Poland Confiscates Half Of Private Pension Funds To "Cut" Sovereign Debt Load

[ltorlo64]

I think that this time ya'll are letting your dislike of Kad cloud your reasoning.

As I see what he is saying, the government took the money out (as ours does Social Security) for the "pension fund", and then the government put the money into the private investment fund. The people did not put it into any private invesment, such as an IRA or 401K.

It would be like the government putting half of our SS deductions into Chase Morgan and half into the general fund. We couldn't go to Chase Morgan and demand our share, as we had nothing to do with it. It is in effect, the government's money invested in Chase Morgan, and the government could withdraw it at any time they wanted.

If they had of done it to people's private IRAs/401Ks, then you would be spot on....but this doesn't seem to be what happened. At least that is how I read Kad's explanation of what went on.

I can understand this. I am not good with money, so you have to make it real simple for me. As long as they are not messing with money the people deposited then I don't think it is such a big deal.

[Oswald Bastable]

I think that this time ya'll are letting your dislike of Kad cloud your reasoning.

As I see what he is saying, the government took the money out (as ours does Social Security) for the "pension fund", and then the government put the money into the private investment fund. The people did not put it into any private invesment, such as an IRA or 401K.

It would be like the government putting half of our SS deductions into Chase Morgan and half into the general fund. We couldn't go to Chase Morgan and demand our share, as we had nothing to do with it. It is in effect, the government's money invested in Chase Morgan, and the government could withdraw it at any time they wanted.

If they had of done it to people's private IRAs/401Ks, then you would be spot on....but this doesn't seem to be what happened. At least that is how I read Kad's explanation of what went on.

So you're saying...the private funds were not private...they were just a shell for the government.

Then why would the government even give such funds the ability to potentially earn fees from such investments?

[Oswald Bastable]

I can understand this. I am not good with money, so you have to make it real simple for me. As long as they are not messing with money the people deposited then I don't think it is such a big deal.

It's all good...there is no private money, or property, or thought, or action any longer...

It all belongs to and is directed by the government.

You've become a happy little drone...you are content.

The government has said so...so let it be written, so let it be done.

[Kadmos]

I don't understand your stance on this one. People put their money into private accounts for their use later.

That's not how their system works. People have money taken from their paychecks to "buy into" the public pension plan. Just like here.

The difference is, in Poland, instead of just using that money year by year to pay for whatever like we do, the government actually invested part of it with private firms. Essentially creating an actual account to act as a way to save up money to pay for increased costs they knew were coming as their own baby boomers aged.

This isn't each individual investing in a mutual fund, this is a government program to invest part of the money in order to hold it back so they don't spend what they knew they were going to need.

The government sees that the public pension plans that provide for everyone is in trouble so they take the private pension accounts to ensure everyone has a pension.

Yes, sort of. They used to be able to pay the pension from just a portion of what they took in from paychecks, but they knew that wouldn't work in the long run, so they saved money up with private firms.

But now, the private accounts do not have the money they had before.

Yes, the government is taking about half of the money out. The real beauty is the bulk of what they are taking out was invested in Polish government bonds, which they can simply cancel.

While technically it is just moving the money from one account to another, in actual practice the money has been taken, I would argue forcibly, from the people who the money belongs to.

But it was the government who put the money there in the first place. People who paid into the pension system will still get their pension.

When this is done by a private citizen, or even an organization, it is called stealing. Why is it not called this when governments do it.

No what it really is, is saving. They knew it was going to get harder as more people got older, so they set up a sort of national savings account to pay for it later.

It is now later. So they take the money out, actually they take their own bonds out, which they now won't have to pay interest on, cancel them out to reduce their own debt, issue new ones to raise money without adding serious new debt or hurting the value of their currency.


The main issues are

1. Pensions will still be paid.
2. They will still be paid in the amount people were expecting
3. The will be paid without undue strain on the economy
4. They will be paid in currency that retained it's value
5. Poland will be able to reduce it's national debt
6. Keep it's credit rating
7. Raise funds by selling bonds which are stable and in demand

The downsides are
1. The private companies lose that piece of business (a customer withdrew half the account)
2. That portion of the fund won't be there later

and I guess..
3. People will misunderstand the action and say they stole the people's pensions


Frankly, I'm jealous. I wish America had the foresight to put money away with private firms. Because we are looking at the same problem in the near future but don't have the option of just cracking open the piggy bank that we set up.

[N/A]

So you're saying...the private funds were not private...they were just a shell for the government.

I don't know...it's Poland/Europe. Who knows how they set the thing up?

Then why would the government even give such funds the ability to potentially earn fees from such investments?

Because maybe the Poles know that private investments usually do a lot better than government bonds do.

[Kadmos]

I think that this time ya'll are letting your dislike of Kad cloud your reasoning.

As I see what he is saying, the government took the money out (as ours does Social Security) for the "pension fund", and then the government put the money into the private investment fund. The people did not put it into any private invesment, such as an IRA or 401K.

It would be like the government putting half of our SS deductions into Chase Morgan and half into the general fund. We couldn't go to Chase Morgan and demand our share, as we had nothing to do with it. It is in effect, the government's money invested in Chase Morgan, and the government could withdraw it at any time they wanted.

If they had of done it to people's private IRAs/401Ks, then you would be spot on....but this doesn't seem to be what happened. At least that is how I read Kad's explanation of what went on.

Exactly!

A 401k, while regulated by the government in part, is a private individual account. If it performs well then you get the added benefit, if not, then you take the loss.

Taking that from someone would be stealing. It was an investment that they personally chose to make, and is their private property.

Sure, Polish people can of course save for their own retirement in similar ways, but that's not what this is all about. This is the government pension plan. If those bonds preform well, then it's just extra money for the government. Either way, the people still get the benefits they knew the government was going to pay, no more, no less...just like they expected.

Edit. Now, I went back an re-read the article linked to, and it actually doesn't give enough details to know who the private funds belong to.

That particular article twisted alot of stuff to make it sound more like "confiscation" rather than a withdrawal...which would be as sexy of a story.

You really gotta be careful about stories involving economics, a good bit of the time the author is some guy with a degree in communication, who minored in dance, and can barely balance a checkbook.

In a way though he didn't exactly lie, the word "Confiscation" comes from Latin and just means "transfer to the treasury", which is exactly what happened.

[Oswald Bastable]

1. Pensions will still be paid.
2. They will still be paid in the amount people were expecting

As in Detroit?

[ltorlo64]

It's all good...there is no private money, or property, or thought, or action any longer...

It all belongs to and is directed by the government.

You've become a happy little drone...you are content.

The government has said so...so let it be written, so let it be done.

You really jumped to an extreme there. My original post shows that I have grave concerns with government taking money that a private person has invested. If, as N/A wrote, this is just moving money that was invested by the government in that countries equivalent of SS, this is different. In my mind, this is like when my mutual fund manager buys and sells stocks or other mutual funds. The manager is moving money to where it does the best. As this is explained by N/A and Kad, the government is acting as the fund manager since they control the SS equivalent program. This does not mean I like SS or that I think this is a good program, just that I understand why it is not a "confiscation" as the story states.

[N/A]

You really jumped to an extreme there. My original post shows that I have grave concerns with government taking money that a private person has invested. If, as N/A wrote, this is just moving money that was invested by the government in that countries equivalent of SS, this is different. In my mind, this is like when my mutual fund manager buys and sells stocks or other mutual funds. The manager is moving money to where it does the best. As this is explained by N/A and Kad, the government is acting as the fund manager since they control the SS equivalent program. This does not mean I like SS or that I think this is a good program, just that I understand why it is not a "confiscation" as the story states.

My memory is not good any more, but wasn't our SS in a "locked box" at one time, not to be touched....and then the .gov unlocked that box and dumped it all into the general fund. And isn't that one reason of many that SS is insolvent; because there is no SS....it's just another line item of the general fund to be funded every two years by Congress?

[Oswald Bastable]

You really gotta be careful about posts from communistas on a forum, a good bit of the time the author is some guy with a degree in propaganda, who minored in debauchery, and can barely comprehend the 10 commandments.

In a way though he didn't exactly lie, the word "Confiscation" comes from Latin and just means "transfer to the treasury", which is exactly what happened.

And there we have it...the justification of theft.

[Oswald Bastable]

You really jumped to an extreme there. My original post shows that I have grave concerns with government taking money that a private person has invested. If, as N/A wrote, this is just moving money that was invested by the government in that countries equivalent of SS, this is different. In my mind, this is like when my mutual fund manager buys and sells stocks or other mutual funds. The manager is moving money to where it does the best. As this is explained by N/A and Kad, the government is acting as the fund manager since they control the SS equivalent program. This does not mean I like SS or that I think this is a good program, just that I understand why it is not a "confiscation" as the story states.

It's all good.

In a world where private money is being "redirected" by governments on a large scale every few months...Kadmos is absolutely correct. There's nothing to see here...move along.

[Kadmos]

So you're saying...the private funds were not private...they were just a shell for the government.

Then why would the government even give such funds the ability to potentially earn fees from such investments?

I'll tell you exactly why. They saw what we did in the same situation.
In the mid 1990's SS was taking in more money than it was paying out. Clinton used that money to balance the budget and start paying down the national debt.

Then some utterly shortsighted douchbag* came along and said "The government shouldn't make a profit" and insisted the people get "their" money back.

And we went right back to deficit spending, getting further into the hole.

Poland saw this, and realized we squandered the opportunity. Knowing the people wouldn't like the government "making a profit" and knowing that they would need that money for the future pension burden that was coming, they decided to invest it with private companies, that way no one could say they were "raiding the lock box" or that they were "making a profit"...they were simply saving it up for later, privately where they couldn't easily get it out and be tempted to squander it.

Opportunities like that are rare for government, Poland was lucky to be in the same position after us and could find a better solution than we did.

Now they get the fruit of that forewarning, in that they have the money to use.

*Newt

[Oswald Bastable]

My memory is not good any more, but wasn't our SS in a "locked box" at one time, not to be touched....and then the .gov unlocked that box and dumped it all into the general fund. And isn't that one reason of many that SS is insolvent; because there is no SS....it's just another line item of the general fund to be funded every two years by Congress?

Bingo!

[ltorlo64]

My memory is not good any more, but wasn't our SS in a "locked box" at one time, not to be touched....and then the .gov unlocked that box and dumped it all into the general fund. And isn't that one reason of many that SS is insolvent; because there is no SS....it's just another line item of the general fund to be funded every two years by Congress?

It was supposed to be in a locked box. I also don't think it is a line in the general fund. The money goes in, government "borrows" it, but I don't think there is anything the say how much has been borrowed so there is no line in the general fund for how much needs to be put back.

[Oswald Bastable]

"The government shouldn't make a profit" and insisted the people get "their" money back."

I'll give you the first half...I have no problem with the gov't making a profit...that means they steal less from us. Of course, that assumes the gov't has ever made a profit on anything they've set their hand to.

But which part of "the people get 'their' money back" is onerous?

[Kadmos]

My memory is not good any more, but wasn't our SS in a "locked box" at one time, not to be touched....and then the .gov unlocked that box and dumped it all into the general fund. And isn't that one reason of many that SS is insolvent; because there is no SS....it's just another line item of the general fund to be funded every two years by Congress?

Not exactly in a lock box, basically it sat with the SS administration so long as the treasury didn't request it be turned over to them. As long as it paid out pretty close to what it took in then there was no reason to ask for it. But once that changed, it became open season on it.

It was more like a checking account, money comes in from some people and goes out to others. When more money than necessary ends up in there people tend to move it to a savings account, or otherwise invest it, where it will grow.

The government being the government though, saw the excess money and moved it from one checking account to another, then promptly spent it.

Which kind of wasn't so ridiculous, as they were already spending money out of that second account, that wasn't actually in that second account

[Kadmos]

I'll give you the first half...I have no problem with the gov't making a profit...that means they steal less from us. Of course, that assumes the gov't has ever made a profit on anything they've set their hand to.

But which part of "the people get 'their' money back" is onerous?

Because it was a limited time offer. For a brief window the government, taking in money by the same percentage it had been (for SS) was making more than it needed in order to pay out the day to day of what it owed people collecting SS.

The math was done, and correct. If we had stayed on the path (of SS collecting too much for a brief time) then the budget could have stayed balanced, the debt continued to be payed down and by about 2011 the national debt would have been gone.

Assuming no wars and no real increase in spending and no economic downturn...which is to say life happens, and it wouldn't have gone exactly as planned, but the situation would have been better than it is now.

A government needs to play the long game, yes it was nice for everyone to get $600 (or whatever) back, but it would have been much nicer to be debt free (or nearly so) when we know the bill will soon come due as the baby boomers retire.

Basically, if you don't save up money in the good times, or at least pay down the debt in the good times, then the bad times are going to be that much worse.

Newt was incredibly shortsighted. But he kept his name on the TV for a while, which I think was most of what he wanted. And of course he did get his way, otherwise we wouldn't be in quite such a mess now.

[stinker]

My memory is not good any more, but wasn't our SS in a "locked box" at one time, not to be touched....and then the .gov unlocked that box and dumped it all into the general fund. And isn't that one reason of many that SS is insolvent; because there is no SS....it's just another line item of the general fund to be funded every two years by Congress?

1964 under Lyndon B. Johnson, DSC(democrat socialist cocksucker).
The money was stolen to pay for "police actions" in a little burb called Vietnam.
In it's place the gov permanently put a Ponzi scheme, wishful thinking and happy happy feelings.
Shockingly the program is broke now since there is absolutely zero money in the programs accounts.

Prior to that it actually was a gov run retirement program where you contributed to it over the course of your life and then drew from your contributions if and when you retired. You still lost the entire balance of your account if you croaked though so you were never able to leave it to your family. If you were the real unlucky bastard that died the day before retirement age you and your family got completely screwed. The gov steals every penny then and thanks you for your voluntary compliance.

The gov sure does a good job of robbing peoples graves doesn't it? Might as well have the IRS guy out there digging up bodies for any valuables that might have been placed in the coffin since you're obviously trying to take more than your fair share with you and it's plain for all to see you don't really need them anymore. At least then they would be honest about what they're doing.

[1 Patriot-of-many]

It's not a matter of crooks, it's a matter of burden on the system. We aren't the only country with a baby boom after WWII



First, it's not illegal. Second it's not confiscation.

It's moving part of the funds of retirement accounts from private institutions (which are often government backed in the first place) to public institutions.

It's not "stealing half a persons life savings"...it's changing who holds the money for you.

Moves like this allow the public retirement system to stay afloat, which in all likelihood is going to make a far greater positive impact on the people than if the private retirement funds failed completely.

It's all fine and dandy to want private retirement funds, but the fact is most people can't (or don't) manage to put enough away to see them through their old age. They depend on the public system being there.

Just stunned. I have nothing to say but I knew it.

[Oswald Bastable]

Because it was a limited time offer. For a brief window the government, taking in money by the same percentage it had been (for SS) was making more than it needed in order to pay out the day to day of what it owed people collecting SS.

The math was done, and correct. If we had stayed on the path (of SS collecting too much for a brief time) then the budget could have stayed balanced, the debt continued to be payed down and by about 2011 the national debt would have been gone.

Assuming no wars and no real increase in spending and no economic downturn...which is to say life happens, and it wouldn't have gone exactly as planned, but the situation would have been better than it is now.

A government needs to play the long game, yes it was nice for everyone to get $600 (or whatever) back, but it would have been much nicer to be debt free (or nearly so) when we know the bill will soon come due as the baby boomers retire.

Basically, if you don't save up money in the good times, or at least pay down the debt in the good times, then the bad times are going to be that much worse.

Newt was incredibly shortsighted. But he kept his name on the TV for a while, which I think was most of what he wanted. And of course he did get his way, otherwise we wouldn't be in quite such a mess now.

Then I take it you will more than content if the US gov't decides to convert any or all of your retirement funds to the social security system?