Mandatory pension funds: What are your thoughts?

Kimberly Nguyen said:My money, my call. 👍
Look, an employer really, truly has absolutely zero business meddling in this. What business do they have explaining to me which mutual fund is "better"? One fund might show higher returns today, while another takes the lead tomorrow... I'm looking at security and stability, and frankly, my boss has nothing to do with that. They shouldn't even know which specific fund I've chosen! That's why the contributions just go through the Social Security Administration or the payroll provider, and they pass them along to the provider. It's my life savings, not a group decision.

This isn't how we carry on a conversation here.

ironsurfer10 said:@Ronald Allen, I have to be honest—you’re really getting under my skin here. No one is disputing the fact that choosing your pension fund is a matter of personal preference according to federal law. Of course it is. But let's look at the reality: when you walk into a place like Chase, feeling a bit desperate and asking for a mortgage, and they tell you that getting approved depends on switching your retirement plan over to their fund, what are you actually going to say? "I'm sorry, but I already have a provider and I'd really prefer to stay put"? Yeah, right. Most people will jump through whatever hoops they have to just to secure that loan. That’s the point I'm making! A bank teller gets a $133 gross commission
for every single person they convince to move their funds over to them.

Nancy Wilson43 said:Look, it’s basic common sense—you should have the freedom to pick whichever asset management firm you want. A bank shouldn't be tying your loan approval to which specific fund you use... but let's get real here. The truth is, those bank employees are chasing commissions. If you pick their preferred fund, they get a kickback, just like if you signed up for a Chase credit card, a mortgage, online banking, or any other product they're pushing. It’s not inherently evil, I suppose, but it would be a lot better if they actually gave people the full, unvarned truth instead of burying the details just to secure that payout.

Nancy Wilson43 said:Look, it’s basic common sense—you should have the freedom to pick whichever asset management firm you want. A bank shouldn't be tying your loan approval to which specific fund you use... but let's get real here. The truth is, those bank employees are chasing commissions. If you pick their preferred fund, they get a kickback, just like if you signed up for a Chase credit card, a mortgage, online banking, or any other product they're pushing. It’s not inherently evil, I suppose, but it would be a lot better if they actually gave people the full, unvarned truth instead of burying the details just to secure that payout.

Michael Johnson6 said:Bankers work for a paycheck, not some commission stunt. Where do you even get this nonsense?😕???

ironsurfer10 said:@johnny-radim, look, I actually have access to the specific numbers regarding one of these retirement funds, so believe me when I say I know what I'm talking about. To be clear: for every existing member transferred over, they get $133 gross, and for every new member signed up, it’s $60 gross. I'm honestly not sure what part of that is confusing you. Do you seriously think these funds pay their advisors out of the fund's actual returns? There is absolutely no connection between investment yields and advisor commissions. Returns are dictated by how the assets perform on the financial markets. Honestly, I struggle to understand how you can jump into a discussion like this when you clearly don't have a grasp on the mechanics behind it.

Ronald Allen said:Look, I know exactly what I'm talking about, so just trust me here;
the payout is:
new member - net, which is a little more than a third of the gross amount you mentioned
transferred member - net, which is a little less than a third of the gross amount you mentioned
Just because you work at a pension fund doesn't mean you know every single decimal point of what gets paid to whom. With all due respect, maybe don't jump the gun like that... 😉

ironsurfer10 said:NEW MEMBER-
NET$33
TRANSFERRED MEMBER-$77 NET

If I've got it wrong, prove it!
Until then, I'm sticking to what I know is true!

Ronald Allen said:Look, I’m not trying to pick a fight with you or anything, and I definitely don't mean to be disrespectful. I'm just laying out the facts as I see them. I get that commission earnings and payouts aren't strictly tied together, they aren't... but in that moment, I just couldn't help but point out that your math was off regarding the total amount. I guess I phrased things a bit poorly... sorry... 😉

Ronald Allen said:Look, if I actually told you where I work, everyone in the US would know, but here’s the deal:

new member - roughly $23 net
moved member - roughly $38 net

...or do you want me to just copy-paste my pay stub from OMF...?

ironsurfer10 said:Commission earnings and payouts are not at all connected!
I'm honestly confused why you're bringing up being insulted. If I actually said something offensive, please point out exactly which part of my post was disrespectful! As for you being mistaken about the facts—that's not really on me. I'm confident about the commission amounts because, as I mentioned, I work for OMF and DMF, so I have more hands-on experience with this than someone who isn't in the industry.

Mark Sullivan62 said:There’s this persistent rumor floating around that they might eventually scrap the first tier entirely—the one where 15% of your gross pay currently disappears. The reality is, you aren't actually building your own nest egg there; you're just subsidizing the checks being cut to current retirees right now.

With the other 5% of your gross income going into an OMF of your choice, those shares are held in your name, and that's what actually constitutes your future retirement fund.

People used to speculate that this ratio—this 15:5 split—would eventually shift in our favor, moving more toward the OMF side until it hit something like 0:20, but nothing has moved an inch on that front. And honestly, there's a dead-simple reason for that: the government doesn't have the cash to cover current pensions on its own. To fix that deficit, they'd have to pull money from somewhere else, which usually means slapping us with new taxes or some other kind of levy...

Of course, when it comes down to it, your final payout from the Second Floor—your OMF—is going to depend on a bunch of different variables. First off, it's about how much you're actually putting into the fund to buy those shares (which, let's face it, is tied directly to how high your gross salary is), then there's the fund's actual performance, and finally, just how long you've been contributing.

Once you actually hit retirement age, those funds sitting in your OMF get transferred over to a retirement firm, where you'll get to pick how you want to receive the money—I think there are about six different payout models to choose from at the moment.

Brian Moore12 said:I don't think anyone here is actually factoring inflation into their projected income—specifically when it comes to pensions. If, for example, OMF pulls a 7% return in a given year but inflation is sitting at 3%, we’ve really only cleared 4%, right? As Mark Sullivan62 so eloquently put it... our pensions are looking pretty pathetic.