Monday, January 3, 2011

Europe Starts Confiscating Private Pension Funds

"The last official act of any government is to loot the treasury.”

~ George Washington

Mark Hemingway, WashingtonExaminer.Com:

The U.S. isn't the only place that's facing a major pension fund crisis. The Christian Science Monitor has this alarming report:

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The article goes on to detail other pension grabs in Bulgaria, Poland, France and Ireland. Obviously, this is a cautionary tale for America. If fiscal austerity becomes a real issue in the U.S. the way that it's been reaching critical mass in Europe -- don't think that U.S. lawmakers regard your either your personal wealth or money they might owe you as sacrosanct. Government has a habit of looking out for itself.

Read more at the Washington Examiner:

Think it can’t happen here?  Think again!

here's part of an article on some Congressional testimony from 2008 (just after the election):

"George Miller (D-California), the chairman of the House Committee on Education and Labor, suggested that 'high-income' earners be no longer allowed to make tax-deferred 401(k) contributions. Miller has since back-pedaled on this notion, and nothing has been put in the form of legislation yet. So the spotlight has now shifted to a proposal by the star witness at the hearing, an econ professor at The New School in New York named Teresa Ghilarducci.

"She’s unveiled the plan in conjunction with the left-wing Economic Policy Institute; it’s available in .pdf form on EPI’s website. The gist of it is this:

"1) Wipe out the tax-deferral feature of 401(k)s because it’s mostly the 'wealthy' who enjoy that feature.

"2) Force everyone to contribute 5% of their income to a 'Guaranteed Retirement Account' (GRA) which invests entirely in government bonds and returns an inflation-adjusted 3% a year. Half of this 'contribution' would come from you, half from your employer. It would be on top of whatever you 'contribute' to Social Security. In exchange for losing the tax advantages of your 401(k) contribution, the government would graciously kick in an extra $600 a year to your GRA. As Mrs. Bakerman said on The Bob Newhart Show, 'Isn’t that nice?'

"As awful as all of this is, confiscating existing 401(k) balances and converting them to GRAs is not part of the plan. Not now. In her prepared testimony to Congress, Ghilarducci said:

"'Short term, I propose that since 401(k) accounts and the like are financial institutions — the bank about where 38% of the workforce can intend to save for their retirement — Congress let workers trade their 401(k) and 401(k) – type plan assets (perhaps valued at mid-August prices) for a Guaranteed Retirement Account.'

"Short-term, then, this is voluntary. But long-term? That’s the problem. Everything about this has a slippery-slope vibe that means you can’t preclude the possibility of a forcible conversion of 401(k)s to GRAs. And yes, if that were to happen, if everyone’s stock and bond holdings were liquidated in one fell swoop and switched into Treasuries, Dan Amoss is absolutely right — that would bring on a government-guaranteed depression."

Folks, if it happens here (and it may well under this Socialist/Marxist Administration) there are a whole bunch of politicians that will literally pay with their heads.

1 comment:

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