Countries Backtrack on Privatizing Retirement
When Poland introduced private retirement accounts in 1999, the government gave its blessing to a $100 million ad campaign explaining why workers were required to contribute. Privately managed savings accounts would assure a comfortable retirement, the pitch went, while giving a boost to Polish capital markets and taking pressure off the underfunded state social security system.
Last year, the Polish government seized more than half the assets held in the individual accounts, telling workers that the state social security system would pay their benefits when they retired. “It was highway robbery, the strong taking from the weak,” fumes Marcin Jaworski, a 34-year-old tax consultant in Warsaw. “I expect the public pension system to go bust,” he says.
Poland is among 11 countries that have recently rolled back or abandoned efforts to privatize their retirement systems. The latest to backtrack was Bolivia, where President Evo Morales in mid-January nationalized $10.2 billion held in individual retirement accounts.
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