The greatest pension raiders of all: governments

Governments around Europe are bailing themselves out by brazenly stealing their citizens’ pension funds. Don’t think it couldn’t happen here, says Merryn Somerset Webb.

We've written here several times about the dangers to your pensions from a deeply indebted government (see the post directly below, for starters). We have also said that this isn't just about allowances being reduced and new taxes appearing out of the blue, but about various kinds of confiscation. Most people don't take this very seriously. But we really think they should.

That's partly because the taboo has already been broken across Europe. Portugal nationalised Portuguese Telecom's pension fund a few weeks ago; Hungary did it in 2010; and last year our own government dipped its toes in the water by shifting all the assets in the Royal Mail pension fund to the Treasury and reducing the national debt by £34bn in the process. The French and the Irish have some form here too.

The most recent move has come from the Polish government, which has announced that all the bonds held in private pension funds are to be transferred to the state. This, says Reuters will "help the cash strapped government to push down public debt, giving it scope to increase public spending at a time when it is trying to restore its flagging popularity with voters".

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I wonder if the journalist who wrote that realised quite how ludicrous it sounds: the government has confiscated people's pension funds in order to bribe them (with their own private pension money) to vote it in for another term. Oh dear. More on this here.

The only positive in the mix is that the government hasn't yet required everyone to transfer their equities too. The government says that this proves that Poland is still "pro market." To us, it merely proves they haven't yet come up with a good PR line to justify taking the equities too. Yet.

Ian King, writing in the Times, makes a good point here. Our new auto enrol system is just starting to create what will soon be huge pools of cash a large part of which will go into the National Employment Savings Trust (NEST). The UK government is no more financially secure than the Polish one (see Matthew Lynn on this in this week's magazine).

So just think, says King, what a "honeypot" this could be for future governments. We rather hope that our governments will have enough fiscal backbone to leave private pension pots alone. But so far their form isn't great.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.