Hungary rolls back pension reform, defies markets

[Psephos]

Source: Reuters

(Reuters) - Hungarian lawmakers voted to roll back a 1997 pension reform on Monday, effectively allowing the government to seize up to $14 billion in private pension assets to cut the budget deficit while avoiding austerity measures.

With financial markets on edge across Europe over debt and deficits, Prime Minister Viktor Orban has spurned international advice to cut budget costs, as Ireland and Greece have done, in favor of unconventional policies meant to revive Hungary's moribund economy.

Parliament passed the pension legislation with 250 votes for, 58 votes against and 43 abstentions. Orban's ruling Fidesz party has a two-thirds parliamentary majority.

By plugging its budget shortfall with the pension funds and new taxes on banks and mostly foreign-owned businesses, Orban has promised to end years of austerity and bolstered the popularity of his right-of-center Fidesz party in opinion polls. But the strategy -- which also includes regaining "financial sovereignty" by ending a 20 billion euro ($26.38 billion) safety net deal with the European Union and International Monetary Fund -- has worried investors, caused losses in Hungarian assets, and prompted a downgrade by Moody's ratings agency last week to Baa3, the lowest investment grade.

<snip>

Read more: http://www.reuters.com/article/idUSTRE6BC3YJ20101213

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Observers are calling Orban's political muscling the "Putinization" of Hungary...not hard to see why. Seizing old peoples' retirement savings is not for the politically faint of heart.

Note that in various degrees, a number of European countries are now extracting private pension funds and/or savings for state use, including Bulgaria ( http://bulgaria.world-countries.net/archives/50753 ), Poland ( http://tinyurl.com/3738rzd ), and Ireland ( http://www.reuters.com/article/idUSTRE6BC3YJ20101213 ).

[dipsydoodle]

1. That's dated December 13th ?

:shrug:

[Cutatious]

2. government to seize up to $14 billion in private pension assets

That must go over well with those that worked and saved all their lives. Let's hope it does not spread.

[DemReadingDU]

3. Following Hungary And Ireland, France Is Next To Seize Pension Funds

11/28/10 Following Hungary And Ireland, France Is Next To Seize Pension Funds

If the recent Hungarian "appropriation" of pension funds, and today's laughable Irish bailout courtesy of domestic pension funds sourcing 20% of the "new" money was not enough to convince the world just how bankrupt the entire European experiment has become, enter France. Financial News explains how France has "seized" €36 billion worth of pension assets: "Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system. The assets have been transferred into the state’s social debt sinking fund Cades. The FRR will continue to control the assets, but as a third-party manager on behalf of Cades." FN condemns the action as follows: "The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system." In other words, with the ECB still unwilling to go into full fiat printing overdrive mode, insolvent governments, France most certainly included, are resorting to whatever piggybanks they can find. Hopefully this is not a harbinger of what Tim Geithner plans to do with the trillions in various 401(k) funds on this side of the Atlantic.

more...
http://www.zerohedge.com/article/following-hungary-and-ireland-france-next-seize-pension-funds

[dipsydoodle]

7. Did you notice the date

What on earth is doing in LBN - not yours : the OP.

[naaman fletcher]

4. It's coming to the US

it's already been talked about by some people in the administration.

[DemReadingDU]

5. 'Lifetime Income Option'

Not only talking about it, but having meetings with testimonies from many companies

January 2010
1/8/10 Bloomberg: The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
full article...
http://www.bloomberg.com/apps/news?pid=20603037&sid=aHFCE999fWR0


In mid-September 2010 there was a joint hearing of the U. S. Department of Labor’s Employee Benefits Security Administration (EBSA) and the Department of the Treasury on lifetime income options for retirement plans. At the following link, you can read the written testimonies of 40 companies, and summaries of 44 companies who requested to testify, and 793 comments of people who responded.

http://www.dol.gov/ebsa/regs/cmt-1210-AB33.html

corrected typos

[w4rma]

6. Robbing pensions and giving their savings to the very wealthy. Wow. (nt)

[sarcasmo]

8. Does this mean that those who were getting pensions will get what the government wants to give them?