Italian Pensions Sapped by Private Funds Bush Backed Italy did for retirement financing what President George W. Bush couldnât do in the U.S.: It privatized part of its social security system. The timing couldnât have been worse. The global market meltdown has created losses for those who agreed to shift their contributions from a government severance payment plan to private funds meant to yield higher returns. Anger is rising both at the state, which promoted the change, and money managers such as UniCredit SpA and Arca Previdenza, which stood to profit. Prime Minister Silvio Berlusconiâs administration is now considering ways to compensate as many as 1.2 million people who made the switch, giving up a fixed return for private plans linked to financial markets. Itâs also letting people delay redemptions on retirement funds to avoid losses after Italyâs benchmark stock index fell 50 percent in 2008, destroying 300 billion euros ($423 billion) in wealth. âThe reform didnât help anyone,â said Gabriele Fava, who heads the Fava & Associati law firm in Milan and writes about labor law. âNot the government, which was hoping everyone would make the switch to take the strain off its coffers, nor the workers who have not resolved the problem of needing a supplement to their social security pensions.â Italyâs experience shows how difficult it is to solve a problem facing governments from the U.S. to Europe to Japan as populations age and the old system of taxing workers to support retirees becomes unsustainable. Bush failed to persuade Congress to let workers put a portion of their Social Security taxes into privately invested accounts as voter opposition increased. -------- The trainwreck of right wing free market principles of privatization/deregulation continues... Imagine if this crap happened here?! No doubt the crowd would want a bailout or riots would ensue.
Wrong... I'm italian. That pension reform was made by the LEFT government, with the agreement of the LABOR UNIONS. And only the uninformed people agreed to put their money into that fund. Most of the workers kept their severance money where it has always been. And this sentence âThe reform didnât help anyone,â isn't true: actually it helped the banks that manage the funds, and charge their fees. BTW, where is "here" ? In USA you have 401k by which you put money in the financial markets, don't you ?