Russian Gov’t Seizes Private Pensions; Can It Happen Here?

The Russian Government has temporarily seized 244 Billion Rubles (approx. $7.6 billion) from private pension funds under the guise of performing “inspections” on the soundness of the accounts. Of course, nobody with an ounce of sense believes that: The Russian Government will likely use the money to patch its own budgetary balloon as the Russian economy reels from a vast slowdown amidst stale growth and weak investment. Russia has therefore joined the ranks of Poland, Hungary, Argentina (and soon, Greece) as the latest in a series of national governments who are seizing private retirement accounts.

As the Wall Street Journal reports:

Prime Minister Dmitry Medvedev told ministers Thursday that the government needs to check that the money Russians channel to private pension funds is safe. To do this, it will seize 244 billion rubles ($7.6 billion) from non-state pension funds and put them into the state pension fund…

Government officials say they’ll just hold the money on the state pension fund’s books for a year while the checks are carried out. But analysts say they suspect the government will be tempted to use the money to plug shortfalls in the pension system, instead of channeling funds from the state budget, as it has previously.

The government is scrambling to find other sources of income to help it fulfill spending pledges by President Vladimir Putin… Experts say the government’s pension maneuver could be another way to cover the shortfall.

Could this happen in America? Certainly. However, will it happen? It is conceivable. When Social Security and Medicare begin to reach critical budgetary mass, I think the Federal Government may reach for the low-hanging fruits: IRAs of private individuals. I can easily imagine the Federal Government nationalizing private IRAs into “The National Retirement Trust” or some other disguise. The real purpose would be for politicians to seize private assets and use them to cover their own overextended butts.

My recommendation for the future: Forget IRAs. Beyond holding cash, purchase precious metals and real estate.

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One Comment on “Russian Gov’t Seizes Private Pensions; Can It Happen Here?”

  1. Byron April 16, 2014 at 12:46 am #

    Congress might try but this would clearly violate the takings clause of our Constitution

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