Threat to pensions

Threat to Pensions

In some countries – Argentina, Hungary, Portugal – governments have already expropriated private-sector pension funds as a means of dealing with serious financial problems. There are “warning tremors” that such policies of seizure could spread to developed nations, warns FT commentator Tony Jackson.

In the UK governments have long regarded pension funds as an irritant: “pots of gold sitting passive in the economic landscape, when there are exciting policy uses to which they might be put.”

Unfunded pension schemes, popular with governments because they hide the build-up of long-term liabilities, could also be hit “at the stroke of a ministerial pen” even though they have no assets to be seized, as benefits can be slashed, reducing their current financing costs.

CopyRight – OnTarget 2012 by Martin Spring