about the activities and supervision of institutions for occupational retirement provision).
In the developed Western States of the EU, these kinds of occupational retirement provisions appeared several decades ago. Today most of the corporations and organisations possess this type of pension programs.
In Hungary, the voluntary mutual pension fund structure (third pillar) developed first in the 1990s, then later the mandatory private pension fund system (second pillar) with the aim to supplement pensions provided by the state social security pension system. However, the occupational payments, as employer contributions paid to pension funds functioning as a part of the pillar system, are not considered as occupational retirement programs according to the EU directive mentioned above, and thus domestic pension funds – just like pension related insurances – cannot be considered institutions for occupational retirement provision (also known as IORP) either.
On the basis of EU directive, the Hungarian Parliament has introduced an Act on occupational retirement provisions and the institutions (Act CXVII. 2007.), providing the corporations and organisations operating in Hungary to establish occupational retirement programs according to EU directive.
According to Act CXVII. 2007., QUAESTOR Foglalkoztatói Nyugdíjszolgáltató Zrt. is the first and only occupational retirement provider (IORP) in the Hungarian market that can establish and operate customizable, defined contribution pension schemes for the joining employers.
In a defined contribution (DC) plan the employer, employee or both make contributions on a regular basis. Individual member’s accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employer contributions and, if applicable, employee contributions) plus any investment earnings on the money in the account.
By joining QUAESTOR Foglalkoztatói Nyugdíjszolgáltató Zrt., employers can develop such pension schemes for their employees that really function as corporate retirement programs, or can even be suitable for mapping pension programs of international corporations.
By applying the vesting period – which may bound the employer contributions to the number of years spent in employment – a new opportunity has been revealed for employers, which is neither involved in local voluntary mutual pension funds, nor in pension insurance schemes and can enhance the retention and motivation of employees in the long term.