Monday, January 03, 2011

Europe - Governments Seize Private Pensions To Cover Budget Shortfalls

As you know by now, the aim of President Barack Hussein Obama and his Democrat allies, among other things, is to transform America into a European style welfare state, AKA 'a Social Democracy'.

Ironically, that's happening at the same time some European governments are realizing what a horrendous idea that was in the first place and are having to take unprecedented measures to stay afloat.

One of those measures, for some countries, involves essentially stealing private pension funds in order to pave over budget shortfalls.

In Hungary for instance, the government told its citizens that they could either turn over Their individual retirement savings ( estimated at about $14 million) to the state, or lose the right to the basic state pension while still having to pay contributions for it.

Bulgaria did something similar, trying to transfer $300 million of private early retirement savings to the state pension fund. The government backed down after the unions protested, but still instituted a partial plan.

In Ireland, the government simply 'borrowed' 4 billion Euros from the National Pension Reserve Fund to rescue the country's banks..and last November, the remaining 2.5 billion in the fund was seized as part of the EU bailout.

France took a different route, using an old accounting trick to get access to the private pensions..the one called robbing Peter to pay Paul. In November, the French parliament decided to use 33 billion Euros from the national reserve pension fund FRR to reduce the short-term pension deficit. That allows the long term retirement savings intended for the years 2020-2040 will be used earlier for the years 2011-2024. Which of course means that the French government can spend the saved up resources on other purposes now and will let 2020 take care of itself...when it will be another French government's problem!

Lest you delude yourselves that this is going to be confined to the antics of foreigners across the pond, rest assured that President Obama and his political soulmates are eagerly taking notes, which is why we heard noises earlier about an American Value Added Tax (VAT), something that has politicians literally drooling at the prospect of automatically stealing millions of your hard earned dollars without the necessity of having to take any responsibility for raising taxes at election time.

And they have an additional wedge here in the US for grabbing onto your pension funds. Some of the EU government pension funds actually had money in them. But in the US, ever since Lyndon Johnson and the Democrats first allowed the Social Security trust fund to be accessed to pay for the War on Poverty,that money has been treated as general revenue and is now essentially one huge IOU backed by government paper.

A government grab of private pensions could be sold as necessary to lower the deficit, or to keep old people from starving or going without healthcare because Social Security and Medicare are bankrupt. And of course, the Federal government's poor management, spendthrift ways and outright theft will never be mentioned.

Some of the states, especially the Blue ones with huge unfunded public employee union pension mandates would absolutely adore this as well, since it would get them off the hook and be a bailout without actually having the odor of one.The only people to really get hit would be the ones who took these jobs in the first place with the idea that the money being put aside would actually go to fund their retirement.


Besides, after all, we have to spread the wealth around just like Chairman Obama said, don't we?

Watch carefully what's going on in DC-land. And if and when this comes up, be prepared to scream bloody murder at your representatives in Congress.

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Anonymous said...

Errr, actually the Irish National Pension Reserve Fund is public pension money. A few years back, the Irish Government set up a ring-fenced fund that was to be dedicated to funding public pensions for the long term. The annual budget would put a little bit aside every year for the pension fund, which was then managed similarly to a private fund, i.e. the managers could make investments in order to increase the size of the pot.

However, Irish short-term needs are deemed to be greater than the long-term plan of pension funding, hence the NPRF has been raided to try and keep the country afloat. But it's public money, and always has been.

Puzzled is my middle name said...

In America the color scheme is the exact opposite of Europe: Red stands for conservative and Blue stands for liberal, see Maybe this is an example of liberal projection, where liberals accuse conservatives of what they want or do themselves. Perhaps liberals feel that conservatives are doing this to them, so they have the right to do it right back. Whatever the reason, I think it would be more appropriate if you swapped the colors of the figures and replaced "Socialist" with Democrat. Other than that small point, good post.

Freedom Fighter said...

In the case of Ireland, it was indeed 'public money',( and thu sdifferent from strictly 'private' pension funds) but that's a rather a case of splitting hairs.

It's still money that was specifically earmarked for pensions and set aside on that basis, rather like the US Social Security trust fund. And, as I relate, it has been similarly misappropriated and diverted elsewhere by the politicians.