Poland confiscates half of private pension funds!

[GALTGULCH8]

http://www.zerohedge.com/news/2013-09-06/poland-confiscates-half-private-pension-funds-cut-sovereign-debt-load

<<<"While the world was glued to the developments in the Mediterranean in the past week, Poland took a page straight out of Rahm Emanuel's playbook and in order to not let a crisis go to waste, announced quietly that it would transfer to the state - i.e., confiscate - the bulk of assets owned by the country's private pension funds (many of them owned by such foreign firms as PIMCO parent Allianz, AXA, Generali, ING and Aviva), without offering any compensation. In effect, the state just nationalized roughly half of the private sector pension fund assets, although it had a more politically correct name for it: pension overhaul.

By way of background, Poland has a hybrid pension system: as Reuters explains, mandatory contributions are made into both the state pension vehicle, known as ZUS, and the private funds, which are collectively known by the Polish acronym OFE. Bonds make up roughly half the private funds' portfolios, with the rest company stocks.

And while a change to state-pension funds was long awaited - an overhaul if you will - nobody expected that this would entail a literal pillage of private sector assets.

On Wednesday, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings. The funds would effectively be left with only the equities portions of their assets, even this would be depleted, and there will be uncertainty about the number of new savers joining.

But why is Poland engaging in behavior that will ultimately be disastrous to future capital allocation in non-public pension funds (the type that can at least on paper generate some returns as opposed to "public" funds which are guaranteed to lose)? After all, this is a last ditch step which no rational person would engage in unless there were no other option. Simple: there were no other option, and the driver is the same reason the world everywhere else is broke too - too much debt.">>>

This could never happen in America, could it? There have been rumors that Obama is looking into retirement vehicles because of the national debt and the fact that there is so much money set aside in the IRAs and 401Ks.

Less likely to happen if Bernanke keeps up the $85 Billion a month loans he purchases. But interest rates are creeping up which will take its toll on the debt service.

So does it still make sense to put money into retirement plans?

[caroljane]

This happened in Canada decades ago, it was not the state but the private employer who put the employee pension fund into his company's asset column and in effect confiscated it. Conrad Black, he went to prison later although not for this. The "bozos in the warehouse", to his mind, deserved nothing but derision and despoliation.

[caroljane]

aCon describes himself as a classical liberal and believes he was born in the wrong age. He is a proponent of Great Man Theory and a Napoleon admirer. I have a certain sympathy for him.

I read a great scifi story years ago, wish I could remember the author. It is a deathbed scene of a French colonel, on Corsica, reliving frustratedly the disasters of 1757 in India, when his stupid generals would not listen to his tactics, and the defeat in Canada in 1763, ditto. His loving ineffectual wife, stern mother and hapless brothers (afraid of the future without him) try to comfort him. But of course they cannot, it is Napoleon, born too soon.