"My pension is safe" -- Or is it? Gov. confiscation all the rage.

[eilen]

Via Pension Pulse.

A senior pension fund manager sent me a link to a Washington Examiner blog entry, Europe starts confiscating private pension funds:

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

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

I wonder if the actions of the government in Ireland and Hungary will influence lawmaker on the changes they will propose and likely pass on Social Security.

[dkf]

1. Isn't this what we want to do regarding the rich here?

"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."

Isn't this a tax? I've heard many proposals to tax 90% of income and citations of the assets of the wealthy.

Many would consider anyone with retirement savings as wealthy as their normal is no retirement savings.

[Tunkamerica]

6. please tell me english is your second or third language

what does this mean: "Many would consider anyone with retirement savings as wealthy as their normal is no retirement savings" ?

[Cutatious]

8. I read it as...

Many who think normal is not having any retirement savings may consider those with retirement savings as wealthy. And my parser didn't break a sweat.

[Tunkamerica]

10. So it's:

Many would consider anyone with retirement savings as wealthy. Their "normal" is: no retirement savings.

That was the most awkward wording I've seen lately. I legitimately thought I was reading nonsense.

[Hannah Bell]

33. i read it as right wing bullshit

[badtoworse]

9. It's meaning is quite clear

There are numerous people in this country (including many who are nearing retirement) who have no pension and no retirement savings. Their only source of retirement income will be Social Security which amounts to very little (In 2010, the average retirement benefit paid was less than $14,000 per year). People in that position are going to be very poor, and as a practical matter, will not be able to retire or will need their family to take care of them.

It's arguable whether these people would consider their situation normal. I expect that many would because they do not want to acknowledge their lack of prudence in not saving for retirement. I would also expect that these people would look at someone who did save and has a retirement nestegg as being wealthy.

[Tunkamerica]

11. The meaning was not clear. And it's: its.

[badtoworse]

13. You've lost me - nt

[Cutatious]

17. You've been grammar'd for not using the possessive "Its" in your Subject

I normally stay away from grammar wars since I like to verb nouns and other albatrossities.

[provis99]

19. I don't think albatrossitie is a word.

[badtoworse]

20. I'm usually careful about that, but nobody is perfect - nt

[Coyote_Bandit]

14. Lack of prudence?

How do folks save for retirement when
(1) they are required to liquidate their savings to get healthcare? or
(2) their earnings are below what is typically considered a living wage? or
(3) they were required to liquidate their savings after becoming unemployed?

I don't dispute that there are some dumbshits that lack the prudence and/or self-discipline to save for retirement.However, many who lack retirement savings have never had the earnings to put aside savings - or they have faced circumstances that required them to liquidate the savings they had put aside.

Sometimes the victim is not a fault for their circumstances.

[badtoworse]

15. Losing your savings through no fault of your own is not lack of prudence

It can happen and it's sad when it does. I'm talking about people who just didn't save anything.

[Broderick]

21. I understand what you are saying

The 'have not' view those that have saved as being wealthy when they reach retirement age. The natural order of things is to resent or be jealous of those that have put away retirement savings while they will be dependent on a meager social security payment. In some cases, the working poor have never had the ability to save or never have had the opportunity for a company 401k plan. Sometimes people have had to liquidate their savings to keep afloat after losing a job too. The seizing of pensions (and I am assuming in this case private 401k funds and IRAs) to equalize the disparity has been bantered around for a long time. Is 401k safe, probably not. There is a lot of gold in them there hills.

[Hello_Kitty]

28. We should probably just euthanize the poor elderly to protect you.

:eyes:

[eridani]

31. No--the big evil gummint would have to pay people to do that with YOUR TAX DOLLARS

I think what you meant was that old poor people should just have to dig their own graves and euthanize themselves, right?

[eridani]

30. You do understand what a marginal tax rat is, right?

It means everything over a certain amount. As in, if that amount were 1 million, and you earned 1.1 million, your addtional rax rate would be 90,000. Anything under a million would be taxed at lower rates.

[xchrom]

2. recommend

[dixiegrrrrl]

3. The plan has been on the drawing board since the 80's

to "incentivize " Americans away from Soc. Sec. and into forced buying of Treasuries as a retirement scheme.
sorta like the War bonds during the 40's, except this would come with a strict limited payback schedule,
like insurance payouts are doing now.
another way for the gov to blow a bubble on retirement money.

I don't think they have time to breathe life into that idea. I think it is too late in the game.

[dkf]

4. In a way taxing is the method the Government uses to take your money so you can't

Put money into your pension.

[LiberalFighter]

5. Pension or retirement (401k)?

If one stashes income within the limits into 401k it is not taxed until it is time to start receiving it.

[dkf]

12. An individual pension fund must be a 401k.

And you can't afford to fund your 401k properly if you need funds to pay bills. Your wages either get taxed, spent, or saved. Increasing taxes or increasing spending reduces savings.

[LiberalFighter]

26. I agree that it is getting more difficult to fund a 401k when wages are low.

And fewer and fewer are provided a pension plan which is also a reduction in wages and benefits.

[stray cat]

7. Safer than 401ks anyway

[hedgehog]

16. The only reason I'm going to get a pension is that the government

has taken over responsibility for paying it after management ran the company into bankruptcy!


http://www.pbgc.gov/

[eilen]

18. Can the gov. deduct out your SS because of the pension?

Or in better words, will they say you may not get SS due to the pension payments they are already paying you--much like the railroad retirees?

[hedgehog]

23. As far as I know, I would get both the pension and SS. I think there

may be a limit on the pension amount, so if I was looking forward to a large pension I might lose out.

[mainer]

22. If you've been saving a private pension in a 401 K

and the government confiscates it, how is this any different from the government confiscating your house, your farm, and your savings account?

I just can't see this happening in the US.

[DemoTex]

24. My airline's pilots' pension plan was terminated on 3/31/2003.

It was terminated by a federal bankruptcy judge (a Republican) at the request of my airline. In the years since, many experts have said that it was a very premature termination. A few months after the termination, the then-CEO - Dave Siegel - walked with over $10-million in his pocket (golden parachute).

[izzybeans]

25. See info from the PBGC about how it works here

http://www.pbgc.gov/workers-retirees/benefits-information/content/page13181.html

If your plan is terminated you are entitled to the money you earned. it's insured. Don't let anyone make the little modicum of protection you have away. We need to be strengthening the PBGC at this time.

Start by not being paranoid about our government stealing from you.

My company terminated their plan. All of us who are vested will still get a small pension even if our company is no longer here when we retire. They replaced it with a 401k match. Not ideal at all, but many assume that if the plan is terminated that you have no rights. You have some, not many, but some. The PBGC is the only place where they can be protected outside of a court.

[dipsydoodle]

27. Comparison with Hungary might not be a good idea

They did so to reduce the budget deficit thus effectively fudging their balance sheet to appease the EU.

Not quite sure why the Irish Republic did similar if they did in fact do so.

[Major Hogwash]

29. What about all of those laws protecting those pensions here in the US? Don't they apply anymore?

Look, I don't care if the Governor is a Democrat or a Republican, a Whig or a Tory, those pension funds were supposed to be "hands off" for the life of the fund, which in legal terms, was for perpetuity.

[Hannah Bell]

32. ain't capitalism great?