Tag Archive: government


Source: CS Monitor

Hungary, Poland, and three other nations take over citizens’ pension money to make up government budget shortfalls.

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 Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

A slightly less drastic situation is developing in Poland. The government wants to transfer of 1/3 of future contributions from individual retirement accounts to the state-run social security system. Since this system does not back its liabilities with stocks or even bonds, the money taken away from the savers will go directly to the state treasury and savers will lose about $2.3bn a year. The Polish government is more generous than the Hungarian one, but only because it wants to seize just 1/3 of the future savings and also allows the citizens to keep the money accumulated so far.

The fourth example is 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.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

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.

The table below is a summary of the discussed fiscal-retirement situations (source):

*These figures do not include the costs of higher taxes, price inflation and low interest rates, which additionally devaluate retirement savings.

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Source: AFP

Nearly one out of three Americans view the US government as a “major threat” to their freedoms, and four out of five say they don’t trust Washington to solve their problems, according to a new poll out Monday.

Just 19 percent say they are “basically content” with the federal government, against 56 percent who say they are “frustrated” and 21 percent who describe themselves as “angry,” the Pew Research Center survey found.

Only 22 percent say they trust Washington to do what is right4 almost always or most of the time, according to the survey, which had an error margin of plus or minus four percentage points.

The first time Pew asked the question, in 1958, 73 percent of Americans said they trusted the government. In mid-1994, just 17 percent said the same.

The US public has historically expressed distrust in Washington, but a sour economy, epic frustration with the US Congress, and an increasingly polarized electorate have fanned the flames, Pew said.

The findings could spell trouble for President Barack Obama’s Democrats in November mid-term elections, with 53 percent saying the federal government needs “very major reform,” though Republicans do not get high marks either.

When Obama took office in January 2009, 62 percent of Americans said they viewed Democrats favorably, against just 40 percent for Republicans — and the president’s party now only has a 38 percent-37 percent edge over his critics.

Just 25 percent said they had a favorable view of the Congress, just half of what it was one year ago and the lowest in a quarter century of Pew surveys.

But while 58 percent say the government has gone too far in regulating the economy, 61 percent say they want tougher government rules for Wall Street — a boon to Obama and Democrats who have made that their top domestic goal now that the president has signed his historic health care overhaul into law.

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