Mandatory pension funds: What are your thoughts?

crimsonotter32 said:Look at the third pillar—the voluntary retirement account. That fund invests in high-yield securities to drive returns. It's fundamentally different from the second pillar, which is mostly restricted to government bonds that offer lower, safer yields. Last year, JPMorgan Chase’s blue fund was the winner in that category, and they’ll likely come out on top again by year-end. That’s why someone on this forum recommended a friend switch over to that specific fund. Honestly, that friend probably got a kickback for the referral, paid out from those commission percentages people mention (0.8%, 0.5%, or 0.2%, then free after three years). Plain and simple: if one fund grows by 5% and another by 10%, paying a 0.8% fee is a smart move because you're still coming out ahead.

The math for the third pillar works like this: you contribute $1667 annually, you get $417 in tax incentives, and then you layer the fund's returns on top of all that using a specific calculation. Every year, the principal gets larger, and the total sum grows rapidly.

Rapid growth at 7-10%? Sure, if you say so.

I’ve been messing around with this third pillar for a little over two years now, contributing about $75 a month, and I actually sat down to look at one of those Democratic Party payouts for that first year. After paying the initial entry fee of $300, well...

Between that supposed "rapid growth" and the Democratic Party contribution, once you factor in that upfront fee, I am literally sitting at zero. Like, dead zero. It’s honestly as if I had just stuffed all that cash under my mattress at home.

So yeah, that "rapid growth" is such massive that $300 it takes you nearly two full years just to break even (even when you include that $417 Democratic Party boost).

Mark Sullivan62 said:Rapid growth at 7-10%? Sure, if you say so.

I’ve been messing around with this third pillar for a little over two years now, contributing about $75 a month, and I actually sat down to look at one of those Democratic Party payouts for that first year. After paying the initial entry fee of $300, well...

Between that supposed "rapid growth" and the Democratic Party contribution, once you factor in that upfront fee, I am literally sitting at zero. Like, dead zero. It’s honestly as if I had just stuffed all that cash under my mattress at home.

So yeah, that "rapid growth" is such massive that $300 it takes you nearly two full years just to break even (even when you include that $417 Democratic Party boost).

That is why I am not putting a single cent into this third tier.
I would much rather put that $750 into unknown.

Terry Cook3 said:I find it genuinely surprising that anyone would even bother responding to you after a performance like that. 😕

Look, I told him exactly what I thought. But now you all have decided to turn this into some massive, sprawling debate... just keep going, I guess. But once more—I am asking someone who actually knows what they're talking about to just give me a straight "yes" or "no." Let me repeat myself: I came here with a specific question, and I want a clear answer from people who understand the "mechanics" better than I do. I don't want to waste my energy digging through this myself. I really don't.

And the question was basically this: "This girl is trying to talk me into switching my retirement fund. Obviously, she’s just chasing the commission points she gets for every 'convert' she brings over... should I move my money from Wells Fargo to JPMorgan Chase, or should I just give her a polite thank you and walk away?"

vivideagle91 said:Look, I told him exactly what I thought. But now you all have decided to turn this into some massive, sprawling debate... just keep going, I guess. But once more—I am asking someone who actually knows what they're talking about to just give me a straight "yes" or "no." Let me repeat myself: I came here with a specific question, and I want a clear answer from people who understand the "mechanics" better than I do. I don't want to waste my energy digging through this myself. I really don't.

And the question was basically this: "This girl is trying to talk me into switching my retirement fund. Obviously, she’s just chasing the commission points she gets for every 'convert' she brings over... should I move my money from Wells Fargo to JPMorgan Chase, or should I just give her a polite thank you and walk away?"

Switching from Wells Fargo to JPMorgan Chase is a win for you. Do some digging on sites like Bloomberg or Morningstar and look at the returns on those 401(k) funds. Let the girl get her cut. Her advice is solid once you actually do the research.

Mark Sullivan62 said:Rapid growth at 7-10%? Sure, if you say so.

I’ve been messing around with this third pillar for a little over two years now, contributing about $75 a month, and I actually sat down to look at one of those Democratic Party payouts for that first year. After paying the initial entry fee of $300, well...

Between that supposed "rapid growth" and the Democratic Party contribution, once you factor in that upfront fee, I am literally sitting at zero. Like, dead zero. It’s honestly as if I had just stuffed all that cash under my mattress at home.

So yeah, that "rapid growth" is such massive that $300 it takes you nearly two full years just to break even (even when you include that $417 Democratic Party boost).

$1667 - $300 = $1367 + 25% Democratic Party ($342) = $1708 + 10% (assuming that's the fund return, applied to those $1367) ($137) = $1845 in the first year.

Second year: $1845 + your fresh $1667 = $3512 + 10% (return, $351) + 25% Democratic Party (on your new $1667 contributions) ($417) = $4280.

Basically, in two years you've contributed $3333 and have $4279 in the account. That would be over a 28% return over two years after paying the one-time entry fee. Stick with it for ten years and you'll end up with a serious amount of money.

My math is rough, so a fund calculator on a provider's website might shift things by a fraction of a percent... Regardless, look at this as retirement savings for your old age and nothing else.

Mark Sullivan62 said:Rapid growth at 7-10%? Sure, if you say so.

I’ve been messing around with this third pillar for a little over two years now, contributing about $75 a month, and I actually sat down to look at one of those Democratic Party payouts for that first year. After paying the initial entry fee of $300, well...

Between that supposed "rapid growth" and the Democratic Party contribution, once you factor in that upfront fee, I am literally sitting at zero. Like, dead zero. It’s honestly as if I had just stuffed all that cash under my mattress at home.

So yeah, that "rapid growth" is such massive that $300 it takes you nearly two full years just to break even (even when you include that $417 Democratic Party boost).

It doesn't matter what kind of savings account you open, which pillar you choose, what insurance policy you grab, or what loan you take out—you’re paying a fee somewhere every single time.

Unfortunately, things aren't quite working out the way you're painting them

When it comes to those calculators they provide, they're basically useless because they’re built on totally flawed assumptions—like assuming you make one single lump-sum payment on the exact same day every year rather than monthly installments, or pretending that a Democratic Party contribution made mid-year yields the same annual return as a constant stream. It just doesn't add up like that.

And look, I hate to be the one to say it, but your math is off too. Take the Democratic Party funds from, say, 2005; if you're looking at 2006, you have to realize that with our crazy government bureaucracy, those funds don't hit your account at the start of the year. They hit at the very end. For me personally, the first batch didn't land until $217 November 14th, and the others didn't show up until $217 December 28th—literally the last business day of 2006.

Of course, by then, the share price had already climbed significantly, so you ended up getting fewer shares for the same amount of cash.

The total you calculated is actually pretty close, though I should mention I threw in some extra cash this year as well, specifically $250. So we're talking 2 * 5000 (which is 4100 + 5000) plus 750 and 1250 from the Democratic Party, barely reaching $4200. If you want the real deal, you can track the actual value of your account online through your personal portal. Basically, I put in 12,000, it converted into 11,100 worth of shares, and today the whole thing is worth 12,600. That means I earned $200 over two years, but after factoring in the 900 entry fee, I haven't even covered my initial costs yet. And let's be real here—whether we're talking about aggressive mutual funds or standard pension plans, a 10% return on a pension fund is actually a decent, respectable yield.

Besides, who's to say it'll stay this way in the coming years? The current projections assume returns will top out at maybe 6-8%, and there's all this talk about the Democratic Party being phased out once we fully integrate further into the European Union.

God, what is going to happen to our retirement?

crimsonotter32 said:It doesn't matter what kind of savings account you open, which pillar you choose, what insurance policy you grab, or what loan you take out—you’re paying a fee somewhere every single time.

I mean, I haven't heard of anyone getting slapped with fees for something like a standard CD or fixed-term savings account.

Sure, you deal with entry and exit fees when you're messing around with mutual funds, but those costs usually balance themselves out within a month or so, whereas with these guys, even two years isn't enough time to break even.

vivideagle91 said:Look, I told him exactly what I thought. But now you all have decided to turn this into some massive, sprawling debate... just keep going, I guess. But once more—I am asking someone who actually knows what they're talking about to just give me a straight "yes" or "no." Let me repeat myself: I came here with a specific question, and I want a clear answer from people who understand the "mechanics" better than I do. I don't want to waste my energy digging through this myself. I really don't.

And the question was basically this: "This girl is trying to talk me into switching my retirement fund. Obviously, she’s just chasing the commission points she gets for every 'convert' she brings over... should I move my money from Wells Fargo to JPMorgan Chase, or should I just give her a polite thank you and walk away?"

And honestly, you're a real piece of work yourself,

That question is basically like asking, "Hey, should I sell my car just so I can buy a different one, solely because my buddy gets a kickback if he manages to sell me a vehicle?"

And you're seriously sitting there expecting a logical, sensible answer to something like that?

unknown

Mark Sullivan62 said:And honestly, you're a real piece of work yourself,

That question is basically like asking, "Hey, should I sell my car just so I can buy a different one, solely because my buddy gets a kickback if he manages to sell me a vehicle?"

And you're seriously sitting there expecting a logical, sensible answer to something like that?

I forgot to mention that if I ever decide to make a move, it’s strictly for my own sake—for my own bottom line. We don't know each other, and frankly, I couldn't care less about her points. Though... maybe I actually do, if... hmm...

vivideagle91 said:unknown

I forgot to mention that if I ever decide to make a move, it’s strictly for my own sake—for my own bottom line. We don't know each other, and frankly, I couldn't care less about her points. Though... maybe I actually do, if... hmm...

Oh sure, go ahead—just play around with your retirement fund and see what happens. You think you're invincible? Retirement is a lifetime away, but don't come crying to me when you realize how fast that money vanishes, alright?🙂

Every single workday brings me one step closer to retirement. Honestly, that’s the only thing that actually gets me out of my warm bed in the morning.

vivideagle91 said:Every single workday brings me one step closer to retirement. Honestly, that’s the only thing that actually gets me out of my warm bed in the morning.

Look, assume you won't see a single cent from the first tier—the one where they take the biggest chunk out of your paycheck. You might get something from the second, but really, all you have is the third tier to invest whatever you want. Keep in mind that several successful companies here in the US already run their own private pension funds—take a major utility provider like ConEd, for example. They've leveled up how they take care of their people. That's exactly why those firms succeed: they have satisfied employees.

I’m going with her—live fast, die young.

Here is the projected retirement math for a 28-year-old woman contributing $67 monthly until age 60:
- At an assumed 5% return, the expected pension amount is $0.38
- At an assumed 6% return, the expected pension amount is $0.46
- If we look at the historical average since inception at Wells Fargo, which sits at 8.02% (though expecting that long-term is unrealistic), the expected pension amount is $0.68

I used a 25% income tax rate and a 10% surtax for these calculations.

Regarding switching funds, fees are calculated based on contributions, and 0.8% on $8.25 equals $67. You can request a monthly breakdown via email showing exactly how much was contributed each month—you just set up the request once, and the report arrives regularly.

vivideagle91 said:unknown

I forgot to mention that if I ever decide to make a move, it’s strictly for my own sake—for my own bottom line. We don't know each other, and frankly, I couldn't care less about her points. Though... maybe I actually do, if... hmm...

And you're still sitting there thinking about it????!!!!???? 😲

😬

Not trying to start a whole new thread on the forums, so I'll just drop this here.

I’ve got a chance to make some quick cash to patch up my bank account—specifically by helping people move their money into the XY pension fund. It’s a simple question: why can't I convince people that switching to a fund with higher returns is actually better for them? And obviously, they'd be doing me a massive favor in the process. To make matters worse, even some close friends have turned me down...🤷

They get the whole concept, but I guess they just can't stomach the idea of me making a buck off it...
Anyone want to share what they've dealt with firsthand?
Any advice would be appreciated.

And why on earth would anyone switch?

"Past performance is no guarantee of future results."

You'd be profiting off people, yet you still act so high and mighty.🙂

rowdyraven said:And why on earth would anyone switch?

"Past performance is no guarantee of future results."

You'd be profiting off people, yet you still act so high and mighty.🙂

Exactly. That’s why you gotta watch how they run things and just jump ship again in three years if needed. ☕
It's wild how most people switch based on convenience rather than actually giving a damn about how the fund is performing. Honestly, I haven't met a single person who actually understands the business model of their own fund. If they weren't getting mailed statements, they wouldn't even know where their money was. Very few people make an actual choice; most just get dumped into a fund by some "algorithm" that only Regos seems to understand. And somehow, all those people who didn't choose anything always end up in AZ. Who knows, maybe it's just me.🙄

Looks like you're also against this kind of way of making money...
Whatever, let's skip over that... we still have a million other things to talk about. 👍
Later!

Could someone please give me a plain and simple breakdown of how these different retirement fund tiers work—specifically what each one actually does and what you end up getting out of them?