Granny in Exile

Exiling The Elderly: Germany Puts Retirees Offshore

by:   at Godfather Politics

It has been a recurring complaint that businesses and corporations are leaving the country and looking for places where labor is cheaper and the dollar stretches farther. This is natural behavior, dictated by economics. But what happens when public and private groups begin the same process with retirees? This has already begun for Germans, and became a custom before anyone noticed it was happening. Thus, the Daily Mail:

“German pensioners are being sent to care homes in Eastern Europe and Asia in what hasGerman pensioners been described as an ‘inhumane deportation.’ Rising numbers of the elderly and sick are moved overseas for long-term care because of sky-high costs at home. Some private healthcare providers are even building homes overseas, while state insurers are also investigating whether they can care for their clients abroad. Experts describe a ‘time bomb’ of increasing numbers unable to afford the growing costs of retirement homes.”

I suppose someone is going to claim that “it can’t happen here.” I wouldn’t be so sure. Already, in the United States, many retirees end up in institutional settings who virtually disappear from view in the wider world. How bad will the situation get when real poverty and a reduction in the standard of living hits US citizens who have needy parents?

In the case of Germans, we are talking about people who were led to believe that they would be “cared for” in their late years, and who allowed their wages to be garnished and given to a pension that was supposed to meet their needs. I think it is pretty obvious that no German worked and contributed to the plan in order to be deported to a foreign country in his sunset years. Yet this is exactly the fate that awaits them.

SoVD“The Sozialverband Deutschland (VdK), a socio-political advisory group, said the fact that many Germans were unable to afford the costs of a retirement home in their own country was a huge ‘alarm signal.’ ‘We simply cannot let those people, who built Germany up to be what it is, be deported,’ VdK’s president Ulrike Mascher told The Guardian. ‘It is inhumane.’ Researchers found an estimated 7,146 German pensioners living in retirement homes in Hungary in 2011. More than 3,000 were in the Czech Republic and more than 600 in Slovakia. There were also unknown numbers in Spain, Greece and the Ukraine, as well as Thailand and the Philippines. Some told researchers they were there out of choice as costs were lower, while standards of care were often higher. But many others admitted they moved reluctantly.”

If it is really true that “standards of care were often higher,” then maybe some people won’t mind. But what happens as the economic depression deepens and spreads across the world? Will we stop sending our elderly to other countries when their standards of care decline? Will we ever admit that the standards are declining?

Without wanting to cause unnecessary fear, I have to ask: what will be the legal environment in these foreign countries where the retirees are sent to live? While I have probably seen too many “soylent green” type movies, I could imagine a horror scenario where a country makes money by “caring” for our retirees and, at the same time, exporting food products to us.

Even if that is extreme, I still want to know, where are the children of these retirees? Are they content to see their parents moved abroad? The myth of the state is that it can replace the family. Traditionally, children have looked after their aged parents. The state is proving to be a poor substitute.

Is That Your 401k?

I recall speaking to some folks a few years ago about the possible confiscation of peoples retirement as the government runs out of money. I also recall, everyone I spoke with called me a crazy person. Well, here we are a few years later and looky, looky. They aren’t proposing full confiscation yet, but it’s a start.

Feds eye retirement-fund tax to cut $16 trillion-plus deficit

By GREGORY BRESIGER

Uncle Sam, in a desperate attempt to fix its $16 trillion-plus deficit, is leering over Americans’ retirement nest egg as its new bailout fund.

Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.

A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankruptcy.

Besides 401(k)s, other possibilities include the mortgage-interest deduction on second homes, as well as benefits from employer-provided health insurance, which are untaxed now.

Under current 401(k) rules, total employee/employer contributions can’t exceed $50,000. In the proposed rule change, employer/employee contributions would be limited to 20 percent of the employee’s compensation, with a maximum of $20,000, the so-called 20/20 proposal.

Another proposal being discussed in Congress says all tax deductions on 401(k)s and IRAs to be replaced with an 18 percent credit. The credit, according to a proposal that has been endorsed by economist William Gale, would be placed directly in a person’s retirement account.

“Unlike the current system,” Gale told Congress, “workers’ and firms’ contributions to employer-based 401(k) accounts would no longer be excluded from income and would be subject to taxation, contributions to IRAs would no longer be tax-deductible and any contributions to a 401(k) plan would be treated as taxable income.”

In other words, the employee and employer would no longer get a deduction under the Gale plan, they would qualify for a credit. And the credit would “increase [government] revenues by about $458 billion,” Gale says.

Last week a group of retirement industry experts went to Capitol Hill to criticize these proposed changes in retirement-plan rules. “These changes could have unintended consequences,” warns Lynn Dudley of the American Benefits Council (ABC).

Testifying before the House Ways and Means Committee about the proposals, Randolf Hardock, of ABC’s board of directors, said, “[The idea] could seriously undermine the retirement savings system.”

Jack VanDerhei, research director of Employee Benefit Research Institute (EBRI), believes either of the two proposed 401(k) changes under review would have a “catastrophic” effect on the current retirement saving system.

The 20/20 plan provisions curtailing non-taxable contributions would freeze out many higher-paid employees from signing up for a 401(k), which could lead some companies, according to critics, to question if plans would still be worth offering employees.

Reducing retirement-plan contributions for those at the higher end of the wage scale will inevitably have a bad effect on those in the middle and at the bottom, ABC’s Dudley says.