The government has rewritten the rules of the Baby Bond

It was published in the Magyar Közlöny Viktor Orban decree signed by the Prime Minister, effective from Tuesday, which overrides the law on youth start-up support with reference to the state of emergency.

From February 13, a maximum of HUF 1.2 million per year can be paid into Start accounts.

The restriction according to the new rule must be applied to payments made after the entry into force of the regulation in 2024.

Bank360 reminds you that currently the Baby Bond is the highest-interest government bond, its annual interest rate is the value increased by 3 percent of the previous year’s inflation, i.e. 20.6 percent this year, which far exceeds even the yield of the best inflation-tracking Premium Hungarian State Bond (PMÁP). This is the only government bond whose current yield has risen above 20 percent due to the outstanding interest premium.

Up until now, there was no upper limit to the amount that could be deposited into the Start account, the better-off could buy a baby bond for even millions, which was a particularly attractive option since the rise in inflation. For every child born after December 31, 2005, the state gives HUF 42,500 start-of-life support, which is deposited in a deposit account with a minimum interest rate in the Hungarian State Treasury. In order for this starting amount to be transferred to an account in the child’s name, to earn interest in Baby Bonds, a Start-securities account must be opened. If this has been done, additional amounts can be paid for the purchase of baby bonds, which is automatically done from the amounts credited to the account. The annual payments are accompanied by a state subsidy corresponding to 10 percent, but with a maximum amount of HUF 12,000. Payment from the Start account can only be requested after the child turns 18, at the earliest after the third year after opening the account, and upon the expiration of the 19-year Baby Bond.

In December, the government announced that more than 340,000 children had their parents or relatives open Treasury Start securities accounts, or Baby Bonds. Around HUF 270 billion were registered in the Start accounts at the time.

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