At first glance, an employee’s retirement may seem primarily a personal matter. However, much of the information required to determine pension eligibility is generated during the employment relationship. As a result, employers also play an important role in ensuring that periods of service and earnings can later be properly verified.
This is important not only when someone retires directly from your company. It is not uncommon for an employer to be asked years or even decades later to provide information about a former employee or to verify a previous employment relationship and the related income.
For this reason, managing directors should not focus solely on the records of current employees. Proper retention of historical HR documentation, accurate reporting, and arrangements for document preservation in the event of company dissolution are equally important.
When Does Someone Become Entitled to an Old-Age Pension?
Under Act LXXXI of 1997 on Social Security Pension Benefits (the Hungarian Pension Act), a person is entitled to a full old-age pension if they:
- Have reached the applicable retirement age; and
- Have completed at least 20 years of service.
A person who has reached retirement age but has completed only at least 15 years of service may be entitled to a partial old-age pension. However, the length of service and the earnings forming the basis of the pension calculation significantly influence the amount of the pension benefit.
Retirement Age in Hungary
- Born in 1952: 62 years + 183 days
- Born in 1953: 63 years
- Born in 1954: 63 years + 183 days
- Born in 1955: 64 years
- Born in 1956: 64 years + 183 days
- Born in 1957 or later: 65 years
Accordingly, in 2026, employees born in 1961 reach the old-age retirement age on their 65th birthday.
It is important to note that since 26 July 2018, termination of employment is generally no longer a prerequisite for the granting of an old-age pension. Employees may therefore apply for and receive an old-age pension while remaining employed.
Determining when an employee becomes eligible for retirement is not the employer’s responsibility. The employer’s task is to ensure that employment, earnings, and contribution records are accurate, retrievable, and verifiable when needed.
Why Are Historical HR Records Important?
Eligibility for a pension and the amount of the pension are primarily determined by two categories of data:
- The length of recognized service time.
- Earnings and income that form the basis of pension calculation.
Both categories arise during employment. Relevant records may include:
- Documents evidencing the commencement and termination of employment;
- Payroll statements and wage records;
- Social security contribution records;
- Employment certificates;
- Exit documentation issued upon termination;
- Historical paper-based social security booklets (TB booklets);
- Any other documents proving service time or pensionable earnings.
Employers may receive requests for information even long after an employee has left the company. Missing employment periods, inaccurate dates, or incomplete earnings data may delay pension assessments and affect the amount of the pension granted.
How Long Must Pension-Related Employment Records Be Retained?
According to Section 99/A of the Pension Act, employers must retain employment records, data, and certificates relating to periods of service and pensionable earnings for current and former insured persons.
However, the special long-term retention obligation linked to retirement age currently applies only to documents and data generated up to 31 December 2024.
These documents must be retained until five years after the employee reaches the applicable retirement age.
Example
If an employee was born in 1975, they are expected to reach retirement age in 2040 under the current rules. Pension-related employment records created by 31 December 2024 must generally be retained until 2045.
This example illustrates that the obligation may require preserving records for several decades.
What Rules Apply to HR and Payroll Records Created from 2025 Onward?
The special retention rule requiring preservation until five years after retirement age no longer applies to documents created on or after 1 January 2025.
However, this does not mean that HR and payroll documents generated from 2025 onward may be immediately deleted or destroyed.
Other legal requirements remain applicable. For example:
- Accounting documents must generally be retained for at least eight years.
- Certain HR documents may need to be retained in light of employment law limitation periods.
- Personal data may only be retained as long as there is a legal basis and legitimate purpose for processing.
Businesses should therefore distinguish between:
- Pension-related records created by 31 December 2024 that require long-term retention;
- Payroll and accounting records created from 2025 onward;
- General employment law documentation;
- Personal data for which no further legal basis or purpose for processing exists.
Document retention policies, privacy notices, and archiving practices should be updated accordingly.
What Happened to the Paper-Based Social Security Booklet?
From 1 January 2026, maintaining the traditional paper-based TB booklet became obsolete and was replaced by the electronic e-TB booklet system.
The electronic system contains information relating to:
- Insurance relationships;
- Social insurance cash benefits;
- Occupational accident sick-pay benefits.
However, this change does not mean that existing paper-based TB booklets can simply be discarded.
The Employer’s Responsibilities
The paper-based TB booklet:
- Must be handed over to the insured person no later than upon termination of employment;
- Should be transferred in a verifiable manner;
- Should be acknowledged by a signed receipt if delivered personally;
- Should preferably be sent by registered mail with proof of delivery if mailed.
If delivery is not possible, for example because the former employee cannot be contacted, the employer must retain the booklet until five years after the employee reaches retirement age.
What Happens if the Company Is Dissolved Without a Legal Successor?
The obligation to retain records does not automatically disappear when the company ceases operations.
If an employer is dissolved without a legal successor, arrangements must be made for the secure storage of all employment records that remain subject to retention requirements. The location of these records must be reported to the competent pension administration authority.
Therefore, before liquidation or another form of dissolution, managing directors should not focus solely on accounting records. Employment, payroll, and pension-related documentation concerning former employees must also be reviewed and properly archived.
The records must remain genuinely retrievable. Simply knowing the theoretical storage location is not sufficient if no person or service provider can actually identify and provide the requested documents when required by the authorities.
What Are the Consequences of Non-Compliance?
Under Section 91 of the Pension Act, a default penalty may be imposed if an obligated party:
- Fails to comply with reporting obligations;
- Does not maintain the required records properly;
- Fails to provide data, or provides it late;
- Does not comply with legal requirements in the prescribed manner;
- Fails to cooperate in pension administration procedures.
The penalty may range from HUF 50,000 to HUF 500,000, and repeated violations within one year may result in fines of up to HUF 1,000,000.
When determining the amount of the penalty, the authority may consider the severity, frequency, and circumstances of the violation.
In practice, however, an even greater issue may arise if missing records delay a former employee’s pension claim or force them to prove employment history and earnings through lengthy evidentiary proceedings.
Managing Director’s Checklist
1. Do official notifications match the actual employment relationship?
Review employment start and end dates, personal data, salary information, and contribution records. Outsourcing payroll or reporting obligations does not necessarily eliminate employer liability.
2. Are records created up to 31 December 2024 properly segregated?
These documents may be subject to particularly long retention periods and should not be destroyed under a standard retention policy.
3. Can records relating to former employees be easily located?
Records should ideally be organized by employee, employment relationship, and year. Electronic archives should ensure readability, access control, backup procedures, and long-term retrievability.
4. Has the handling of paper-based TB booklets been resolved?
Maintain records of which booklets have been handed over and which remain in company custody, together with evidence of transfer.
5. Is current practice aligned with data protection requirements?
Long-term retention requires an appropriate legal basis and documented retention periods. Access should be limited to those whose duties require it.
6. Was a complete transfer of records performed when changing payroll or accounting providers?
Transfer documentation should include payroll databases, tax filings, employment certificates, exit documents, and paper-based records. Relying on a former service provider to keep everything indefinitely may create significant risks.
7. Has a record storage location been designated in case of company dissolution?
This issue should not be left until the last moment. The company should determine who will store the records, where they will be stored, and how they can be retrieved, while ensuring compliance with all notification obligations.
Conclusion
A well-designed HR and payroll records management system is far more than administrative housekeeping. It protects both the employee’s future pension entitlement and the business itself from regulatory, data protection, and legal risks.
This article is intended for general informational purposes only and does not constitute personalized legal, social security, or pension advisory services.
