Thursday, May 3, 2012

How Governments Can Seize Retirement Accounts

Iris Mack emails:
Unthinkable that the U.S. government would seize control of a portion of your retirement? Think again. It is happening all over the world, and the U.S. may soon follow suit. 
Eight countries have raided retirement plans since 2008, including France, Poland, Ireland, and Hungary.
She then points to these Simon Black comments:
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 US, public pensions have been raided for years, 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 boneheads 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 US Treasury bonds. And, just to be on the safe side, let's park them in 30-year bonds that yield 4.35%. 
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 US taxpayers will end up being forced to loan their hard earned retirement savings to the government at rates far below any expected inflation. 
Right now, there is a window of opportunity to take action; US taxpayers with retirement accounts can set up a special kind of IRA structure that allows you to take control of your retirement savings, and even ship it offshore if you want to, completely legitimately.
After taking control of your IRA, you can do any number of things-- buy and store gold and silver coins overseas; hold foreign currencies in an offshore bank account; buy securities on international stock exchanges; purchase agricultural property overseas, or even a beautiful apartment on the beach in some sunny country. 
The possibilities are incredible... but the most important thing is that you get this retirement money off the radar of the politicians before they pull an Ireland and announce some new measure, virtually overnight. These things can happen very, very quickly. 
Read more from Sovereign Man here.


  1. To quote from the text:
    "In the US, public pensions have been raided for years, 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."

    There is no "Debt" here, there is no "Owe..."

    From the Politicized Wiki-P:

    "Helvering v. Davis, 301 U.S. 619 (1937), was a decision by the United States Supreme Court, which held that Social Security was constitutionally permissible as an exercise of the federal power to spend for the general welfare, and did not contravene the 10th Amendment. The Court defended the constitutionality of the Social Security Act of 1935, requiring only that welfare spending be for the common benefit as distinguished from some mere local purpose."

    And, Flemming vs. Nestor:

    "Flemming v. Nestor, 363 U.S. 603 (1960), is a Supreme Court Case in which the Court upheld the Constitutionality of Section 1104 of the 1935 Social Security Act. In this Section, Congress reserved to itself the power to amend and revise the schedule of benefits...The Court ruled that no such contract exists [[as Nestor claimed]], and that there is no contractual right to receive Social Security payments. Payments due under Social Security are not “property” rights and are not protected by the Takings Clause of the Fifth Amendment."

    A government entity may not "obligate" another government entity to spend or not spend for some promised goal. Funds are paid into the "General Fund" and benefits are spent from the "General Fund".
    There is no "Debt". There is no "Owe".

    Finally, there does not have to be a "Cataclysm" to cause an elimination of benefits. Programs may be "Defined Away" in "Reorganizations" that fundamentally alter the intent of current law.

    We're living it today.

    Charles Wilson

  2. Are private pensions safe?

    1. As long as they are in gold, silver or nickels and under your bed.

  3. @ RW, thanks for your insightful response. I'm stunned to the point of disbelief and inactivity. I'm sure there are more phases to pass through.

  4. The question I have is once this begins, how long will this allow them to kick the can down the road? Can they do it for another 40 years like they did following Nixon taking us off of the gold standard, or will time be in very short supply by the time they get to this point?

  5. the govt will eventually try to increase taxes on retirement accounts. the easy ways are to increase tax rates on IRA/401k withdrawals, and reduce the deduction allowed for contributions. the other more difficult way will be through some sort of a wealth tax, where they will start taxing the accounts even before the owners are even taking distributions.