How Safe are Americans’ Private Retirement Savings?


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Due to protests by trade unions, the government relented:  only 20% of the original proposal will be implemented.

In Poland, government wants to transfer one-third of future contributions to individual retirement accounts into the country’s state-run social security system.  Unlike Hungary however, the proposed Polish seizure will not touch money its citizens have already accumulated.  Yet it will still cost Polish savers $2.3 billion dollars a year.

In Ireland, The National Pensions Reserve Fund was established in 2001 to meet pension costs from 2025 onward, when budget projections revealed social welfare and public service pensions would increase substantially due to an aging population.  The payouts from the fund would have continued until 2055 with the rules for drawdowns established by the Minister for Finance, and were seen as the best way to keep the system sustainable.

In March 2009, the rescue of Irish banks from the worldwide financial crisis necessitated a withdrawal of $5.35 billion from the fund.  The remaining $2.66 billion was withdrawn in November 2010, when the entire nation required a bailout totaling $113 billion.

France is country number five in which funds earmarked for the future will be used to shore up government finances today. $43.9 billion will be taken from national reserve pension fund (FRR) and used to reduce the deficit accumulated in short-term pensions.  Retirement funds earmarked for the years 2020-2040 will be used for the years 2011-2024 instead, and the French government will use the additional saving resources for “other purposes.”

What do such seizures have to do with America?  Nothing–so far.  Government already has control of our “pubic pension system,” aka Social Security, and a simple act of Congress can alter both the amount and the percentage of its Social Security obligations any time Congress desires to do so.  President George W. Bush used up considerable political capital attempting to forestall the looming insolvency of a system which went into the red for the first time this year, a threshold which was not expected to be reached until 2016.  Democrats were enormously successful in convincing a majority of Americans that part of that reform, a partial privatization of the system, would be catastrophic.

That success is a testament to the economic illiteracy of many Americans, who essentially believed that leaving the Social Security portion of their retirement accounts in the hands of spendthrift bureaucrats was a better idea than putting that money into private accounts under their own control.  But as Europe is currently demonstrating such choices may become irrelevant.  No doubt the idea of government seizing private retirement accounts was once considered as unthinkable in Europe as it currently is here.  And Americans might be surprised to learn that as recently as October of last year Senate Democrats held hearing to discuss the possibilities of seizing private 401(k) plans.  Their rationale? To “fairly” distribute taxpayer-funded pensions to everyone.  The motivating factor?  Under-funded public service employee pension funds.

A Republican-controlled House of Representatives may have a far bigger budget battle on their hands than they might imagine.

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  • Kevin Stroup

    First you pay your taxes, havee SS, Medicare, and anything else taken out of your pay check. From what is left over, you then invest in 401Ks and other types of savings accounts. Then a government bureaucrat comes and takes this from you. This is stealing, pure and simple. This causes armed revolutions to take place. The fact that a government agency takes it from you in no way legitimizes it. Theft is theft. It must be remembered, you already paid your taxes. You then invested with the money that was left over. Your money. Then they try to take that? This is theft, people. Folks, we need to wake up to the massive amount of corruption that is overwhelming our country. Massive government gives you massive corruption. Small government gives you small corruption. It must always be rememberd that only the government has the power to take things by force. No private entity can do this. Even when you are sued, the other party is trying to get the government to take if from you and give it to them.

    Any government that is big enough to give you everything is big enough to take it all away. – Ronald Reagan.

  • Pat

    It will not happen.

    We have guns.

    • davarino

      Damn straight. There is no way they are taking my 401(k). I will take out a loan from my 401(k) to go buy a really big gun and join you in the fight.

      All these do-gooders spend future money to help people sit on their ars doing nothing, having more babies than they should, and causing trouble. Progressives think its all funny money they are playing with, well it aint so funny now.

    • Reason_For_Life

      They have far more guns and Waco showed that they have few compunctions about using them. When you see a gang of thugs like the ones who seized Elian Gonzalez you won't do a thing except beg for your life or die. The second choice means that you wll be declared a traitor and have all your property seized under forfeiture laws leaving your family penniless.

      If you think your neighbors will help then tell me how many of them talked tough about what they would do if the government got out of hand and now meekly submit to being groped by federal thugs at airports.

      • CTYankee

        I suppose the colonists were just a fluke then?

        • Reason_For_Life

          The colonists faced an enemy whose primary forces were 3000 miles and several months away. Most Americans lived on farms or in small towns. There was no such thing as driver's licenses, surveillance cameras, huge national databases, SWAT teams armed with weaponry no private citizen can match. There were no Predator drones, no vast standing army, no ability to starve a city to death by blocking a few roads. It was a different world.

          Furthermore, we were losing everything until the French got involved and saved America. Washington was a good president but a poor tactician and strategist. Rochambeau, not Washington defeated Cornwallis at York. The best general that we had was Benedict Arnold and you may remember how that turned out.

          Do you think that the colonists would have meekly submitted to being groped before being allowed to ride in a coach? They had the ability and the inclination to resist, they were used to freedom. How many people today can remember when you could buy an airplane ticket anonymously and board an airplane without a search of your luggage? When the colonists were growing up were they indoctrinated every day in public schools? Were there huge unions of public employees? Was one in four families collecting a check from the government?

          Do you see any Madisons or Jeffersons? Thomas Paines? John Lockes?

          The Revolution was indeed a fluke. The factors that made it possible came together only once in human history. Great men, great ideas, a courageous populace, a weak and distant foe and a powerful ally.

          See any of that today?

          • trickyblain

            Great post — solid history.

            (though I do think airport security is a must in today's world)

  • aspacia

    News Flash: The Feds have been raiding Social Security for years. States are attempting to raid PERS as well.

  • Andres de Alamaya

    Yes, it could happen here if an Obama didn't have to deal with checks and balances. Deep down he is frustrated by Democracy and despises it. Nixon had a similar mindset but at least Nixon didn't despise America.

  • sflbib

    Our government will be a little more stealthy about it by just printing the money via some paper shuffling scheme.

  • Reason_For_Life

    The US government won't seize retirement funds outright. They will simply deduct, dollar for dollar, all private retirement funds (IRA, 401k etc) from your Social Security payments effectively nationalizing all retirement funds. All private payments exceeding the Social Security payments will be taxed to pay for Medicare. They will justify it as "means testing" and "fiscal responsibility".

    This effort will be led by the Republicans with just enough Democrats going along to be sure that it passes. Without the massive theft of resources the Feds will be out of business in a few years.

    Remember, the government is not your friend and congressmen believe that all wealth is theirs to dispose of as they see fit.

  • John Van Olden

    Ask any Jew that lived in Germany and survived what they did with their savings and property. They stole it. We still have valuable paintings in museums that were taken by the Nazi government. dutch

    • kafir4life

      That was George Soros job during WWII. Seizing property from condemned Jews. He never should have survived the post-war.

  • Cuban Refugee

    We started down the path of communism a long time ago. By the time we reach the middle of the road, assets will be seized, and gold confiscated, as everything belongs to the state, including our children. Food will be rationed, and work camps filled with the able-bodied willing or unwilling. Expression of free speech will not be tolerated, and forums such as this will be shut down. By the time we get to the end of this perilous path, we will forget about the IRA's and 401-k's we lost, and concentrate on saving our lives, the last vestige of God-given freedom we will have.

    • Rick_in_VA

      It's beginning to look as if "Atlas Shrugged" will become fact rather than fiction.

  • tanstaafl

    "The best government is the one that governs the least."

    Not a statement that most of our ruling class is familiar with.

  • Doug

    When the monetary system totally collapses, we will have to go back to barter; the physical exchange of actual goods with no reliance on currency or paper money. Perhaps your best investment plan is to stockpile canned food and ammunition in an underground bunker in your back yard. If the government doesn't know about it, they can't confiscated it. You can also learn to make whiskey and trade booze for necessities. I plan to.

  • Paul

    The tipping point is when the majority of ‘voters’ are absolutely dependant upon government for the basics of life. It’s all too easy for those facing destitution to rationalize the need to confiscate from those that through good luck and hard work are attempting to avoid their fate.

    • Rick_in_VA

      It will only take another 4% to push us over. The latest figures I have read say that 47% of the population receive some type of government payment

  • Wesley69

    Now that the Republicans have a majority in the House, no such bill seizing anything is going through Congress. If the Republicans can hold the line against Leftist Reform. 2012 may see a Republican Senate and possibly a Republican President.

  • suzy

    There seem to be so many intelligent people out there but it seems that no one is really doing anything. Are we all just a nation of people unable to affect change. Everyone it seems likes to complain and get their opionion out there…But why I ask is no one doing anything.

    Don't we have any spirit of the people of the 60's in us that stood up and rebelled. We need to take action before it is to late. Things are happending to fast. Are there any leaders out there….???? or are we so over educated our minds are full of knowledge but little else????

    • Tony

      Unfortunately, I think yes. We have educated ourselves from books, text, and teachers but lack the skills or experience to apply this information. I'm 28 and I myself have found a profound difference from what I was taught and how everything really works. Nothing makes up for real life experience

  • http://401Klimits2012.org/ 401klimits2012.org

    You are so interesting! I do not suppose I’ve truly read through a single thing like this before. So great to find somebody with some unique thoughts on this subject. Really.. many thanks for starting this up. This site is something that is required on the internet, someone with some originality!

  • kwg1

    No it means they will take the value of your IRA's and possibly 401(k)'s and give you a promise of a government annuity when you retire! This will be in addition to the current Social Security scheme. This issue has surfaced months ago in several think tanks run by progressives. It is a way to tap money which the Fed has not printed, so it will not technically cost any money immediately.