Saturday, June 27, 2009

The ultimate clusterf**k?

Latvian media are reporting that because of administrative and reporting delays, so-called working pensioners who quit their jobs in June because of new laws cutting their pensions by 70 % will receive neither their salaries nor full pensions in July.
Apparently, this is the result of a combination of cut-off dates for preparing pension pay-out lists and reporting delays to the appropriate social services agencies. In some cases, the disparity (being treated as a 30 % pensioner when one has, in fact, quit work) may extend into August. In any case, a number of people who drew both a salary and a full pension they had earned legally earned until retirement age will be effectively destitute for several weeks this summer. Even the State Social Insurance Agency admits this will happen. Those with mistakenly reduced pensions will be compensated in August.
This is an event that adds insult to both the insult and injury of the 10 % pension cuts mandated for all pensioners as well as the 70 % cut for those still working. There is reason to regard pensions as entitlements equivalent to a personal property interest and the reductions amount to a confiscation (without compensation or recourse) of vested property rights.
It is something that further deteriorates the already badly shaken remnants of public trust in the Latvian government and the state as an institution. It will stimulate further tax evasion and recourse to non-state means of financing one's "retirement" (saving from an off-the-books salary, registering a young relative as working while the retired person, in fact, continues to work and collect a full pension). Under present circumstances, there is no "moral" reason to condemn any means by which people affected by these measures retaliate by ripping off the state. One can only say-- Right On!


MrVariant said...

I can't even say much but "DAMN!" I thought it was bad when politicians steal taxpayer money to go on luxury vacations and whatnot but this takes the cake. This pension screwover is as bad as the guy who gets laid off a year away from retirement and gets nothing.

Pierre said...

While we were in Latvia earlier this month, an acquaintance in the very situation you describe was pondering her options. Odds are she - and many like her - will put their jobs in the grey economy. Employers will save on payroll taxes and employees will keep their 90% pensions.

Consequently, what the government thought it was going to save by lowering pensions, will be further eroded by losses in payroll and tax revenues. A double whammy! Sad, really...