Poland’s prime minister, Donald Tusk, announced Wednesday that the government would attempt to cut government debt by taking money from its citizens’ private pension funds. Poland currently has a two-fold pension system: mandatory contributions are made to the state pension fund and then to private funds. It is the state funds, known as ZUS, that the Polish government plans to “transfer” money from. According to Reuters:

…Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.

He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.

Clearly, not everyone is happy with this plan, and some are calling it unconstitutional. However, Finance Minister Jacek Rostowski stated that the government hoped to reduce Poland’s debt by about eight percent of that nation’s GDP. Poland’s market did not respond well to the news, dipping slightly the day of the announcement. An unnamed executive at a pension fund said,

This is worse than many on the markets had feared,” a manager at one of the leading pension funds, who asked not to be identified, told Reuters.

“The devil is in the detail and we don’t yet know a lot about the mechanism of these changes, what benchmarks will be use to evaluate our performance… (It) looks like pension funds will lose a lot of flexibility in what they can invest.”

One official said that private pension funds may close all together due to this move.

This move by Polish officials mirrors what happened in Greece last year, when workers and retirees lost around 10 billion euros ($13 billion) due to that government’s “debt restructuring.” While one Bank of Greece official referred to the move as a “haircut” of pensions, citizens didn’t feel that way:

Among individuals on the receiving end of the losses is Constantine Siatras, 79, a retired lieutenant-general, who says his e has fallen by 33 percent during the crisis.

“We should not have illusions that our pension fund will recoup what it lost from the haircut on its government bond holdings,” he said. “It’s very hard to get by as a pensioner the way things are going.”

Yet Siatras is one of the lucky ones: he still gets about 1,700 euros a month. Most have to survive on far less. Despite Greece’s reputation for profligacy – with reports of public sector workers retiring early on fat pensions – the average pension is about 850 euros a month, according to unions representing 80 percent of pensioners.

Many pensioners have to get by on less, including Yorgos Vagelakos, a 75-year-old former factory worker, and his wife, who live in Keratsini, a working-class district near Athens. “We can barely afford to buy our grandchildren anything, not even a colorful notepad. When they ask us for one, we change the subject and then we cry,” Vagelakos said in the tiny yard of his house.

As Samuel Gregg, Acton’s Director of Research, pointed out in ing Europe, most of the EU has big pension problems. With decades of decreased birth rates and burgeoning retirement rates, demographic and economic realities are colliding. Sweden, France and Germany have all attempted pension reforms, to varying degrees of success, mainly by raising the age of retirement. Gregg states, “…it is not clear that the United States can avoid similar political and economic challenges to those faced by Europe with regard to…fiscal sustainability…”

If private citizens’ pensions are now being used to bail out European governments, it gives one pause as to America’s financial future.