Thursday, January 6, 2011

US Next? Private Pensions Seized In Europe

Investor's Business Daily
January 6, 2011
With similar problems for Social Security looming in 2015, it behooves the U.S. to watch this mess — and to avoid repeating it.
Social Security: Europe is trying to dig out of its budget hole by seizing private pensions. It's a last-ditch effort to preserve socialism at the expense of the very assets that would sustain its future growth.

In Hungary, Poland, Bulgaria, Ireland and France, big government, a demographic death spiral and weak tax revenues have left fiscal coffers in trouble. Unwilling to stand up to voters — or rioters — most governments have little taste for doing the right thing: cutting their budgets.

So, they're going after pensions to make up for shortfalls. Public and private pensions co-exist in European countries. In some cases, public ones resemble our own Social Security, stressing budgets.
But instead of privatizing pensions, as Chile did in 1980 — which would have turned these obligations into assets — three former stars of European emerging markets have come up with heavy-handed incentives to turn private savings public. It's a step backward.

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