Government Speaker’s Statement

1. Act now, for everybody Respect for the elderly! Government Decision on Supplementary Pension Increase 24 September 2003 Government Speaker’s Statement

2. Act now, for everybody Supplementary pension increase At today’s meeting the Government decided on increasing the amount of pensions and pension type benefits by yet another 2.2 % in November, with retroactive effect on the first eleven months of 2003. The increase will cost some HUF 38.8 billion to the state budget. • The pensions paid to almost 3 million pensioners will increase by an average of HUF 1,1000 per month (by a total of HUF 13.200 over the whole of the year). The increase of the pensions will result in HUF 36.8 billion extra expenditure. • Pensioners will receive the increased amount of pension in November. • The amount of the increase on the first ten months will also be paid out in November in a lump sum, equalling an average of HUF 11.000. • In addition to the pension the Government is also increasing the amount of the pension-type regular welfare benefits – for over half a million recipients – by 2.2 % (or an average of HUF 400 a month and HUF 4,800 for the whole of the year), which will cost another HUF 2 billion. • Those entitled to the benefit will receive the increased amount of the annuity. • The HUF 4,000 average amount of the increase covering the first ten months of the year will also be delivered in November. Government Speaker’s Statement

3. Act now, for everybody Increase of regular pension-type welfare benefits Government Speaker’s Statement

4. Act now, for everybody The reasons for and the rate of the pension increase introduced in November Based on the pension act the rate of the increase of pensions in January shall be established on the basis of the planned growth of net earnings and of consumer prices. In the month of November each year the rate of the pension increase is adjusted in view of the actual data on the first half of the year, if such data differ from the planned figures.. • In January 2003 the 8.4 % increase of pensions was established in view of a 11.8 % expected increase of net earnings and a 5 % expected increase of consumer prices. These lead to a 3.2 % increase of the real value of pensions. • The 2.2 % supplementary increase introduced in November is justified by the higher than planned increase of earnings, instead of a faster than expected growth of consumer prices as was the case in earlier years. Together with the supplementary pension increase the real value of pensions increases by a total of 5.7 %. In view of the past months of this year in 2003 • Consumer prices are expected to increase by 4.8 %, while the price increase calculated on the basis of pensioners’ consumption patterns will fall below the average increase. • Net earnings, however, increase faster than expected at the beginning of the year, by about 16-17 %. • On the basis of the 16-17 % increase of net earnings and the 4.8 % average price increase pensions should increase by 10.8 % this year. This will be guaranteed by the 2.2 % additional increase of pensions on top of the amount increased in January. Government Speaker’s Statement

5. Act now, for everybody Additional pension increases in November Taking into account the amount just increased, in November 2003: • The introduction of the 13th month pension will commence. In the month of November pensioners will receive one quarter of their increased monthly pension the 53rd week pension. The average amount of this benefit will be HUF 13,000, resulting in an additional 2.1 % annual increase of the amount of pensions. • The survivors’ pension paid to recipients of such benefit in addition to their own pension benefits will increase from 20 % to 25 %: • the pension benefits paid to a total of 580,000 widows and widowers will increase • by an average of HUF 3,000. The average of 12,000 survivors’ pension will amount to HUF 15,000 in the wake of the current supplementary increase. Government Speaker’s Statement

6. Act now, for everybody Pension Increase in 2003 As a combined result of the pension increases introduced in January and November the average amount of old age pensions increases by 10.8 % in 2003 – an average of HUF 5,000 per month. The annual revenues of pensioners will be increased by another 2.1 % in the form of the 53rd week pension, as a consequence of which a pensioner living on an average amount of pension benefit will be able to spend by almost 13 % or HUF 73,000 in 2003, than one year before. The almost 600,000 recipients of survivors’ pensions in addition to their own pension benefits will receive an even higher increase – almost HUF 97,000 - for the survivors’ pension benefit will increase by an average of 24,000 a year. In view of the expected 4.8 % growth of consumer prices the real value of pensions increases by 7.7 % in 2003. Increase of the average old age pension in 2003 Government Speaker’s Statement