Social contribution tax on pension insurance gains: old policy, top-up account, payout

People who took out their pension insurance before summer 2023 often believe that their policy is “under the old rule” and is therefore not affected by the social contribution tax (szocho) on interest income introduced in 2023. This is true for regular premiums – and not true for payments made into the top-up account since then. And those who do the numbers before closing a policy often reckon only with the 15% personal income tax, not with the 13% szocho. As a broker, I see that these two misunderstandings lead to most poor surrender decisions. In this article, we set out the source of the rule, the dividing lines and the cases in which a payout is tax-free – without premium figures and without promises.

What is interest income from insurance, and when does it arise?

Under Section 65(1)(d) of Act CXVII of 1995 on Personal Income Tax (Szja tv.), the part of an insurance payout that exceeds the premiums paid is interest income, subject to 15% personal income tax – but only if the payment is not made on a tax-exempt basis. For pension insurance, in practice this means surrender and partial surrender. The same section also provides relief: for regular-premium contracts, half of the interest income is exempt from tax after the 6th year and all of it after the 10th year; for single-premium products, the corresponding periods are 3 and 5 years. According to insurers' tax information sheets, top-up premiums are taxed separately from the regular premium, as single-premium insurance: the 3- and 5-year rule applies to them, and the years elapsed are counted separately for each payment, from the date of payment. The full bill for a surrender is set out in the itemised article, and the logic of the 6- and 10-year limits in the 10-year rule.

The 2023 rule: where did it come from, and where does it stand now?

The social contribution tax on interest income was introduced by Government Decree 205/2023 (V. 31.) as a state-of-danger (emergency) rule from 1 July 2023, at a rate of 13%. According to the January 2026 information booklet of NAV (the Hungarian tax authority), the rule is now set out in Section 1(5)(f) and Section 36/H of the Social Contribution Tax Act (Szocho tv.) – insurers' tax information sheets refer to it being written into statute in 2024 – so it is no longer a temporary item. The tax is determined and deducted by the payer, i.e. the insurer, at the time of payment, and NAV's booklet specifically points out that the ceiling on tax payment does not apply to interest income. The base is the same as for personal income tax, so the 6- and 10-year relief also reduces the szocho proportionately. There are exceptions too – for example retail government securities, investment units of real-estate funds and the interest on the Babakötvény (baby bond) – but savings-type life and pension insurance is not among them.

Old policy, new payment: the dividing line

The rule distinguishes by the date the contract was concluded. No szocho is payable on interest income from a contract concluded before 1 July 2023; for a contract concluded on or after 1 July 2023, all interest income is subject to szocho. The trap is the case in between: the tax information sheets of several Hungarian insurers interpret the rule as meaning that gains on payments made into the top-up (extraordinary) account of an old contract after 30 June 2023 already fall under the new rule – and since a top-up premium counts as single-premium insurance for tax purposes, the clock for the 3- and 5-year relief starts on the date of payment for these. The regular premium and indexation under the policy conditions typically remain under the old regime, but this – and the classification of any voluntary premium increase – is worth checking in your own insurer's tax information sheet, because record-keeping differs from insurer to insurer. So if, among the flexibility tools, you use top-up payments on a 2019 contract, a 2024 top-up premium will already attract two taxes if you touch it early. This is not an argument against top-up payments – if you stay the course to the pension goal, gains on the top-up account also arrive as a tax-exempt pension benefit – it is simply a sign that the top-up account is not a place to park money for the short term. Insurers keep separate records of payments falling under the old and the new regime and calculate the deduction accordingly at payout; the individual has no tax-return obligation in this respect, as the tax is deducted by the payer.

Not on the pension benefit – but on surrender

This is where the essence of pension insurance becomes tangible. If the policy ends with an insured event under Section 3, point 93 of the Szja tv. – retirement, reaching the retirement age applicable at inception, or a health impairment of at least 40% – the benefit is tax-exempt under point 6.6 of Annex 1 to the Szja tv.: there is no personal income tax, and since the base of the szocho is interest income as defined for personal income tax, there is no szocho either. The death benefit is also tax-exempt. By contrast, on early surrender four items appear at once: repayment of earlier credits increased by 20% under Section 44/C(8) of the Szja tv., 15% personal income tax on the interest income, 13% szocho on the affected portion, and the deduction under the surrender table set out in the policy conditions. These four items have to be weighed against what keeping the policy – even with a reduced premium – would give you; the details are supplemented by the article on the taxation of payouts.

What should you do before deciding?

• Ask the insurer for an itemised statement: the surrender value, the amount of interest income and, separately, the portion subject to szocho – this is in the insurer's records, and it is not worth estimating.
• For an old policy, look at the history of the top-up account: payments made after 30 June 2023 are taxed differently from the regular premium.
• Go through the alternatives one by one: premium reduction, premium holiday, conversion to a paid-up policy – these are not taxable events; surrender is.
• Have your accountant review the figures too; I help where I can in comparing the policy's options.

The szocho does not change the basic logic of pension insurance: if you stay the course to the goal, you receive the benefit without tax; if you exit early, since 2023 you have had to reckon with one more item.

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Sources

• NAV information booklet No. 49: The social contribution tax (16 January 2026) – interest income, Szocho tv. Section 1(5)(f), Section 36/H
• Government Decree 205/2023 (V. 31.) on the different application of the social contribution tax (the introducing rule; repealed with effect from 1 August 2024, its content continues in Section 1(5)(f) and Section 36/H of the Szocho tv.)
• Hungarian Government information on the social contribution tax payable on certain interest income
• Personal Income Tax Act (Szja tv.) Section 65, Section 44/C(8), Annex 1 point 6.6 (Act CXVII of 1995)
• UNIQA tax information 2025 (top-up premiums on old contracts, incorporation into statute)
• MetLife tax information (tax exemption of the pension benefit, 6/10-year relief)
• NN Biztosító: How does the social contribution tax affect savings-type life insurance? (top-up premiums: relief after 3 years, exemption after 5)
• Alfa tax information 2025 (social contribution tax on top-up premiums paid after 30 June 2023 into life insurance concluded before 1 July 2023)

Related articles

• The consequences of surrender: the full bill, itemized
• Taxation of the payout: what the rule says, and what your accountant says
• The 10-year rule: why does the contract's age matter?