Swedish Pension Funds Have Already Been Stolen
by Erol Curmak and Ulf Sandmark
STOCKHOLM, Dec. 23 (EIRNS)While President George W. Bush and his Wall Street friends ready their heist of America's Social Security funds, the Swedes have long since had their once-proud program privatized and its funds stolen. They were suckered into it by a television ad campaign that told them that they would all become millionaires if they went along with the Swedish variant of a privatization scheme.
According to the scheme, payments by employers amounting to 2.5% of employee salaries, are placed in private investment accounts, for which a worker could chose from among 465 fund managers, who would put the monies into the equity markets. This has pumped 20 billion krone (about $3 billion) into the financial bubble.
Meanwhile, the 16% of employee salary that is placed into four funds for the "pay as you go" social security benefits, is also being speculated with and invested in the markets. These funds went down the drain when they were invested in the IT bubble, just before its crash. The loss of monies will mean future cuts in benefits. The retirement age could increase from 65 to 69 years, warns KG Scherman, former head of the government Insurance Administration.
Bush-Style Lying
The privatization scheme, which was exposed in a recent Swedish TV report, was put over on the population by lies and manipulation. Just as Bush now does, both the ruling Social Democrats and the opposition parties claimed that the pension funds would lose monies if invested in safe Treasury bonds. As the documentary exposed, this was a lie, because higher levels of contributions would have kept the funds solvent for some time to come. On the Oct. 29 television broadcast, a Boston University economics professor disputed the government's claims, showing that the funds were not more at risk because of their investment in the markets. Besides, he stated, why should Sweden have given up a system that worked well, for one that won't work and was unproven? The journalist interviewing him replied, meekly, because maybe all Swedes are speculators at heart!
Last year, 87% of all the private investors in some 654 investment funds available were losing money, with an average loss of 10%-20%. Most Swedes are now afraid to open the bright red envelopes with reports of their accounts' performance for fear of the bad news.
Majority Is Opposed
And while the so-called reform was put through with much hoopla, there was really very little public discussion, and any potential opposition was squelched and kept out of the media. Polls taken at the time, in 1998, and since have consistently shown that the overwhelming majority of Swedes opposed the reform and supported the "old" workable system.
The "old" pension system was implemented after a long fight led by the trade unions in 1960. From 1960 to 1985, the AP Buffer Funds (Allmanna pensionsfonderna) became the major source of public backing for investments into public infrastructure. The low nominal interest rates paid on such investments were compensated by improvements in productivity and general economic activity, which increased salaries and thereby the money available for the financing of the pensions. With the new pension system, two-thirds of the funds are invested in stocks and real estate, where nothing is produced. The rest of the funds are looted by the government, and its creditors. When the financial markets fell apart and the econony went down in 2001, the Social Democratic government seized another quarter of the pension fund reserves to balance their budget and pay off debt.
Americans would do well to learn from the example of this Swedish looting scheme.
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