This story was very interesting. Facing budget pressure, Ireland's government seized private pension plans.
They imposed a tax of 0.6% of plan assets per year for the next four years. This is a tax on plan assets and not income. Even if the pension plan loses money on its portfolio, it still pays 0.6% of assets as a tax.
You might say "So what? It's only 0.6%." A 100% tax would be flagrantly obviously corrupt. The State steals property via taxes. The State doesn't steal 100%, because that would be too obvious.
Interestingly, this tax penalizes fully funded pension plans. They will pay a larger tax than an underfunded pension plan.
Ireland's government is broke because Ireland bailed out its banks. Now, Ireland is seizing private pension plan assets, to pay for the bank bailout. They are doing this under pressure from the EU and foreign creditors. The banksters who own Ireland government debt can profitably lobby Ireland's government to raise taxes to prevent a default.
Could this happen in the USA? Yes. At any time, tax law may be changed. Pensions and IRAs and 401(k) plans have certain legal rules now. Those laws can be changed.
How can the State steal your 401(k) or IRA? The most commonly-cited proposal is "mandatory annuity conversion".
They can force you to buy Treasury debt or an annuity, with your IRA or 401(k) assets. That would subsidize the State. Treasury interest rates are much less than inflation. The implied interest rate for an annuity is a lousy rate, and annuities have loads and hidden fees.
At any time, the State may seize your IRA, 401(k), or any State-licensed investment. In 1933, President Roosevelt seized every American's gold. Based on that precedent, the State may steal any investment.
No investment is safe.
- If you invest in a checking account, money market account, or Treasury debt, you will definitely be robbed by inflation.
- If you invest in stocks, the return will probably underperform true inflation. Over the past 10 years, the stock market has severely underperformed true inflation, as measured by gold and silver.
- If you invest in real estate, you will be robbed by property taxes. State bureaucrats can arbitrarily raise property tax rates, ruining your property value. Property can be seized via eminent domain. Zoning laws restrict what you may do with your land.
- Any State paper investment is subject to seizure. It can come from a dispute with the IRS, a frivolous lawsuit, "asset forfeiture", or other legal tricks.
- If you invest in an IRA or 401(k), the tax law may be changed, enabling State thugs to rob you.
- If you invest in a gold or silver ETF, there's a management fee. Even worse, there's a risk that the ETF fund manager is lying about how much physical metal he owns. I.e., there's a fraud risk.
- If you invest in physical metal, there's a "where to store it" problem. If you use a third party, you're subject to fraud risk. If you hide it in your home, you may be robbed by common criminals, or by criminals wearing badges and uniforms. If you buy gold or silver from a State-licensed dealer, they are required to report the transaction to the State. If police keep track of who owns physical gold and silver, they can rob you legally, or leak the list of gold owners to other criminals.
The State financial system will probably collapse in 15-20 years. Once that happens, all State paper investments will probably be worthless. Given that, I should cash out my IRAs, pay the withdrawal penalty, and buy gold and silver. But where would I safely store the metal?
I expect the State to collapse in 15-20 years. I'll keep my State paper investments as a hedge. In a year or two, I'll start gradually buying gold and silver, so I can estimate the risk.