Hungarian Federation of Mutual Funds

Legal Basis of the Federation's Activity

A Hungarian Federation of Mutual Funds was formed as an Association according to the right of assembly described in the Civil Code. The Federation functions according to society regulations determined in the 1993. Act on the Voluntary Mutual Insurance Funds:

Chapter V.
The Federation of Funds

§ 52

      (1) The Funds may set up a federation (federations) to represent. their collective interests and for implementing their common goals.

      (2) The federation is a social organization operating as a legal entity

      (3) The federation may issue professional recommendations for the operation of Funds.

      (4) The Funds may set up through the federation a guarantee fund in order to ensure their solvency and the safety of their services, and a general fund to equalize the differences between the levels of services and the population cocered, to promote the transfer of fund-members among Funds as well as for implementing further tasks defined in the present act.

      (5) The guarantee fund and the general fund may be operated by agreement among the Funds concerned.

The History of the Federation

Preceeding the enactment process, many health care financing societies had been established, which set up their own associations. The Federation joined the AIM, and with the help of its international relations and "know how" took part in the enactment process. Following the 1993. Act on the Voluntary Mutual Insurance Funds, the Federation assumed its present name and extended its sphere of authority and activity on funds.

The result is that members of the Federation may be mutualities, which can be established according to three different legal regulations:

- Mutual Benefit Funds based on the Civil Code, which are under the supervision of the Prosecution
- Insurance Funds formed according to the Insurance Law, which function under the supervision of the Insurance Supervisory Office
- Voluntary mutual benefit funds and private funds, which are established according to the Act on the Voluntary Mutual Insurance Funds, and their function is supervised by the State Private Funds Supervision.

The Federation has about 60 member organisations, and represents 400.000 individuals.

The Federation has four sections, each of them being managed by an elected president:

- Health Funds Section
- Voluntary Mutual Funds Section
- Pension Funds Section
- Association Section

The Federation's International Activity

The relations developed with international organisations are of utmost importance in the life of the Federation. These relations were a suportive background for the Federation in the enactment process, in establishing and organising member organisations, in advising member organisations, in training professionals, in communication of the Federation, respectively to use different international legal, educational and organisational materials. The international relations and projects are as follows:

The effect of the Mutualité Francaise is determining in the life of the Federation, as this organisation offerred to train on two occasions the experts of the Federation in 1990.
This training lead to the initiation of the enactment process. The French principles thus reached the Hungarian legislations, and consequently are asserted in the Hungarian Law.

United Nations Development Program. The UNDP supported and financed with three subsequent projects the restructuring of the social security, the establishment of health funds, the forming of their health provision and the institutionalisation of preventive activity within the framework of funds. The main focus of the last UNDP projects was social communication and intervention.

The Flemmish Government and British Government, each in one project supported the development of educational material, various teaching aids, and provided the respective "know-how".

The Hungarian Federation of Mutual Funds has organised four international conferences. The aims of these conferences made clear the importance of asserting the French principles concerning mutualities in the field of health and pension financing in Hungary.
Partly, due to these conferences, the health and pension financing organisations were established as nonprofit civil organisations based on mutuality and individual assembly (similar to an association).

The Pressure Group Activity of the Hungarian Federation of Mutual Funds

The Act on the Voluntary Mutual Insurance Funds, respectively its alterations and related decrees were initiated and influenced by the Hungarian Federation of Mutual Funds.

The Hungarian Federation of Mutual Funds had an impact in the process of enactment on private pension funds, and had significant role in harmonising interests of different pressure groups.

In 1999 the Hungarian Federation of Mutual Funds lobbied successfully for preserving the unity of the social security, and maintaining the tax benefits for voluntary funds.

In 1998 the Hungarian Federation of Mutual Funds developed the Ethical Code for funds, and managed to have the organisation representing all funds accept and adhere to it. The Federation has been able to cooperate and act in agreement with fellow organisations.

The Information and Educational Activity of the Hungarian Federation of Mutual Funds

The legislations imposed requirements and qualifications on the status of managers, actuaries and investors in voluntary and private funds. In order to obtain these qualifications, the Hungarian Federation of Mutual Funds took a mediating role in validating one postgraduate and two postsecondary course in education. The professional training of the sphere of funds has been carried out with the cooperation and contribution of the Hungarian Federation of Mutual Funds.

The Hungarian Federation of Mutual Funds issues a Newsletter quaterly. These Newsletters were issued in English and German in the past, but lately the Federation has had to renounce their translations for financial reasons.

The Federation organises professional meetings each month. During these meetings the Federation cooperates with the enterprises of the software market, and in classification of software used by funds.

Starting from the year 2000 the Hungarian Federation of Mutual Funds will become a member representative of the Directory Board of private funds' guarantee fund.

The Organisational and Advising Activitly of the Hungarian Federation of Mutual Funds

Within the framework of the UN Development Programme the Federation participated actively in making the notion of mutual help known, and spreading information on the activity of funds as organisational forms of mutual help e.g. by conducting a survey, preparing media materials and by being continuously present in the media.

The Federation has had guidelines of evidence based preventive medicine developed, and circulates these guidelines among health funds, thus enhancing the development of cost-effective services.

The Federation actively participates in the establishment of most health funds by advising, organising the Founders' Assembly and occasionally providing financial support within the framework of projects.

Summary

The Hungarian Federation of Mutual Funds cannot be considered the top organisation of health and pension funds according to its legal status. Yet its function and activity has been determining in the process of forming the character of funds and funds related professions, respectively the safeguarding of funds' interests.