The US government doesn’t need to take your money explicitly, by seizing your retirement accounts, requiring you buy government bonds, or whatever.
It can accomplish the same thing perfectly legally by doing what is generally called “printing money”. Your money is worth less and there’s nothing you can do about it.
Enjoy.
WHAT ?
In a thread entitled " Impending government seizure of retirement account money? " a description of a means to acheive the thread title is not allowed ?
USA politics debates are all about talking about these technical fouls and harldy ever about irmproving the rules of the game to avoid endless discussion about the technical rules of the game
If only you’d held out a few more days this OP could’ve been a 60 day zombie.
You’re also in General Questions, not Great Debates
IIRC (Not American) there are certain situations where the employee has an alternate plan and is exempted from social security participation. Based on the article early in the thread, the Hungarians were trying to roll those sorts of plans into the main “social security of Hungary” type plan.
What plans are exempt / replacement for Social Security in the USA?
Moderator Note
Isilder, I suggest you read the rules of this forum before posting further. The post in question is full of inappropriate political invective. Comments like “looks like Obama is unleashing his minions to start to seize a large jackpot of money” … “Obama and his lame brain economic policies” … “Obama is full of greed and have a frightening large number of followers who think he is Christ” are out of place in General Questions.
I also note that discussion of moderation is not allowed outside of the ATMB forum. Do not do this again or you may receive a warning.
Colibri
General Questions Moderator
I’d say the situation in Europe is fueling this sort of rumor. The typical pattern in countries getting bailouts that people who lose benefits/money/etc due to the autsterity measures are being given bonds that few people seriously think have any real value.
As for it happening in the US, if you have a municipal pension, the far more likely scenario (as faced by Stockton, CA; Detroit, MI; and other places) is that the city declares bankruptcy, and the money in the pension fund is siezed and diverted to other purposes. Since municipal bankruptcies are processed under Federal law, there would be very little that state or local officials could do about it.
Is that what happens?
I know in Canada (I assume the same in the USA) the pension fund is NOT the property of the employer, but a fund “held in trust” for the benficiaries. Thus, the employees do not lose their pension fund in a bankruptcy.
The danger is the opposite: a municipality or company facing bankruptcy is probably well behind on its payment obligations, either legally or not. Plus, if the fund is managed by municipal accounting department, it was probably (unwisely) over-investing in bonds from the failing municipality / company. (IIRC, Detroit Big 3 was famous for car companies accepting car maker stock in lieu of cash for their pension funds)
As a result, the fund will find itself well below the required amount for meeting its obligations and no hope of getting the missing funding made whole by the employer. A fund in this sitauation has 2 choices - keep paying until they are broke, or recalculate payments and cut them to continue to meet all outstanding obligations until they (and the pensioners) expire; i.e. “you are all getting a 30% cut in your pension…”
From what I’ve read, it’s something of a gray area. Municipal bankruptcies are not common, and apparently the law regarding them is not very well-developed.
Basically, not an expert, but reading the news stories…
Stockton pays into the California pension plan for civil servants. They were behind and took out a loan - issued bonds - to make up the difference, gave it to the pension fund. Of course, they still kept falling behind; so they owe a wad more money to the fund. APparently CA law says wages and pensions come before bonds in the debt line-up. The guys who lent money so the pension fund could get paid are crying foul, and also claiming the banks that sold the bonds misrepresented how risky they were for the lenders and for the solvency of Stockton. (Overdue payments the fund charged 7.75% on, while the bonds were under 6%) They are trying to get the bank, or Stockton, or the courts, to put the pension fund in the same line with them and not pay it in full ahead of them.
Meanwhile the California-wide fund has its own solvency problems, due to arrears from municipalities and investments that did not yield the expected 7%-plus these last few years. (what a surprise)
But nobody “takes” a fund, since it is essentially held in trust for the beneficiaries. It is not an asset of the municipality.
Even the airlines did not do this. They basically took the same tack as the municipalities - “Remember that good pension we promised you instead of a raise? Well, surprise we haven’t been putting anywhere near enough money into it as the law said we should; and now we’re bankrupt so that debt is erased. And as an added bankruptcy bonus, the contracts that inculded the pension are void, so when you are eligible to retire, you only get whatever share of your pension you earned before the bankruptcy, reduced by the proportion of the fund that there is enough money for; and you are promised no additional pension going forward. And, oh, yeah, let’s negotiate a pay cut now.”
Adding to this, apparently there is a clause in Federal bankruptcy laws that says the judge must treat all creditors fairly. Some of the creditors are saying this means the pension fund shouldn’t get special treatment, and should have to take a haircut like everyone else.
Just to clarify, under US bankruptcy law a municipality cannot declare bankruptcy without the consent of the state in which it is located. See 11 USC § 109(c). But once it does obtain such consent, the case is handle under Chapter 9 of the federal bankruptcy code.
In case someone else was wondering, there is no provision in the law allowing a state to declare bankruptcy.
I wonder if there was a clue in not knowing by name any of these “5 European countries”
No, there wasn’t. If I asked every Texan coworker who told me a wild story about foreign lands to name any 5 European countries (not necessarily the ones in question), I would soon find that no one wanted to speak to me at all. Geography beyond the state is not considered mandatory knowledge around here.
I’m sure Greece & Cyprus are two of the countries. They fit the pattern of people getting haircuts, and receiving bonds of dubious value in return. I haven’t followed the European economic crisis well enough to guess what the other three countries might be.
The OP was from before the Cyprus crisis, so that couldn’t be it. In any case that was bank accounts, not retirement plans. I’ve never heard about retirement plans being cut in Greece either, though of course if they were invested in Greek bonds they would have taken a licking. But the fact that many IRAs in the US lost value in the crash did not mean that Wall Street was stealing the investment.
So I think that we are, unsurprisingly, still 0 for 5.
Yes, there was nothing about seizing savings plans.
What there was a lot of talk about, in Greece, was reducing pension plans. People who retired at 55 with 100% of their civil service salaray might expect, with the government bankrupt, to have that number reduced; but they were nto special - any civil servant might also expect their salary to be reduced. It’s a process people (other than those affected) call “cutting the budget”.
However, those in private plans should be fine, depending on the details of their plan. If like California, the fund was underwater (maybe it invested in Greek bonds?) and if the company providing that fund was unable to make up the difference - which could happen in a bad economy - then the payee could expect a cut in pension. But, there’s nothing at all (at least, nothing that I’ve read) about seizing peoples’ savings or pension plan funds.
Cyprus is a specil case. A lot of rich Russians parked their money away from prying eyes in Cyprus. The Cypriot banks invested that money in safe, secure Greek bonds. This is just the fallout from the problems in Greece. The Cypriot banks were failing. German taxpayers, who seem to have all the available money in Europe, did not feel like bailing out Russian mobsters. So the final decision was that anything over the 100,000 deposit insurance limit was fair game to “contribute” to the banks’ recovery. Russia refused to help the banks in Cyprus, so the Russians go the haircut.
Again, nowhere in there was a suggestion that savings accounts or pension funds would get taken over.
I think it was only ‘cash’ if the owner created joinder with the US. Don’t quote me, tho. 