Generous Pensions Toppling Hungarian Economy

Move staves off default until Aug. 2

(NEWSER) - Washington hit the debt ceiling today, barring the Treasury Department from borrowing from the public, so it will begin borrowing from federal workers’ pensions to keep the government afloat. Treasury is legally bound to reimburse the pensions, so retirees won't be affected, notes the Washington Post , but if the debt ceiling isn’t raised by Aug. 2, secretary Timothy Geithner warned again today that the US will hit default. More»

Market losses, aging population leave funds in dire straits

(NEWSER) - States' pension and health care funds had a disastrous year in 2009, saving a whopping $1.26 trillion less than they’ll need to pay the retirement benefits they’ve promised to their workers, according to a new study from the Pew Center on the States. Part of the problem is that market losses related to the financial crisis savaged funds across the country, but states also just aren’t contributing enough to their funds to deal with their aging workforces, the Washington Post explains. More»

Hungary, Bulgaria, Poland call for citizens' savings

(NEWSER) - As European governments seek new sources of revenue, private retirement plans are taking a hit. Since most are organized by the state, "European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends," writes Jan Iwanik for the Christian Science Monitor . Iwanick highlights five such schemes:

• Hungarians last month had to choose between handing the government their retirement savings or giving up their state pensions.
• In Bulgaria, the government called for $300 million of private early retirement savings to be moved to state pensions; trade union protests weakened the plan.

When fund ran dry, it stopped paying its retirees

(NEWSER) - When an Alabama town’s pension fund ran out, it simply stopped sending money to its retirees—a decision that’s never been made before, pension experts believe. That left retired public workers struggling: Some returned to work, one filed for bankruptcy, and one died with no electricity or running water at home. The New York Times calls the case a warning to other cities and states with tight pension funds. More»

Reliance on volatile 401(k)s breeds reluctance to retire

(NEWSER) - Their retirement savings devastated by the financial crisis, older workers are increasingly postponing retirement, the New York Times reports, creating even more competition for scarce jobs. A recent survey found that four in 10 workers over 62 have remained at their jobs longer than they planned thanks to the recession. Our dependence on fluctuating 401(k)s for retirement is turning out to have a perverse effect on the economy, the Times notes. "It’s a sort of reverse automatic stabilizer,” says one economics prof. More»