Today is Theft Tuesday May 10th 2011. The State is about to cross the line moving closer to Buenos Aires than Boston or Berlin. Imagine watching your home being stolen from today at about 4pm, brick by brick and that the thief simply alters the law to make it perfectly legal!

Because, if leaks are accurate, today the Government will announce its intention to rob 2% of the capital saved by 800,000 workers, including the unemployed, from their retirement savings at an annual rate of 0.5% for the next four years. These are nothing like public sector pensions. The pension capital saved by those under 35 is only about seven grand rising to about a hundred grand by age 65 and capable of generating a lousy three grand a year in pension.  Despite the fact that the average public sector pension is about eight times bigger and mostly paid out of tax transfers  by private sector workers, their pensions are to be immune. Ironically the weakest public sector workers, tens of thousands who hoped to bolster their shorter service pensions with AVC accounts will find they too are being raided. 

No, it’s not like DIRT or a tax on gains or a levy on economic activity it’s straight forward appropriation of property, that’s theft of capital by any other name and will continue to be robbed even if fund values fall and losses are incurred.

That’s a line never crossed before in the history of the State. After, successfully plundering the private pension market for cash, what do you think is next? Cash deposits, An Post, and Credit Union Accounts are no different to pension accounts, just better understood. Life Insurance savings also move into the firing line.  Today is the game-changer. The Government’s intention, if the briefings are accurate will be to;

• Unilaterally change the law to set aside complex protection surrounding pensions accounts.
• Attempt to coerce Trustees and custodians who are mandated to safeguard assets for members to deplete them by 0.5% each year for the next four years.
• Blunder into a minefield of operational and legal complexities chasing a daft political equation that 0.5% of €90 billion in assets which includes property and schemes bordering insolvency will yield €450 million in cash, no sweat.
• Leave public sector pensions uncapped including the obscene pensions paid to failed former ministers despite election promises to the contrary
• Destroy any incentive to invest in private pensions by chopping tax relief to a level that makes it fruitless.

That the Government intends to revive job growth by robbing the capital it needs off the weakest workers while immunising the strongest is cynical, immoral and ultimately unworkable. That it expects to get clean away with it is deeply misguided. There will be consequences. The best way to plan for retirement from Theft Tuesday is to adopt  the nearest public sector worker to you whose pension you’ve helped purchase with your taxes. Count your lucky stars if that happens to be a former minister or mandarin on about €120,000 per year, they'll make grand neighbours when your short on heating oil.

- Eddie Hobbs