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Wednesday 5 January 2011

Is your pension safe?

In 1997 Gordon Brown's raid on UK pensions netted his government many billions of pounds and ruined the retirement plans of many Britons. I warned over a year ago that more raids would be on the way along the lines of the Argentinians . Well today I read on CSMonitor that the Hungarian 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.'
Meanwhile '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.'

But that's just the old Eastern Block countries, I hear you say. Not so,:
'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.'

If we had a Labour government in power now then I would not be in the slightest bit surprised if they decided to conduct a similar raid on private and/or public pension pots. I doubt that a Conservative government would do this but desperate times... However can you be sure that a Labour government, red in tooth and claw, will not be elected soon? How safe is your pension?

1 comment:

Grant said...

Quite likely the State Pension will be "means tested" by reference to other pensions, personal, occupational and civil service pensions. Either way, the game is up. The numbers don't add up and no amount of fiddling about will avoid the inevitable.