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Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its 'fair share' of private retirement funds.
Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year... a lot of money in a country of only 4.4 million people.
Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7 percent. Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.
It reminds me of Bolivia — there's a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll... obviously not for the maintenance of the road, but to pay the salary of the toll collector.
At the airport, you have to pay an airport tax before departure... obviously not for the upkeep and efficiency of the airport, but to pay the salaries of the guys who collect the airport tax.
This is what politicians consider "job creation," yet these positions only serve to destroy value. That they would stick up the retirement funds of hardworking people is even more immoral.
Here's the best part, though. If you are a government worker in Ireland, your pension is exempt. They're only going after people in the private workforce. It's truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.
Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.
Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.
Think it can't happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, "legally" allowing politicians to steal retirement funds from the public in order to pay off other debts.
In the U.S., public pensions have been raided for years, and Congress routinely "borrows" from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt "because we owe it to ourselves" — $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.
Chances of this money being repaid to Social Security in full? Slim. The trend is more debt, not paying off existing debt. In fact, I'm convinced that politicians have their eyes firmly fixed on the trillions of dollars in private individual retirement accounts (IRAs) in the United States to fund new spending.
Here's how it will go down:
First, there will be some event... some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.
Bear in mind that most IRAs are managed by hotshots at big financial institutions; they get compensated not based on the performance of their portfolio, but on the total amount of assets under management. Your interests and their interests do not align.
As such, most IRAs are callously tossed into S&P index funds or some such generic vehicle, citing the safety of broader market diversification, as if that nonsense they teach in MBA finance classes is how the real world actually works.
When a big crash occurs, these unhedged broad market positions get hammered the most. Don't worry though, your fund manager will still get a big fat bonus check, because his performance is irrelevant.
This is when Congress will step in. Citing its desire to 'protect' the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the "safety and security" of U.S. Treasury bonds. And, just to be on the safe side, let's park them in 30-year bonds that yield 4.35 percent.
Sound fair? Well who asked you anyways... just be a good citizen and turn over your money already. The important part is that the big financial institutions still get their big fat fees, and the government gets its hands on the mother lode.
This is how U.S. taxpayers will end up being forced to lend their hard-earned retirement savings to the government at rates far below any expected inflation.
This is when Congress will step in. Citing its desire to 'protect' the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the "safety and security" of U.S. Treasury bonds. And, just to be on the safe side, let's park them in 30-year bonds that yield 4.35 percent.
And they've had numerous hearings on this. They believe Americans want this; that Americans don't want to manage their money themselves.
Well with the Treasury now borrowing from Fed retirement pensions and that will only last until August..what will they do come September ?
SS is no longer the cash cow for Congress..that one is now operating at a monthly deficit.
The writing is on the wall and has been for some time.
How many are seeing it ?
The Obama administration will begin to tap federal retiree programs to help fund operations after the government loses its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.
Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its 'fair share' of private retirement funds.
Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year... a lot of money in a country of only 4.4 million people.
Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7 percent. Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.
It reminds me of Bolivia — there's a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll... obviously not for the maintenance of the road, but to pay the salary of the toll collector.
At the airport, you have to pay an airport tax before departure... obviously not for the upkeep and efficiency of the airport, but to pay the salaries of the guys who collect the airport tax.
This is what politicians consider "job creation," yet these positions only serve to destroy value. That they would stick up the retirement funds of hardworking people is even more immoral.
Here's the best part, though. If you are a government worker in Ireland, your pension is exempt. They're only going after people in the private workforce. It's truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.
Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.
Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.
Think it can't happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, "legally" allowing politicians to steal retirement funds from the public in order to pay off other debts.
In the U.S., public pensions have been raided for years, and Congress routinely "borrows" from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt "because we owe it to ourselves" — $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.
Chances of this money being repaid to Social Security in full? Slim. The trend is more debt, not paying off existing debt. In fact, I'm convinced that politicians have their eyes firmly fixed on the trillions of dollars in private individual retirement accounts (IRAs) in the United States to fund new spending.
Here's how it will go down:
First, there will be some event... some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.
Bear in mind that most IRAs are managed by hotshots at big financial institutions; they get compensated not based on the performance of their portfolio, but on the total amount of assets under management. Your interests and their interests do not align.
As such, most IRAs are callously tossed into S&P index funds or some such generic vehicle, citing the safety of broader market diversification, as if that nonsense they teach in MBA finance classes is how the real world actually works.
When a big crash occurs, these unhedged broad market positions get hammered the most. Don't worry though, your fund manager will still get a big fat bonus check, because his performance is irrelevant.
This is when Congress will step in. Citing its desire to 'protect' the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the "safety and security" of U.S. Treasury bonds. And, just to be on the safe side, let's park them in 30-year bonds that yield 4.35 percent.
Sound fair? Well who asked you anyways... just be a good citizen and turn over your money already. The important part is that the big financial institutions still get their big fat fees, and the government gets its hands on the mother lode.
This is how U.S. taxpayers will end up being forced to lend their hard-earned retirement savings to the government at rates far below any expected inflation.
That is why I haven't been making contributions to my IRA and SEP-IRA and have been paying the taxes on my money and just investing it in a taxable account.
It is also a good idea for people to find a firm where they can invest their money in foreign stocks in NON dollar denominated currencies. Just about any other currency will do better than the dollar and therefore your investments will do better. Also, having your money not physically here makes it harder for the government to get their grubby paws on.
Well, I am glad I emptied my 401k a few months ago. Yes, I'll take a big tax hit, but once that's over, the cash is all mine!
Never did feel really safe with the money in there.
Good move, the stock market is manipulated by the banksters and they can make it dance. You might recall when the Senate was debating the audit the fed bill it dropped 700 points. Then the other face of the two headed monster is our cash starved gvt that is seeking any revenue it can devour.
My philosophy is : if you can not hold it in your hand or plant your feet on top of it you might not own squat. Gold,silver,land,housing to rent, and the best iinvestment of all is your self.
Well, I am glad I emptied my 401k a few months ago. Yes, I'll take a big tax hit, but once that's over, the cash is all mine!
Never did feel really safe with the money in there.
...what are you going do to hedge inflation if the cash is sitting in a 2% cd?....you're already behind the eight ball by paying the taxes and the penalty...don't know if i'd have made the same move...
...what are you going do to hedge inflation if the cash is sitting in a 2% cd?....you're already behind the eight ball by paying the taxes and the penalty...don't know if i'd have made the same move...
Well, there was no penalty because I'm over 59-1/2 years old.
It was a tough decision for me to make, but I followed my gut instinct. I suppose time will tell.
I don't plan on a fancy retirement; just a nice house I own outright with low taxes should do me fine. I have six pets, so I'm not gonna be roaming the world, anyway!
Yes, but Ireland has healthcare for all!!! Who cares how it is paid, liberals love to spend other people's money...
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Good move, the stock market is manipulated by the banksters and they can make it dance. You might recall when the Senate was debating the audit the fed bill it dropped 700 points. Then the other face of the two headed monster is our cash starved gvt that is seeking any revenue it can devour.
