That's there. It can't happen here.

[jimpeel]

Many European countries are confiscating, or have their eyes on, their citizen's pension funds.

Could it happen here?

Read on ...

SOURCE

Europe starts confiscating private pension funds

By: Mark Hemingway 01/03/11 2:22 PM

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.

 

[jimpeel]

Nah. It can't happen here.

SOURCE

Mark Hemingway: Unions target your private retirement savings

By: Mark Hemingway 10/30/10 10:00 PM

Will the government outlaw your 401(k) plan? It seems like an absurd possibility, yet earlier this month two Democratic senators, Sen. Tom Harkin, D-Iowa, and Sen. Bernie Sanders, I-Vt., held a hearing on Capitol Hill exploring the possibility of doing exactly that.

On Oct. 8, the two senators from the Health, Education, Labor and Pensions (HELP) Committee held a hearing on "Retirement (In)security in America." Among the proposals discussed was "Guaranteed Retirement Accounts," or GRAs.

The purpose of the GRA proposal is simple: To force Americans to stop putting their retirement savings money into private 401(k) accounts and send their money to the government instead.

GRAs would "eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary," according to a letter signed by House Minority Leader John Boehner and 12 other Republican representatives.

The letter urged opposition to the proposal and was sent to Treasury Secretary Timothy Geithner and Labor Secretary Hilda Solis in May. The Harkin-Sanders HELP committee hearing shows Democrats are ignoring critics of the GRA proposal.

Testifying at the hearing in favor of GRAs was Ross Eisbrey, vice president of the Economic Policy Institute, a liberal economic think tank located in the same building as the liberal Center for American Progress. (Both organizations have been funded by left-wing billionaire George Soros.)

In February, President Obama released the "Annual Report of the White House Task Force on the Middle Class." GRAs are among the proposals recommended in the report "for further study." The task force's executive director is Jared Bernstein, EPI's former head.

EPI's work on retirement security issues also has some suspect backing. The think tank has teamed up with two of the most powerful unions in the country -- the AFL-CIO and Service Employees International Union -- to push a public campaign for a "Retirement USA" initiative (see Retirement-USA.org).

One of the proposals being touted on Retirement USA's Web site is, you guessed it, GRAs. At the hearing, Eisbrey noted that Retirement USA had not specifically endorsed GRAs, but did "affirm that it meets all of the 12 principles the coalition set out as essential to deliver retirement income that is universal, secure, and adequate."

But why are unions pushing this? The average union pension plan is only 62 percent funded, far below the point at which the government considers a pension plan "endangered." Estimates suggest unions' multi-employer pension plans are underfunded by $165 billion and could be on the verge of collapse.

Union leaders see these "retirement security" ideas like GRAs as vehicles to a back-door pension bailout, where union leaders will no longer have to worry about the fact they've underfunded their rank and file members' pension plans. Just let Uncle Sucker take care of it.

Labor is the biggest source of campaign cash for Democrats (Retirement USA backers AFL-CIO and SEIU are spending $88 million this election), and Harkin also wants to pass "card check" -- the proposal to do away with secret ballots in workplace representation elections -- during post-election lame duck session.

Regardless, forcing everybody into a government retirement system that pays out equally to Americans who have scrimped and saved and to those in organized labor who have grossly mismanaged their pension plans seems almost too crazy to contemplate.

But unions are desperate, and Democrats are in hock to Big Labor in a big way. And the lame duck could be their last chance for a very long time.

Mark Hemingway is an editorial page staff writer for The Examiner. He can be reached at [email protected].

 

[jimpeel]

Or could it ...

SOURCE

Save Your 401 (k) Before the Feds Replace it With the GRA

By: Pamela Villarreal and OpEd Contributor 11/20/08 12:00 AM
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When ideas emerge out of fear instead of facts, the consequences can be disastrous. Amid the tumultuous stock market and worries about the cost of federal bailouts, policymakers, politicians, and presidential candidates are focusing now on 401(k) plans.

At a recent hearing before the House Committee on Labor and Education, several experts testified about the effect of the financial crisis on these defined-contribution retirement plans, all but sounding the death knell for 401(k) plans.

Certainly, the balance sheets of those invested heavily in equities have taken a hit — although these paper losses are not cast in stone unless they are cashed out or transferred to another type of investment.

And most certainly, some who may have considered retiring in the next few years will want to work longer to recoup a portion of their nest eggs. But should 401(k) plans be subject to drastic rules changes that make them unrecognizable or virtually nonexistent?

Teresa Ghilarducci of the New School for Social Research has proposed a plan to let workers trade their current 401(k) plans in for a Guaranteed Retirement Account (GRA). This type of plan would pay a monthly amount at retirement, similar to an inflation-indexed annuity, at a guaranteed three percent real rate of return.

Moreover, every worker would continue to contribute a mandatory five percent of his earnings into a GRA (the employer would contribute half), with the government depositing $600 a year, inflation-indexed, into the account of every worker.

Ghilarducci notes that the plan has many advantages: First, for those who are worried about fairness, the GRA plan, says Ghilarducci, would be fair. Since the current tax-deferred set-up of 401(k) plans benefits higher-income workers (uh…of course it does, since they pay most of the taxes), the GRA would eliminate the 401(k) tax subsidy to the “rich” in place of the $600 tax credit given to every worker.

Another advantage, according to Ghilarducci, is that the accounts are pre-funded since workers are saving their own money.

The National Center for Policy Analysis, the organization for which I work, has long supported allowing workers to invest a portion of their payroll taxes into personal accounts and allowing them to select from a limited number of investment choices.

But, unlike some mandatory savings plans, GRAs are not personal, per se, as they do not allow individuals to pick from a limited array of funds like the federal Thrift Savings Plan (TSP) does. The money would instead be pooled and invested by the government as it sees fit.

Moreover, a GRA is no less immune to problems than a 401(k) plan. Although a guaranteed three percent real rate of return sounds good on the surface, in the fine print the government would have the right to reduce the guaranteed rate of return during economic down times and allow workers to access their funds during those times.

Even though the fund would be managed by an independent body (similar to the TSP), it could still be subject to political manipulation. Congress has numerous times attempted to require the TSP to invest in various funds of dubious value.

Finally, giving up on 401(k) plans because of a temporary market downtown is patently silly. Senator Barack Obama has also announced that as part of his tax plan, he proposes allowing 401(k) plan holders to obtain hardship withdrawals for this year and 2009 without the 10 percent penalty that is normally imposed.

While there is no doubt that hardship cases exist for some individuals and such a withdrawal may be necessary, politicians should not attempt to water down 401(k) retirement plans further.

In essence, instead of strengthening 401(k) plans which have served most workers quite well, the fear-based solution is to gut them to the point where they become unattractive to retirement savers and employers, leaving people even more unprepared for retirement and relying on government entitlements.

Pamela Villarreal, is a senior policy analyst at the National Center for Policy Analysis.