Government Seizes Private Pension Funds

Rate this post

UPDATE: See also Governments of Ireland and France Seize Private Pensions.”
No, it is not the U.S. government that just seized private pension funds. It’s the government of Hungary.
But given last January’s Obama trial balloon about seizing our 401k and IRA retirement accounts by forcing us to convert them into annuities (see HERE and HERE), this news from Hungary is alarming because it’s a precedent.
Never forget what Thomas Jefferson warned in his letter to Edward Carrington, 1787:

“If once they [the people] become inattentive to the public affairs, you and I, and Congress, and Assemblies, Judges, and Governors, shall all become wolves.”

~Eowyn
Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare’ for Some
By Zoltan Simon – Bloomberg – Nov 25, 2010
Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.
Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.
This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”
Hungary is rolling back pension changes implemented more than a decade ago as countries from Poland to Lithuania find themselves squeezed by policies designed to limit long-term liabilities by shifting workers into private funds. Now the cost is swelling debt and deficit levels at a time when the European Union is demanding greater fiscal discipline.
Hungary, the most indebted eastern member of the EU, is following the example of Argentina, which in 2001 confiscated about $3.2 billion of pension savings before the country stopped servicing its debt. The government in Buenos Aires nationalized the $24 billion industry two years ago to compensate for falling tax revenue after a 2005 debt restructuring.
Hungary…Prime Minister Viktor Orban plans to use pension funds to pay current government pensions and reduce debt as he seeks to cut the budget deficit to less than the EU limit of 3 percent of gross domestic product next year from a targeted 3.8 percent this year. The bloc last month rebuffed a request from nine members, including Hungary, Poland and Sweden, to discount deficit figures by the amount shifted to private managers. “There is a huge hole in the state pension system fund,” Matolcsy told reporters in Parliament. “The government fund’s revenue from pension contributions is 900 billion forint less than its expenditure. This is unsustainable.”
In 1998, Hungary required workers to put a portion of their pension contributions into privately managed funds that were designed to supplement state pensions. Today, about 3 million people have money in the private plans.
The funds’ assets will be automatically shifted to the state system on Jan. 31, unless members specifically opt out. Those who decide to remain in the private funds will lose their government pension after future contributions even as the state will continue to claim 70 percent of pension contributions paid after the individual, Matolcsy said.
“This is open blackmail,” Julianna Baba, president of the Stabilitas Penztarszovetseg, which groups private pension funds, said in a phone interview today. “It’s a rigged deal.” The association is filing a motion at the Constitutional Court to have the law annulled. It says the pension fund plan violates constitutional guarantees against discrimination, for the rule of law, social security, the defense of property and human dignity.
Other eastern EU members are also seeking to cut deficits with the help of pension funds. Polish Prime Minister Donald Tusk said yesterday that the country may issue long-term pension bonds to compensate private funds for funneling some employee contributions to the budget…. Lithuania reduced contributions to private funds last year, and Estonia announced in April 2009 that it would freeze pension-fund contributions through the end of this year. The government in Tallinn is reinstating partial contributions to pension funds from January. In Bulgaria, private vocational pension funds will put 20 percent of their assets under state control to cover early retirement until 2014 to curb a widening deficit. This amounts to 100 million lev, or $68 million. Such retirement funds cover about 100,000 workers in specific professions who are forced to retire early.
…“The pension system changes will increase long-term risks, while short-term gains such as lower public debt and deficit will prove illusory, if the economy stays weak,” Michal Dybula, an economist at BNP Paribas in Warsaw said in an e-mailed note. “The proposed changes on pensions also increase the risk of rating downgrades, since Hungary’s structural fiscal position will not improve.”
In Hungary, employers set aside 24 percent of each worker’s salary for pension contributions and employees are required to pay 10 percent. Forcing workers back into the state system means the government will retain control of all that money, rather than transferring a portion to the private funds.
Under the rules announced yesterday, workers who choose to remain in the private pension funds will lose the social security contributions made by their employers, Matolcsy said. The government would continue to transfer contributions made by employees to the funds, he said.
“It’s unprecedented in Europe that a government is threatening to kick its own citizens out of the state pension system,” Zoltan Torok, a Budapest-based economist at Raiffeisen Bank International AG, said in a phone interview. “It’s probably enough to ensure that no one is going to stay in the private pension fund system in his or her right mind.”

Please follow and like us:
0
 

0 responses to “Government Seizes Private Pension Funds

  1. Don’t let left/libtards hear about this. They just love running out of other peoples’ money.

     
  2. So we work all our lives only to fund wars etc with every bit of money we earn. It’s like having money in a bank, saving it for a rainy day and it grows and grows and when you find you need it so you don’t have to ask anyone for anything…it is no longer there.
    I was supposed to start receiving my pension this year but I have yet to hear anything. I guess I best be checking into it.

     
  3. I have been warning about this for over two years.
    The commie libs were kicking this hideous idea around back in the early ’90s, but had to shelve it when they lost control of congress.
    My guess is this move will either spark a revolt, or the sheeple will sit by and take it.
    I’d say it’s 50/50.
    -Dave

     

Leave a Reply

Your email address will not be published. Required fields are marked *