In Liberty some time back (“Pension Peril,” March 2009), I reflected on President Kirchner of Argentina, who helped fund her country’s failing public pension system by simply stealing money from the private pension savings accounts that many of her countrymen had managed to accumulate. Her government expropriated (“nationalized”) the $24 billion private pension funds industry in order to save the public system, forcing citizens to trade their savings for Argentinean Treasury bills of dubious creditworthiness. I suggested then that such a thing might happen in the US, where Americans have many billions put aside in various retirement vehicles — a tempting target for any cash-starved government.
I think that dark day is growing closer. My feeling is confirmed by some troubling news, recently reported by the Adam Smith Institute’s wonderful website. The author of the report, economist Jan Iwanik, notes that a number of European countries are shoring up their tottering public pension plans by the Peronista tactic of stealing from those who have prudently put aside some extra money for their retirement.
Bulgaria, for example, has put forward a plan to confiscate $300 million from the private savings accounts of its already impoverished citizens and put those funds into the public social security system. Fortunately, organized protest has cut the amount transferred to “only” $60 million — for now, at least. And Poland has crafted a scheme to divert one-third of all future contributions that are made to private retirement savings accounts, so that the money flows instead to the public social security scheme. This will amount to $2.3 billion a year stolen from frugal people to shore up the improvident public system.
The most egregious case is that of Hungary. This state, which has been teetering on the verge of insolvency for years, has taken a drastic punitive step. Under a new law, all citizens who have saved for their retirement face a Hobson’s choice: either they turn over their entire retirement accounts to the government for the funding of the public system, or they lose the right ever to collect a state pension, even though they have paid and must continue paying contributions to the state system. The Hungarian government thus hopes to pocket all of the $14.2 billion that the hapless Hungarians have managed to squirrel away.
As our own national insolvency grows nigh, it is just a matter of time before the feds take a swing at the enormous pot of private retirement savings held by Americans. If you think you’ve heard nothing but class warfare rhetoric from this administration, just wait till it feels the need to take your 401ks, IRAs, and so on. The demonization of the productive and the prudent will be loud and shrill.