Generous Pensions Toppling Hungarian Economy

Budapest secures huge loan to prevent default à la Iceland

(NEWSER) - The Hungarian government secured a $6.7-billion loan yesterday from the European Central Bank in an attempt to stave off an Icelandic-style national meltdown. The EU newcomer's troubles derive from loans denominated in euros or Swiss francs, rather than the softer Hungarian forint. Frozen credit markets have left Hungary's government and citizens struggling to repay their debts. More»

Companies complain they're being forced to sit on too much cash

(NEWSER) - Low interest rates are forcing major employers to put too much money into their pension funds, according to business groups urging Congress to allow contributions to be cut. A measure attached to the Senate highway bill would change the formula major employers use to calculate contributions to defined-benefit pension plans, allowing them to divert funds elsewhere, reports the Wall Street Journal . The measure before Congress would allow firms to use a 10-year average of bond yields, instead of a 2-year average. If it passes, it would be the sixth relaxation in the pension formula since 2002. More»

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.