Mandatory pension funds: What are your thoughts?

Hit me up in the DMs to talk all things 401(k)s and pension funds...

Look, let me break this down for you, plain and simple:
1. The first pillar. Every employee shuffles 15% of their paycheck straight into a federal fund to cover current retirees. Don't hold your breath waiting for that money to come back to you; it’s already gone, spent on the people ahead of us in line.
2. The second pillar. You set aside 5% of your pay into a personal account. Whatever manages to pile up over your career is supposed to be your little safety net for when you retire. Of course, that assumes they don't scrap the whole system before then—in which case, you might get some scraps from the first pillar, taken directly from the younger generation.
3. The third pillar is voluntary. You contribute whatever you can afford, whenever you want. You get the tax breaks and the benefits of a 401(k), but you can't touch it until you hit age 50.

Gerald Thomas11 said:Look, let me break this down for you, plain and simple:
1. The first pillar. Every employee shuffles 15% of their paycheck straight into a federal fund to cover current retirees. Don't hold your breath waiting for that money to come back to you; it’s already gone, spent on the people ahead of us in line.
2. The second pillar. You set aside 5% of your pay into a personal account. Whatever manages to pile up over your career is supposed to be your little safety net for when you retire. Of course, that assumes they don't scrap the whole system before then—in which case, you might get some scraps from the first pillar, taken directly from the younger generation.
3. The third pillar is voluntary. You contribute whatever you can afford, whenever you want. You get the tax breaks and the benefits of a 401(k), but you can't touch it until you hit age 50.

Or earlier if you take a 10% penalty.👎

I’ve just entered the workforce for the very first time.☕

Yesterday, I received word from the Department that I am required to select one of the BlackRock funds by December 1st.

The inevitable question arises: which one should I actually pick?

I would be most grateful if you could share your personal experiences, any specific recommendations, or whatever insights you might have.

Heaven knows it won't cost you anything to help out.

😉

Go ahead and check out Morningstar or a similar site to see how these funds are actually performing. Don't get distracted by last year's numbers—look at the returns since the fund's inception. That’s the real metric that matters. Last year, Chase had the highest returns, but honestly, their business practices feel pretty shady and their overall strategy seems inconsistent. Raiffeisen shows solid returns; they stumbled a bit last year, but they've more than made up for it this time around. Avoid AZ at all costs—it's just not worth it. Bank of America is doing alright, though.

Also, when you're selecting a retirement fund, you don't go directly to the fund manager. Instead, head over to a local Fidelity branch and talk to someone at the service desk. Just make sure to bring your ID or any official document with your Social Security number on it.

I’ve got a question burning a hole in my brain, so I’m just going to throw it out there right away: can anyone—and by anyone, I mean my bank—actually force me to move my money from one retirement fund to another? Like, is there some legal loophole or a specific federal regulation that lets them pull a stunt like that? Sorry if this is some redundant question that's already been asked a thousand times on this board, I just need to know what we're dealing with here.

NOBODY can force you to switch your pension fund

The specifics regarding YOUR chosen fund are strictly confidential—not even your boss gets to know...

I can't pull it up right this second, but I'll dig up a link for you... it’s probably tucked away somewhere on the FedEx website

I’ve actually heard rumors that certain banks... hmm... they basically blackmail their clients by forcing them to move their funds over to the bank's own preferred provider just to get a mortgage approved

And people just stay quiet because, well, life happens, but even if they wanted to file a formal complaint, they wouldn't have any actual documentation to back it up

I’m currently at JPMorgan Chase and I’m doing just fine 👍 besides, I have zero intention of relying on Social Security once I retire. By then, those checks will barely cover the cost of a single lunch at a college cafeteria, so...🙂

electricsailor13 said:I’m currently at JPMorgan Chase and I’m doing just fine 👍 besides, I have zero intention of relying on Social Security once I retire. By then, those checks will barely cover the cost of a single lunch at a college cafeteria, so...🙂

I really don't get why everyone is being so skeptical about this new retirement system structure. Personally, I'm actually feeling optimistic; I'm hoping for better, higher payouts down the road!

@ Edgar, I read your post about switching over to those private retirement accounts and 401(k) plans. Did you ever end up getting an answer, or are you still looking? I actually work in the pension industry, so I might be able to help if you need some insight.

Kimberly Nguyen said:NOBODY can force you to switch your pension fund

The specifics regarding YOUR chosen fund are strictly confidential—not even your boss gets to know...

I can't pull it up right this second, but I'll dig up a link for you... it’s probably tucked away somewhere on the FedEx website

I’ve actually heard rumors that certain banks... hmm... they basically blackmail their clients by forcing them to move their funds over to the bank's own preferred provider just to get a mortgage approved

And people just stay quiet because, well, life happens, but even if they wanted to file a formal complaint, they wouldn't have any actual documentation to back it up

Yeah, what you heard is true. That kind of behavior is illegal, and these are exactly the types of things that need to be reported. I honestly can't wrap my head around why people just stay silent. Everyone seems to be waiting for things to fix themselves, but that's never how it works.

ironsurfer10 said:Yeah, what you heard is true. That kind of behavior is illegal, and these are exactly the types of things that need to be reported. I honestly can't wrap my head around why people just stay silent. Everyone seems to be waiting for things to fix themselves, but that's never how it works.

Ha, I finally found a link that actually works on the retirement site 🙂
Does anyone have a direct link to the regulation or law that specifically bans banks from forcing you into an MF as a condition for getting a loan? I spent way too much time digging through the regulations on the Hanfe website, and all I could find was stuff about fund marketing. It almost feels like the bank thinks they have some legal loophole to demand a switch to an MF just to "secure" the credit. Beyond the legality, though, the whole thing is just plain stupid. If I'm totally off base here, please, hit me with a link to the actual rulebook. I’d be more than happy to go toe-to-toe with the bank by filing a formal complaint 🙂

Under current law, banks have absolutely zero authority to touch your retirement funds if you happen to default on a loan.
So, really—why do they push these funds so hard if it doesn't actually secure their loans? 😕
Just take a look at the fund regulations; you're actually entitled to choose your own provider, and no bank can force one on you.

Copy-paste from the Social Security Act, Chapter V:

MEMBERSHIP AND CONTRIBUTIONS TO MANDATORY RETIREMENT FUNDS

Section 40.
(1) Insured individuals covered under the Social Security Act who are under the age of 40 are required to participate via individual capitalized savings in a mandatory fund of their own choosing, thereby becoming members of that specific fund.

If a bank actually had the legal standing to mandate a specific retirement fund as a condition for credit—which we all know they don't—they wouldn't hesitate to issue a certification demanding it from you (but they won't, because it’s illegal). If you're looking to push back—and you certainly have the grounds to do so—file a complaint with the SEC. They quite enjoy it when people report this kind of nonsense. 😉

Steven Reed said:Under current law, banks have absolutely zero authority to touch your retirement funds if you happen to default on a loan.
So, really—why do they push these funds so hard if it doesn't actually secure their loans? 😕
Just take a look at the fund regulations; you're actually entitled to choose your own provider, and no bank can force one on you.

Copy-paste from the Social Security Act, Chapter V:

MEMBERSHIP AND CONTRIBUTIONS TO MANDATORY RETIREMENT FUNDS

Section 40.
(1) Insured individuals covered under the Social Security Act who are under the age of 40 are required to participate via individual capitalized savings in a mandatory fund of their own choosing, thereby becoming members of that specific fund.

If a bank actually had the legal standing to mandate a specific retirement fund as a condition for credit—which we all know they don't—they wouldn't hesitate to issue a certification demanding it from you (but they won't, because it’s illegal). If you're looking to push back—and you certainly have the grounds to do so—file a complaint with the SEC. They quite enjoy it when people report this kind of nonsense. 😉

That’s exactly what I’m getting at—it's just basic, common sense logic right there. 👍

The only thing I really 😕
is, how on earth do you actually prove that a bank is demanding something from someone like that?

They aren't going to give you anything in writing, no way in hell...

But look, if the CFPB receives complaints from several different people at once, I truly believe that would catch their attention. They might actually launch an investigation using something like undercover sting operations or secret shoppers.

Look, if they’re claiming this is a prerequisite for a loan, tell the client to demand that requirement in writing immediately!
If they refuse, skip the teller and ask for the branch manager right then and there—besides, there is always a way to file a formal complaint through the bank's official website, which escalates the issue to corporate headquarters.
I’ve heard whispers that certain banks operate this way, though unfortunately, nobody seems to have stepped up to cause enough of a scene to actually report them.
Practices like these are outright illegal and need to be shut down once and for all.

I am absolutely on board with this idea 👍

But honestly, who’s actually going to step up and take the first move?

ironsurfer10 said:I really don't get why everyone is being so skeptical about this new retirement system structure. Personally, I'm actually feeling optimistic; I'm hoping for better, higher payouts down the road!

@ Edgar, I read your post about switching over to those private retirement accounts and 401(k) plans. Did you ever end up getting an answer, or are you still looking? I actually work in the pension industry, so I might be able to help if you need some insight.

Man, you totally spooked me there, 🤣

I actually had to go back and dig up what I wrote a few months ago just to make sure I wasn't losing my mind, 🤣

but yeah, no, I haven't found an answer, and honestly, I haven't even really put in the effort to hunt one down lately,

so if you actually do know the deal with how those accounts move, I’d be seriously grateful if you could drop the info here, because who knows, maybe someone else reading this is stuck in the same boat too.

Steven Reed said:Look, if they’re claiming this is a prerequisite for a loan, tell the client to demand that requirement in writing immediately!
If they refuse, skip the teller and ask for the branch manager right then and there—besides, there is always a way to file a formal complaint through the bank's official website, which escalates the issue to corporate headquarters.
I’ve heard whispers that certain banks operate this way, though unfortunately, nobody seems to have stepped up to cause enough of a scene to actually report them.
Practices like these are outright illegal and need to be shut down once and for all.

Well, I didn't take out a loan, so whatever.

If I had, and if they came looking for me, believe me, we’d be front-page news by tomorrow morning.

And those folks over at Chase have probably already read my entire inbox cover to cover by now.

Chase actually ended up paying my parking ticket for $27 because their completely incompetent clerk kept me stuck there for an hour and a half just to handle a five-minute task.

Mind you, I am part of the Amazon fund, so they probably won't come sniffing around my business like that...

I’ve always been a firm believer that if someone is up to something illegal, you report it. If anyone ever came to me asking for something shady, I’d make sure the FBI and every major news outlet in the country heard about it. People seem to think that standing up to a bank means they'll never get a loan again—which might be true for that specific branch, but thank God we have enough banks in America now to just shop around elsewhere. 🤷

Mark Sullivan62 said:Man, you totally spooked me there, 🤣

I actually had to go back and dig up what I wrote a few months ago just to make sure I wasn't losing my mind, 🤣

but yeah, no, I haven't found an answer, and honestly, I haven't even really put in the effort to hunt one down lately,

so if you actually do know the deal with how those accounts move, I’d be seriously grateful if you could drop the info here, because who knows, maybe someone else reading this is stuck in the same boat too.

So, looking at it this way: if you contributed, say, $333 into an Erste Bank voluntary retirement fund this year and now you want to switch over to something like a Vanguard target-date fund to put in the remaining $1333 to maximize your retirement savings, you'll end up with the full amount of $1667 in the Vanguard fund. You still have time to make the switch, but just keep in mind those exit fees. I'm not sure if the math actually works out in your favor... while the Vanguard fund performs really well, if you have a significant balance sitting in Erste Bank, those exit penalties might end up costing you quite a bit...