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Joined: 16 Dec 2009
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PostPosted: Tue Nov 30, 2010 10:41 pm    Post subject: France Seizes €36bn of Pension Assets Reply with quote

It seems Euroland is in a lot deeper doo-doo than they're letting on. Yes, we know about Ireland and Portugal, and all about Spain ... but this looks like an extreme step by one of the two central nations that created the Euro. Scary.

Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system.

The assets have been transferred into the state’s social debt sinking fund Cades. The FRR will continue to control the assets, but as a third-party manager on behalf of Cades.

The change is included in the annual social security law that was adopted last week and will be published by the end of December after anticipated approval by the constitutional court.

The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system.

The decision has prompted a radical restructuring of the FRR’s investments. The new strategic investment plan, which will be released in the new year, will see a rapid reduction in its 40% allocation to equities and a shift to cash and short-term government bonds, according to a source close to the situation.

There will be a focus on liability-driven investment, where asset managers are told to minimise risk by matching assets closely to liabilities.

The transfer of the FRR’s assets to Cades is controversial. Force Ouvrière, a trade union confederation, accused the government of “provoking the clinical death” of the FRR.

The article is behind a firewall at: http://www.efinancialnews.com/.....ion-assets

The thing is -- it works out to be only about €700 per French citizen. Obviously, the pensions of the nation aren't fully funded.

This strikes me as an indication that things are bad, and getting worse once again, in the Eurozone. Look for the US dollar to strengthen, and the stock market to rally ...

In the meantime, we can ponder -- will it happen here?


Joined: 18 Mar 2009
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PostPosted: Wed Dec 01, 2010 3:14 am    Post subject: Reply with quote

Ponder what?

I have been saying for 20 years that when I retire, there will be NO government pension for anyone my age....

It is impossible for a dwindling taxpayer base to support an increasing drain on the system. It was impossible based upon the 1950's baby boom and the bubble of increasing age expectancy.

That was true prior to world governments buying re-election with increasing debt. Prior to the recent implosion of buyouts of the corrupt banking system.

The shi* is hitting the fan in Europe; all European government pension plans will be non-existent in a few years. There is nothing to realistically suggest that Canadians will have a government pension in the future.

Govern your financial planning accordingly...

Joined: 16 Dec 2009
Posts: 5409
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PostPosted: Fri Dec 03, 2010 1:44 pm    Post subject: Reply with quote

I wonder, then, why our government persists in calling it a pension?

A pension is funded. The money is there, and it is invested. Outside of Quebec, ours is a tax.

I agree with you, at least in the general sense. What I actually think is that they will inflate the crap out of the currency so that the payoff is a joke. But it amounts to the same thing. It won't support the so-called pensioners when the time comes.

Yet ... only a minority gets perturbed, and there isn't much they can do except bore people at parties.

Still, it is different when the government actually seizes the money that is there. I think it's a major warning sign.

Most Canadians, it seems, are waiting for an official announcement that their country is bankrupt. Amusing, isn't it?
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France Seizes €36bn of Pension Assets

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