governments seizing private pensions

in europe now, but possibly coming your way soon... forwarded to me from a friend in the Treasury dept in DC:

My accounting/finance skillz were never the greatest. I don't really understand what/how the government(s) are taking any money.

Could we say it would be like if I purchased stock, and then the company took the stock away from me for itself? Or is it more like the company took my dividends from said stock, for a short term cause, and would return it when possible?

Not at all, the potential threat is they will take your invested funds and then decide how much you will get and when, of course that means that the alleged fund will be completely depleted when you need it.

aussiesmg wrote: Not at all, the potential threat is they will take your invested funds and then decide how much you will get and when, of course that means that the alleged fund will be completely depleted when you need it.

Huh... I guess I don't really understand how its possible for someone to physically take your money that you are not obligated to give (other than for the purpose you were originally obligated to pay for).

It just seems really, really odd. Like, theft odd.

Well, yes, HiTempguy, it is theft. Welcome to Socialism.

I've been following the European situation. How I think they would do it here is to one Saturday announce that IRA accounts (new or old style) and 401K's are temporarily frozen and a certain percentage of the funds would be required to be "invested" in government bonds, at whatever return rate the government feels like giving us. Don't think that's off the table. I've seen the idea thrown around by The O's "peeps."

Yep, that's socialism. Which comes down to 'we know better than you what should be done with your money'.

Of course, instead of a seizure or a theft it could be renamed a tax and then it would be okay.

Right?

1. Kudos for linking the Christian Science Monitor.. Finally someone who reads a proper news source.

2. Aren't most of these pension schemes even when considered "private" have some kind of state funding? It is unclear, to me, if these are "Private" funds with government money or just private funds with private money...

3. I'm pretty much resigned to the fact that the only way to protect my family in the future is to become super rich and tell everyone to go to hell. but since I'll never make it there, I'm starting a farm.

4. I think we really need more info here, until we go off the deep end like Hess is apt to do.

I expect that at some point all of our 401k's and IRA's will be 'taken'. It will be described as a necessary, but painful, step that the country must take. We will be told that it is for our own good. There will be some sort of guarantee against loss like you cannot get in the stock market. Will it happen anytime soon? Who knows. I also expect at some point in my life, my military retirement pension checks will stop. Am I crazy? Am I overly pessimistic? I think I am realistic. The economy is not getting better despite all the propaganda to the contrary. Our monetary system is mathematically impossible to maintain and will collapse or end in some way in the not too distant future. Don't think that the threat to your retirement account is one party or the other. They both exist to serve the banks.

That being said, I am still dutifully contributing to my 401k each paycheck, and still putting money into my IRA each month.

Ignorant wrote: 1. Kudos for linking the Christian Science Monitor.. Finally someone who reads a proper news source. 2. Aren't most of these pension schemes even when considered "private" have some kind of state funding? It is unclear, to me, if these are "Private" funds with government money or just private funds with private money... 3. I'm pretty much resigned to the fact that the only way to protect my family in the future is to become super rich and tell everyone to go to hell. but since I'll never make it there, I'm starting a farm. 4. I think we really need more info here, until we go off the deep end like Hess is apt to do.

1. The Christian Science Monitor is indeed a reliable and generally "unbiased" news source. But, it's not the only outlet reporting on such financial develpments.

2. I'm not aware of ANY public funds that have ever been contributed to my retirement accounts. Those sources have been derived from personal contributions and those coming from my empolyer(s). If public funds are part of a plan's funding, it would happen because one works for a public entity that offers contributions as part of it's employee retirement package.

3. Starting a farm is a possible choice, but I'd also recommend forcing our elected officials to address their own irresponsible spending habits.

4. Hess often makes his point by using extreme examples, but European governments plundering private accounts is also an extreme example of policy run amok. Argentina also seized private accounts (in 2008) in an attempt to address ongoing economic woes (how's that working for you, Christina?) BTW, the idea of the US "taxing" private retirement accounts was floated at least 15yrs ago, when wonks under Clinton looked for more money the government deserves.

Yes, we need more info, but with the current levels of public dissatisfaction with government performance we're going to see a backlash more polarizing than experienced over the last four years.

Yes, we need more info, but with the current levels of public dissatisfaction with government performance we're going to see a backlash more polarizing than experienced over the last four years

Herein lies a big part of the problem.

It has nothing to do with your current government. These are problems that should have been addressed years ago. Now it's too late.

Glad I'm not dumping everything in my company's 401K right now. Sounds like the government will take care of it for me and distribute the funds evenly!!

(Ducks and hides!! )

-Rob

My grandfather had the right idea... he kept his cash in a in an old dynamite crate from the mines, stored in the coal bin. He managed to live well for 30yrs after retirement on a few odd handyman jobs. He even left a nut to his kids to split. I thought he was a little nuts back then. Now... not so much.

GPS, the problem with your grandfather's retirement plan is that with inflation built into the system, that's a tax on money in a box in the coal bin. You put in $100, 12 years later you can only take out $50, and that's at a "modest" real (not government BS that excludes stuff you need to survive, like energy and food) rate of 5%.

It's already in committee, although I am too lazy/busy to look it up. They view it as their money that they don't have access to since we don't pay taxes on our 401ks. Last I heard they want to seize the existing 401ks, force us to save 3% and give us some tiny interest on a pretend account they set up.

oldsaw wrote: 2. I'm not aware of ANY public funds that have ever been contributed to my retirement accounts. Those sources have been derived from personal contributions and those coming from my empolyer(s). If public funds are part of a plan's funding, it would happen because one works for a public entity that offers contributions as part of it's employee retirement package.

I was talking about the european funds. I "think" they are "private funds" i.e. managed by a private entity and then contributed to by the government of that country. I don't know of any of my European compatriates that contribute to their own retirement funds, except in some rare cases where the people are extra money conscious..

Ignorant wrote:

oldsaw wrote: 2. I'm not aware of ANY public funds that have ever been contributed to my retirement accounts. Those sources have been derived from personal contributions and those coming from my empolyer(s). If public funds are part of a plan's funding, it would happen because one works for a public entity that offers contributions as part of it's employee retirement package.

I was talking about the european funds. I "think" they are "private funds" i.e. managed by a private entity and then contributed to by the government of that country. I don't know of any of my European compatriates that contribute to their own retirement funds, except in some rare cases where the people are extra money conscious..

Thanks for the clarification.

Which makes any consideration of the US government seizing funds from private accounts ever more despicable and appalling.

oldsaw wrote:

Ignorant wrote:

oldsaw wrote: 2. I'm not aware of ANY public funds that have ever been contributed to my retirement accounts. Those sources have been derived from personal contributions and those coming from my empolyer(s). If public funds are part of a plan's funding, it would happen because one works for a public entity that offers contributions as part of it's employee retirement package.

I was talking about the european funds. I "think" they are "private funds" i.e. managed by a private entity and then contributed to by the government of that country. I don't know of any of my European compatriates that contribute to their own retirement funds, except in some rare cases where the people are extra money conscious..

Thanks for the clarification. Which makes any consideration of the US government seizing funds from private accounts ever more despicable and appalling.

correct.. We need more info. One scenario is effectively, indian giving. The other scenario is theft.

Dr. Hess wrote: GPS, the problem with your grandfather's retirement plan is that with inflation built into the system, that's a tax on money in a box in the coal bin. You put in $100, 12 years later you can only take out $50, and that's at a "modest" real (not government BS that excludes stuff you need to survive, like energy and food) rate of 5%.

Well... I put about 12% of my earnings in a 401k for the last 20yrs and its worth less than that now... and I have to pay a huge fee to get it out. My experience with loaning my money to others to make money with has not been much better than if I just kept it to myself. I guess folks with better financial skills can have more confidence - but I am only good at making tangible things you can touch.

In the twisted mindset of a bureaucrat it's not theft, because it's not our money.

As Tuna55 pointed out, it is money they graciously allowed us to put aside without paying taxes on. Since taxes are a prior obligation to all others, it's their money because the taxes have not been paid on it.

Try withdrawing "your" money early and see how much you get. The penalty FAR exceeds the taxes you would have paid.

What makes taxes a prior obligation to all others? Because laws (written by Congress) say so. What is stopping Congress from writing other laws (such as seizing pension funds), as necessary for running the government? Nothing. Especially when it involves money they consider as theirs.

From a finance perspective.. Allowing this money to sit in a banks reserves and then providing collateral to borrow against is much more powerful than a simple withdrawal...

Know what I'm saying.

SVreX wrote: What is stopping Congress from writing other laws (such as seizing pension funds), as necessary for running the government? Nothing.

I would hope that fear of where a mob with nothing left to lose might place blame would keep them at bay. It's been a long time since people en masse have been angry enough to send a clear message but if that kind of thing didn't get the sabers rattling then I guess we deserve to be fleeced.

Ignorant wrote: From a finance perspective.. Allowing this money to sit in a banks reserves and then providing collateral to borrow against is much more powerful than a simple withdrawal... Know what I'm saying.

The banks won't let it happen unless there's a quid pro quo arrangement.

Then again, TARP and S.3217 may be part of such an agreement..........

not sure where everyone is coming off with this "money we aren't paying taxes on"...... or words to that effect...

my Roth account has had taxes payed.. yes it can grow tax free, that's the agreement for my having already given them some money, my 401k and my regular IRA will both be taxed when I start withdrawing.... the hook is that it will be at a simulated lower rate....

actually the same rate, just with higher deductions due to age... so only a small bit is actually not / never ( I hope ) taxed / taken .. all the rest on MY (as in no government involvement) retirement moneys have already been through the government theft program

Nope.

You forget that you are earning money tax free on the money you paid taxes on. That's why you put it in a Roth, remember?

The 401K and the IRA are both deferred. No taxes have yet been paid.

In both cases, it is a deal defined by Congress, and a deal that can be redefined by Congress if they see fit.

Did YOU define this agreement? Nope. They did. Just like they define tax rates, and change them if they see fit, they have defined the tax privileges related to these retirement accounts, and they can redefine the deal if they choose.

If the financial position of the US government were to become truly desperate at some point and they HAD to have cash, could not borrow, and did not have sufficient revenues, don't you think they would consider a large pool of cash sitting in accounts which had a Federal tax obligation related to it?

Which is why I save for my retirement in my own manner, no 401 or IRA for me, I have other forms of assets which will be very difficult for them to get their greedy mitts onto.

The Government thinks every penny in circulation is theirs, they are being generous letting you keep any of what you earn.

Look at the way they described the "Tax breaks for millionaires and billionaires". Not one person would have got to keep a single penny more if the Dems had won that one, but the people making "wages" over $250K would have had to increase their tax burden.

Those same people are the ones not spending, or creating jobs because of not knowing what their tax burden would have been for 2011.