Personal Finance

What's with these "get rich while starting young" examples?

  • Last Updated:
  • Sep 5th, 2007 12:53 pm
Tags:
None
Deal Expert
User avatar
Oct 16, 2001
76501 posts
1583 upvotes
Neil wrote: Can you explain this a little more?

When I worked there they matched my contributions dollar for dollar.

I had to leave it in the pension fund when I left there, but the interest I make still gets matched dollar for dollar
Newbie
Mar 8, 2007
6 posts
I agree that an annual rate of return of 8 per cent is perhaps unrealistic.

There are several things to consider however. The stock market has averaged more than that in the long term. However past performance is no guarantee of future results. Another problem if lack of diversification. If one holds only a few stocks returns can get a little dicey. I am not talking Moose Patures Inc. but rather some of the biggest names in Canadian history.

Anyone remember Air Canada, Stelco, Nortel, Eaton's Massey . Be overweight in anyone of these and we are talking some huge negative returns.

Another factor everyone ignores is the rate of inflation. If you know what $800,000 will buy 40 years from now Nobel prize winners will beat a path to your door...
Deal Addict
Aug 24, 2002
3569 posts
40 upvotes
Sask
Spidey wrote: When I worked there they matched my contributions dollar for dollar.
This part makes sense.
Spidey wrote: I had to leave it in the pension fund when I left there
I don't think that's the case. You should be entitled to move it to another investment plan if you want.
Spidey wrote: , but the interest I make still gets matched dollar for dollar
I don't think this is the case either.

You should probably have someone take a look at that for you.
Deal Expert
User avatar
Oct 16, 2001
76501 posts
1583 upvotes
Neil wrote: This part makes sense.


I don't think that's the case. You should be entitled to move it to another investment plan if you want.

I don't think this is the case either.

You should probably have someone take a look at that for you.
I asked and I asked again. And as for not being the case, I showed who I invest with the semi-annual papers I get, and they do match dollar for dollar. So really theres no sense moving it
Deal Addict
Aug 24, 2002
3569 posts
40 upvotes
Sask
Spidey wrote: I asked and I asked again. And as for not being the case, I showed who I invest with the semi-annual papers I get, and they do match dollar for dollar. So really theres no sense moving it
No sense asking the same people who gave you wrong advice already... of course they'll just repeat the same wrong advice.

And you really might want to go shopping for a new person or company to invest with... if they missed this I would have some questions about their ability either to understand it or to convey it to yourself.

Here's the actual facts from the PEPP's web site:

http://www.peba.gov.sk.ca/PEPP/pepp_faqs.htm

"If you terminate your employment after you become vested and locked-in you may leave your account balance in PEPP until retirement, or transfer your account balance to a Locked-in Retirement Account (LIRA) with a financial institution of your choice, or transfer your account balance to a pension plan with your new employer (with their permission)."

As for the idea that they are matching your earned interest, I think this is a misunderstanding. Perhaps they are showing an imaginary split between what you contributed and what your employer did, but that's not "matching the interest" by any stretch.

How long did you work there and how much did you contribute?

Using your example of the $350 interest being matched by an another $350, what's probably happening is that your vested amount earned $700 and they are just splitting it up visually trying to make you think they are doing something for you when they really aren't. Do they show 2 amounts of money, for example "your" contribution is $9,000 and the "employers" is $9,000? As long as you are vested, the whole $18,000 is actually yours, no matter how they try and present in the statement.

The same link above lists the highlights of your plan and certainly a post-employment interest doubling is not one of the features. That would be an amazing benefit and I don't think I've ever heard of it existing anywhere.
Deal Expert
User avatar
Oct 16, 2001
76501 posts
1583 upvotes
Neil wrote: No sense asking the same people who gave you wrong advice already... of course they'll just repeat the same wrong advice.

And you really might want to go shopping for a new person or company to invest with... if they missed this I would have some questions about their ability either to understand it or to convey it to yourself.

Here's the actual facts from the PEPP's web site:

http://www.peba.gov.sk.ca/PEPP/pepp_faqs.htm

"If you terminate your employment after you become vested and locked-in you may leave your account balance in PEPP until retirement, or transfer your account balance to a Locked-in Retirement Account (LIRA) with a financial institution of your choice, or transfer your account balance to a pension plan with your new employer (with their permission)."

As for the idea that they are matching your earned interest, I think this is a misunderstanding. Perhaps they are showing an imaginary split between what you contributed and what your employer did, but that's not "matching the interest" by any stretch.

How long did you work there and how much did you contribute?

Using your example of the $350 interest being matched by an another $350, what's probably happening is that your vested amount earned $700 and they are just splitting it up visually trying to make you think they are doing something for you when they really aren't. Do they show 2 amounts of money, for example "your" contribution is $9,000 and the "employers" is $9,000? As long as you are vested, the whole $18,000 is actually yours, no matter how they try and present in the statement.

The same link above lists the highlights of your plan and certainly a post-employment interest doubling is not one of the features. That would be an amazing benefit and I don't think I've ever heard of it existing anywhere.
Thanks for the advice. Im leaving it where it is
Deal Addict
Aug 24, 2002
3569 posts
40 upvotes
Sask
Spidey wrote: Thanks for the advice. Im leaving it where it is
Sure thing, just glad we could clear up the matching interest thing. If there ever is a plan like that, I definitely want in myself!
Deal Expert
User avatar
Oct 16, 2001
76501 posts
1583 upvotes
Neil wrote: Sure thing, just glad we could clear up the matching interest thing. If there ever is a plan like that, I definitely want in myself!
Actually the stuff you listed off their website is new. 8 years ago when I quit the government of Saskatchewan, it was that you had to leave it in there.

They have been mailing stuff out the last few months so you can take it out and do what you want with it now. I am taking all that in this fall to my investor and we are going from there
Deal Fanatic
Jul 1, 2007
8569 posts
1763 upvotes
I've seen a lot of different statements of pension plans and other employee savings plans where the employer contributed a portion. Usually, even after you terminated your employment with them, they still segregate employee and employer contributions and show interest/dividends seperately. I can see how this would confuse someone into believing the employer is "matching interest" when really it's just showing the interest earned on the employer contribution.
Deal Addict
Aug 24, 2002
3569 posts
40 upvotes
Sask
Spidey wrote: Actually the stuff you listed off their website is new. 8 years ago when I quit the government of Saskatchewan, it was that you had to leave it in there.
Sorry to be contradictory but I don't believe that's the case. My friend's mom rolled her PEPP stuff out and that was at least 10 years ago.

I know the way they administer the plan and communicate options to the workers are all geared towards leaving the distinct impression you can't (or shouldn't) do this, but the rules and facts are otherwise and have been so for many years. They aren't alone on this, every plan tries to protect it's market share often by making things so intimidating or obscure that people don't realize they have options.

I agree with you that in recent years the plans have become a bit more open in revealing that you do have options.

Top