Europe starts confiscating private pension funds

[Ares]

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.

http://washingtonexaminer.com/blogs/beltway-confidential/2011/01/europe-starts-confiscating-private-pension-funds#ixzz1A1X4u8Tt

[chad]

bump.

[Twisted Titan]

http://www.csmonitor.com/Business/The-Adam-Smith-Institute-Blog/2011/0102/European-nations-begin-seizing-private-pensions




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 Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

A slightly less drastic situation is developing in Poland. The government wants to transfer of 1/3 of future contributions from individual retirement accounts to the state-run social security system. Since this system does not back its liabilities with stocks or even bonds, the money taken away from the savers will go directly to the state treasury and savers will lose about $2.3bn a year. The Polish government is more generous than the Hungarian one, but only because it wants to seize just 1/3 of the future savings and also allows the citizens to keep the money accumulated so far.

The fourth example is Ireland. In 2001, the National Pension Reserve Fund was brought into existence for the purpose of supporting pensions of the Irish people in the years 2025-2050. The scheme was also supposed to provide for the pensions of some public sector employees (mainly university staff). However, in March 2009, the Irish government earmarked €4bn from this fund for rescuing banks. In November 2010, the remaining savings of €2.5bn was seized to support the bailout of the rest of the country.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

It looks like although the governments are able to enforce general participation in pension schemes, they do not seem to be the best guardians of the money accumulated there.

The table below is a summary of the discussed fiscal-retirement situations (source):

*These figures do not include the costs of higher taxes, price inflation and low interest rates, which additionally devaluate retirement savings.

[Twisted Titan]

Holding Several Peace Dollars in my Right hand I say to myself.


So this is what it feels like to be a Prophet and Live to see your words fufilled

[vacuum]

This is actually somewhat good news...it means we've still got time. Just something that still has to happen here before other things happen.

[Twisted Titan]

The Hungarian government Wednesday approved a set of measures to force Hungarians back into the state’s pension scheme and make life more difficult for any surviving private pension funds. The measures are aimed at helping the country meet strict budget deficit targets set by the European Union.

Those Hungarians who decide not to return fully to the state’s pension scheme from their private pension funds will lose their right to the portion of the state pension they would have received based on future contributions, Economy Minister Gyorgy Matolcsy said.

Hungarians will have until Jan. 31, 2011, to decide whether they opt to return fully to the state’s pay-as-you-go pension regime. Only the private pension fund members who wish to remain in their respective pension funds will need to express their wish. Those who don’t do that will automatically return to the state scheme.

“They have two options: they either stay or decide to return, [and] both decisions have their consequences,” Matolcsy said at a press conference in parliament after a government meeting.

The assets of those who decide to return to the state scheme will be kept in individual accounts and will remain inheritable by the spouse, Mr. Matolcsy said.

Hungary has a pay-as-you-go state pension scheme with a mandatory private pension-fund regime complementing it, as a result of a pension-system reform in 1997. Voluntary payments into private pension funds are also possible, but they have been negligible compared with the rest of the system.

Most Hungarians of working age are members of a private pension fund. The savings of those three million or so people total 2.8 trillion forints ($14.2 billion), or about 10% of Hungary’s gross domestic product. One half of the amount is invested into foreign and Hungarian stocks and the other half in government bonds.

Under the current regime, private pension fund members were to receive 70% of their future pension from the state and 30% from the proceeds based on personal savings in private pension funds. The system was designed to boost domestic savings and produce a sense of higher personal self-sustainment. The government guaranteed to top up the amount to be received from the private pension fund should that amount fall short of the 30% portion of the 100% pension amount.

Now, the government no longer guarantees to top up any missing amounts, Mr. Matolcsy said.

Hungary earlier withheld private pension fund contributions for 14 months starting in November. The government will compensate the fund members for that, making them eligible for state pension for that period, Mr. Matolcsy said.

The government will use the assets returned to the state to pay pensions this year and next year, and the remainder to pay public debt, the minister said. Hungary has the highest debt levels in central and Eastern Europe, making it the most sensitive to changes in financial market sentiment.

Starting Jan. 1, 2012, the government will cap the asset management fee for private pension funds to 0.2% of proceeds from members, down from the current 0.8%, and it will limit their operation costs to 0.9% of the proceeds, compared with 4.5% now, Mr. Matolcsy said.

At present, Hungarian employers pay 24% of their employees’ gross wage to the state as a pension contribution. That will remain unchanged for those employees who decide to remain private pension fund members.

Employees pay a total of 9.5% of their gross wage in pension premium, including 8% of the gross wage to the private pension funds. The 9.5% payment will rise to 10% from January. Those who wish to remain members in the private pension funds will pay the 10% to their respective pension funds after Jan. 31, and those returning to the state pension scheme will pay the 10% into the state coffers.

http://blogs.wsj.com/new-europe/2010/11/24/hungary-forces-private-pension-fund-members-back-to-state-scheme/

[chad]

i showed this article to a relative of mine who is a financial planner. his response was "that can't happen here, americans are different." :oo-->

[Twisted Titan]

Ur shitting me right???

Please tell me you are.

Please dont allow me to believe at this late stage in the game people are still holding on to this mickey mouse Logic

[Libertytree]

Ur sh*tting me right???

Please tell me you are.

Please dont allow me to believe at this late stage in the game people are still holding on to this mickey mouse Logic


Mickey Mouse Logic is the driving force and brain trust in the populace and of the politicians and they will hold onto it until it's too late and the reality of it all has hit them square between the eyes.

[Ares]

i showed this article to a relative of mine who is a financial planner. his response was "that can't happen here, americans are different." :oo-->


HA HA HA, Congress / Obama Administration has already discussed an option to take a portion of 401K. Your relative really believes it can't happen here?

http://moneymorning.com/2010/01/27/retirement-plans/

[chad]

Ur sh*tting me right???

Please tell me you are.

Please dont allow me to believe at this late stage in the game people are still holding on to this mickey mouse Logic


hell no, i'm not kidding. he works at a bank and has fleets of people lining up to "get back in the market." he won't even deal with people who want to invest less than 30k anymore, that's how busy he is. people "have been seeing the big returns this last year and want back in."

as for myself, "i am a moron." i should "sell all of that silver and get back in the market asap."

people on gs-us are like .000000000000001 percent of the population.

[Horn]

i showed this article to a relative of mine who is a financial planner. his response was "that can't happen here, americans are different." :oo-->


We are different, but oligarchy never sleeps.

[Twisted Titan]

He works at a bank and has fleets of people lining up to "get back in the market." he won't even deal with people who want to invest less than 30k anymore, that's how busy he is. people "have been seeing the big returns this last year and want back in."


Let Them who wish to be deceived......... be deceived.

Roman Maxim

[SWRichmond]

He works at a bank and has fleets of people lining up to "get back in the market." he won't even deal with people who want to invest less than 30k anymore, that's how busy he is. people "have been seeing the big returns this last year and want back in."


Let Them who wish to be deceived......... be deceived.

Roman Maxim


So, since these people desire to "get back into" the market, they must have sold while it was down, at a loss. This means that now they are buying high, to cover their having sold low. Do they no understand this? This is how wealth is confiscated with a smiley face: "Oooo, bad decision on your part!"

[chad]

beats me, i'm just glad he's busy. all i've been hearing about for months is the "tons of money on the sidelines just waiting to get it!"

[Ares]

beats me, i'm just glad he's busy. all i've been hearing about for months is the "tons of money on the sidelines just waiting to get it!"


When a farmer sheers his sheep there's always a ton of them waiting too. ;D

[Horn]

beats me, i'm just glad he's busy. all i've been hearing about for months is the "tons of money on the sidelines just waiting to get it!"


When a farmer sheers his sheep there's always a ton of them waiting too. ;D


Are you suggesting that there is some sort of government & private interest market manipulation occurring?


:soap

[Ash_Williams]

Sounds like the government big enough to give them everything they wanted is now trying to take everything they have.

[Neuro]

Ur sh*tting me right???

Please tell me you are.

Please dont allow me to believe at this late stage in the game people are still holding on to this mickey mouse Logic


hell no, i'm not kidding. he works at a bank and has fleets of people lining up to "get back in the market." he won't even deal with people who want to invest less than 30k anymore, that's how busy he is. people
"have been seeing the big returns this last year and want back in."

as for myself, "i am a moron." i should "sell all of that silver and get back in the market asap."

people on gs-us are like .000000000000001 percent of the population.
I counted it to 1 in a 100 trillion, surely we aren't that few and special on GSUS...
;D ;D