1. Tuleva pension fund manager belongs to people who are themselves investors of the pension fund. This means that the owners are always motivated to keep the costs low. This leaves us, the pension fund investors, more money for our pension. Old school fund managers aim to take as high as possible management fees because their owners – banks – want to maximize their profits.
2. Tuleva introduced low-cost index funds to the Estonian pension market. Most of the pension money in the world goes to such index funds today because historical evidence shows – the lower the costs of the fund, the better the long-term returns.

We in Tuleva believe in passive investing. This means you just spread your money among the largest companies’ shares and government bonds so that risks are well diversified. Then you just need patience in order to keep on the same track and to not let bank tellers scare you or salesmen to deceive you. The funds that invest passively are called index funds.

This used to be a radical idea that became lifetime work for many independently-thinking finance experts:  for example Burton Malkiel, Jack Bogle and Nobel prize winner William Sharpe. Today, academic research and statistics have proven that this strategy works. That is why most people today choose a passive investment strategy.

1. Tuleva pension funds focus on long-term returns and do not worry about short-term fluctuations. Hedging short-term risks would be costly and would reduce our chances of getting the best return for our money.
2. Tuleva does not make forecasts or attempt to outperform the market but invests based on facts. The pension fund money is spread among the world’s largest and most successful companies` shares because this has proven to give the best results for most investors in the world.
3. Tuleva keeps costs very low and spends money only on activities that add value to pension fund investors. The higher the costs, the less money will accrue for our pensions. Tuleva does not spend money on expensive advertising, hedging short-term risks or on an army of salesmen.

Yes. Your money is protected in addition to Tuleva’s own internal rules and procedures by these three pillars:

Financial Inspection has issued Tuleva fund manager a license and is overseeing that our activities comply with its rules.

Swedbank is the depositary bank of Tuleva pension funds. Depositary bank confirms every transaction made with the fund`s assets. Exactly the same way as with the bank`s own funds.

State guarantee fund protects all pension fund investors against the worst, in case the fund manager’s fault has caused damage to the fund.

In case you have more than 10 years to pension age, then we recommend to follow these two principles when saving for pension:

1. Your pension savings should be invested in the asset class with a maximum expected return. For our pension savers that asset class is shares in companies. So you should keep your money in a pension fund with maximum proportion in shares i.e. aggressive strategy funds.
2. Among those funds that satisfy point 1, choose the lowest cost funds. Historical data shows that the fund cost ratio is the best predictor of long-term returns. The higher the expenses, the lower the return, and vice versa.

If you have less than 10 years until retirement, then it makes sense to consider conservative funds. Even though such funds are expected to return less, the value of their shares also fluctuates less.

If you are younger than 55, then Tuleva World Stocks Pension Fund suits you.

If you are over 55, then Tuleva World Bonds Pension Fund may be suitable for you if the volatility of the stock market is completely unacceptable to you.

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The best way to protect yourself is to do nothing and stick to your strategy of low cost funds through both market boom and bust.

Jack Bogle, the founder of the world’s largest fund manager Vanguard, recommends: “Put your money in a low cost index fund and don’t peek!” One of the world’s most successful investors Warren Buffett recommends: “Keep buying it through thick and thin, and especially through thin. The temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something. Just keep buying.”

Why?

Markets are cyclical – there is always a fall after a rise and vice versa. At least that’s how it has been in the past. When you save for your pension, you are a long-term investor. The past is no guarantee for the future, but at least history has shown that a long-term investor does not need to worry about market cycles.

Look at it this way: markets will fall. This is certain. Also, it is certain that nobody knows when it will happen. If you doubt this, try to find a fund manager or analyst who has precisely forecast all recent market crashes – in January 2000, autumn 2007 and summer 2011 and who recommended to buy shares in the intermediate period. There are no such people – some were too optimistic and lost money and others missed out on market gains because they were too pessimistic. All Estonian pension funds have underperformed the market average because fund managers have sometimes been too bold and sometimes too scared.

If you manage to avoid the temptation of making decisions based on short-term market fluctuations and keep smooth-talking salesmen and scaremongering bank tellers at bay, you will get the world market average returns for your investments. Over the long term, these returns have been higher than what most professional fund managers have achieved with their active buying and selling.

No. This is not a good idea. This question has been analysed quite thoroughly in the world and the conclusion is: those people who try to time the market tend to buy when markets are at their peak and sell when at the bottom.

Many investors attempt to predict market movements but most often they do not succeed, even professional investors. This is one reason why Estonian pension funds have significantly underperformed world market average returns.

Remember that a market decline is not necessarily bad news for you. Most of us will be buyers of pension fund units for many years to come. A fixed amount of your salary goes to the pension fund every month and when the market is down, you will get more units for the same amount of money. So when the markets start to rise again, you will have more units that grow in value. This is called dollar-cost averaging. This works for you only in case you do not jump in and out of the funds, attempting to “step on the gas” or “decelerator” all the time.

Learn the basic facts of long-term saving and decide, what is you strategy. You should change your pension fund when it turns out that your pension fund’s strategy is not aligned with your own saving principles. We (and most expects, like investment guru Warren Buffett) recommend that you follow two main rules:

1. If you have more than 10 years to retirement, invest in the asset class with maximum expected return. For our pension savers that asset class is shares in companies. So you should keep your money in a pension fund with a maximum weight in shares i.e. aggressive strategy funds. If your fund is not keeping as much of your money as possible in shares, change the fund.
2. Keep your money in a fund with the lowest possible expenses because the lower the expenses, the better the chances that you will have more money for retirement. Change your pension fund if it isn’t among the lowest cost ones in your chosen investment strategy category.

It might seem unbelievable, but in reality only a quarter of the management fees of a bank’s fund will go towards handling the assets. Fund managers will channel the rest of the money to the parent company for cost of sales and profit. These expenditures will not create any value to us, the pension savers. If we minimize those charges, it is really not that difficult to start a low-cost pension fund.

Tuleva started with managing pension assets of 3000 people. Every pension fund has fixed costs that decrease proportionally as the fund’s volume increases. So, the more people bring their savings to Tuleva, the cheaper we can take care of our assets. In other words, when Tuleva’s funds grow bigger, the management fees will drop even more.

If you have any questions, please contact via 644 5100 or [email protected]. Saving for your pension is one of the most important things to do when thinking about your future. Unfortunately, the pension system has been made rather difficult to understand – don’t hesitate to ask further information.

If you choose Tuleva’s pension funds you will become Tuleva’s client. If you also become a member of Tuleva, you will become a co-owner of Tuleva. Tuleva is a commercial association, which is owned by Tuleva members. We started Tuleva Fondid AS, which manages Tuleva pension funds. All Estonian people can become clients of Tuleva pension funds, you do not have to be a member to do so.

To become a client of Tuleva’s pension funds, you do not have to pay anything – you will instead instantly start to save money due to low management fees. It only takes 2 minutes to switch your fund to Tuleva.

To become a member of Tuleva, you have to pay a one time membership fee (100 euros). Every member has paid a membership fee – this is every owner’s contribution to help develop our jointly owned association. The membership fee is one time only – there are no additional fees later on.