‘Kiss your pension fund goodbye’? Economist warns government could seize 401(k)s

The United States government could start seizing 401(k) plans, says one economist who believes a recent Supreme Court ruling sets the stage for Washington to initiate any such plans.

Economist Martin Armstrong published a blog post Monday that took a look at the recent Tibble v. Edison case. The court concluded that employers have an obligation to protect their workers’ 401(k) plans from mutual funds that provide deplorable returns.

Armstrong thinks this could give the federal government the arsenal to begin seizing private funds and take companies to court if mutual funds perform poorly. This comes as the Obama administration has attempted to battle Wall Street brokers who peddle certain retirement investments that may prove to be a conflict of interest.

Here is what Armstrong, who reportedly predicted the ’87 crash and 1990s Russian economic collapse, wrote in his article:

“This comes just in time for then the next step is government to seize private funds and prosecute employers who choose badly a fund manager. This fits perfectly just in time for the Obama administration’s next assault as they prepare a landmark change of its own by issuing rules requiring that financial advisers put the interest of customers ahead of their own. This creates a very gray area wide enough to justify public seizure of pension funds under management.”

He added: “Between the court ruling and the Obama administration’s push for stronger fiduciary rules send a strong message that government can much easier seize the pension fund management industry of course to ‘protect the consumer.'”

In recent years, financial institutions, central banks and governments worldwide have imposed stricter deposit/withdrawal measures and classifications on customers. Here is a list of some questionable practices and newsworthy events in the past couple of years:

• Bank deposits may soon be classified as paper investments and not money.
• JPMorgan Chase has begun to restrict the use of cash in various markets  and here.
• Spain imposed a tax on savings accounts.
• Swiss Bank blocked a pension fund from withdrawing its cash.
• Six major banks were fined $6 billion after it was discovered they manipulated currency market.

There is so much going on in the world of central banking and international finance that it is hard to be optimistic about your retirement investments, savings accounts and overall cash deposits.

If a country like Australia, a nation that has been lauded for its sound banking infrastructure, can install a deposit tax then why can’t a country similar to the United States, a place with an unsound banking infrastructure, do so as well?

Retirements are already in a crisis. If governments begin to seize your 401(k) accounts the crisis will only be exacerbated.