Yesterday the Christian Science Monitor at its Adam Smith Institute Blog reported that European nations have begun seizing private pensions.
The article reports:
"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."
Other countries are beginning to follow similar paths--Bulgaria was forced to back down from a plan to transfer $300m of private early retirement savings to the state pension scheme. The trade unions protested, and finally only about 20% of the original plans were implemented. In Poland, the plan is for the government to transfer of 1/3 of future contributions from individual retirement accounts to the state-run social security system.
The article reports what has happened in 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."
France has decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit.
The article reaches a very valid conclusion:
"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."
We need to learn from the mistakes of our European friends.
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