The following video is by Singapore News Alternative. This short video examines the factors affecting CPF, making it inadequate to meet most Singaporeans’ basic retirement needs.
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aiyoyo
really worry commoners need work till 65yr or more,
how to take it? where is the solution elites?
sad story
aiyoyo
Look at 20% of your salary going into CPF as taxes paid to the government. Don’t expect to get it back. You’d probably be dead by the time you can get it. Besides, the minimum sum is going nowhere but up. $100 can pay for groceries today. Imagine getting $110 back 40 years later when it’s as small as $10 now. 20% CPF contribution IS tax. To the still unconvinced, HDB flats are a rip-off & you pay much more than you should. The amount you shouldn’t have paid for is not unlike tax.
A quick question … what happen if someone die before he reach 65? Would his family inherit the money? One lum sum or installation? What if that someone is single and has no immediate family (thus PAP can legally pocket the CPF) ?
sadoh, I strongly believe that, given the government’s obvious greed, would suck in the money like a powerful vacuum cleaner from the year 3000!
Those retirees who retired at age 55 were very lucky to have enjoyed the perks in higher employer/employee contributions and can be admired for travels and leisure……Ouality of Life!
Life is all about timing and if one is lucky to be in that category…..it is like striking 4D. But what I hear that some dread to retire at age 65 but no choice as the video said it all ……work to your grave……No wonder couples are not producing for the saying that the new born these days, is from cradle to grave…..born and work till you reach old age to your grave……….
Some maybe cash rich but no time for leiaure whilst many with commitments due the high cost of living, will ultimately realise that there will be “0″ quality of Life!…….this will lead to severe depression and many unhappiness
maybe its time for the state to rethink on restructing the cpf.. if they are going to made it a burden on the citizen… then have it will just defeat its orginal purposes.
Rather than using it as a vehicle to ensure a saving for retirement… why not instead restructure it to meet the current demand of singaporeans. I pretty sure that most singaporeans’ main usage is for payment of housing and medical. So just have it for these purposes then…
54) sadoh
If you have made a valid CPF Nomination, it will be distributed to your nominees in the proportion as stated in your nomination upon your death. If you have not made a nomination (why not?) it will be distributed to your family members in accordance with the intestacy laws.
57) Whatsup
///… maybe its time for the state to rethink on restructing the cpf.. if…..usage is for payment of housing and medical. …../////////
It is now still primarily used for these two purposes.
The promise that one will get his money back at 55 is broken. That is the issue here.
Regardless of whether one has paid up his home, the remaining CPF money is rightfully his at 55 to do what he deems fit. If one has yet to fully pay his home, the same applies, he has the right to his CPF money at 55, he can choose to pay outright his outstanding loan, or pay over a peirod of time using his withdrawn CPF.
The medisave minimmum has ballooned to more than $30 over the years. This amount is locked in the CPF forever. The $30 k will be wiped out in one major medical episode in your life, so whether they put the minium at $30k or $300k it is still not going to be enough. If you buy hospitaisation insurance, you do not need that huge sum to cover your medical.You need only to pay a few hunderd buck in premium per annum. So the rational for the medisave minumum is flawed.
>> 51) AngelVision
” all the other stealth taxes like maid’s levy & eating out”
I think you have mentioned ‘stealth taxes’ before.. and while i agree maid levy may fall in that category, i can’t understand why eating out is a tax.
Sure, the price of food includes rental- but the rental not necessarily goes to the govt. it can very well be given to some private foodcourt operator/shopping centre such as Food Junction, Kopitiam, etc.
Plus the definition of tax is a payment that is mandated by the govt in exchange for nothing concrete. Rent is payment in exchange for something– a space to run your business- which is a legitimate business cost like other costs such as noodles, gas, etc.
Actually, if we think about it, Singapore is not unique in holding people’s money for retirement. That is basic premise of govt-run retirement schemes in general.
Let’s put it this way, if we were all living in a welfare state, we pay taxes (think parellel to our monthly CPF contributions). When we become old, do we get back one lump sum of 60k? Nope. We get some fixed amt every month. (think CPF payouts).
Probably the only difference between a welfare kind and a CPF system is CPF lacks the “Robin-hood” redistribution element. In terms of govt-holding money, all countries’ govt retirement schemes are the same.
Which probably brings to the question- why govts (Sg and the West) even put a retirement scheme (regardless of form) in the first place. I guess the experience of many countries is people tend not to plan for retirement.
So people who are disadvantaged by this govt intervention are usually people who CAN and WILL manage their money better than the govt and make it last longer. Unfortunately, this is usually the minority and since there isn’t a perfect filter, they just have to go along with it.
For people who are unhappy that they can’t spend the money now, (which seems to be the majority of the commenters) well you are precisely the target group which all governments target! =)
hi RW,
for some who may have already retired or are near retirement age, who are retrenched currently or is in financial difficulty, they may need to spend to cover daily/monthly expenses.
i hope you do not assume spending the CPF more to frivolious spending. since our govt said reiterated it is so unwilling to provide much welfarism to individuals, yet provide blanket coverage for companies whether they are at risk of winding up or not.
our govt understands that if companies cannot survive in the short term, will not be there for the long term. is it any different for individuals? can someone 45 years old not eat till he or she gets the payout years later?
61) RW
Your comments are reflective of the reality of things in the world and at home with regard to govt-run retirement schemes. CPF or what-you-may-call-it in some other land, are blunt tools.
61) RW on July 8th, 2009 12.48 am
Your explanation as deduced that our cpf is meant to ‘equalise’ the high-tax welfare-state ‘redistribution’ effect in some other countries but not the “Robin-hood”element would be more acceptable and less painful for us to accept if at least the policy makers at least do not give the impression of some robin-hood tendency as far as their own compensation and retirement scheme is concerned.
“For people who are unhappy that they can’t spend the money now, (which seems to be the majority of the commenters) well you are precisely the target group which all governments target! ”
So what does that mean, that it is alright for them to do so. And please do not mention all (emphasis intended) governments as a lot more countries have other elements in their system to ensure that asses are kicked when they need to be kicked.
ugdragon, I do echo your perspective regarding this CPF scheme. The threat of inflation and rising living costs will diminish the temporal value of the lump sum of $$$ in our CPF accounts. CPF is merely the perfect $$$-sucking vacuum cleaner to generate cold hard cash for our government to invest. Actually, the minimum taxes we pay to the government is now at least 27% before IRAS’.
54) sadoh on July 7th, 2009 5.49 pm
‘A quick question … what happen if someone die before he reach 65? Would his family inherit the money? One lum sum or installation? What if that someone is single and has no immediate family (thus PAP can legally pocket the CPF) ?’
Many roads lead to Rome, if you know what the fookie i mean.
47) mike on July 7th, 2009 3.21 pm
‘IMO, CPF belongs to that person. Should he/she decides to withdraw all CPF and migrate to some other country, so be it. We are not in any position, not even PAP should interfere that by delaying the CPF withdrawal age.
…….
In the long term, I belive more people is likely to migrate if they have the ways to do so, and take away all their CPF with them. (me too is looking into this option)’
I shall put it simply. IF Malaysia can give an attractive deal for singaporeans-who-dun-mind-migrating, I wonder how many would not mind cashing out their CPF to retire in a less costly place like in JB which is just a short drive away?
Feel my drift.
erm, is it a good idea of leaving your comments here as they require complusory e-mail address here?
CPF is probably both a social secuirty AND borndage. If you want to leave, nothing would stop you. As for social secuity. Its for social. meaning less burden on the state…even if you’ve got to live like a churchmouse.
Considering human nature generally isn’t too wise with money…even in plenty.
#68 Izekiel
You think gahman delay our CPF withdrawal cos they are caring and want to prevent us from spending it unwisely ??
I might believe that IF temaSICK and GIC didn’t lose so many of our billions and IF our Papies & their cronies are not paying themselves the Guinness World Record for top politicians pay !!!
>> 63. Kopitiam Apek
Thanks for the comment.
>>64. To 61) RW
Yes, i know people are complaining about minister’s high salary.
Yes, i know people are complaining our political system- not being able to ‘kick their ass when needed’.
Thank you for your comment on Singapore politics.
>> 62 Mice is Nice
“i hope you do not assume spending the CPF more to frivolious spending”
I think you are right, in that not all spending is frivolous. If a person is living from hand to mouth, spending more is definitely necessary.
But one point is that even for people who are living from hand to mouth, one should be mindful that are many such years ahead (85-55 is 35 years). We might solve the problem now but it is a short term solution.
We should dissect the issue to two parts:
(i) CPF being not enough
(ii) CPF is being controlled and slowly rationed out.
If CPF is not enough and our answer is to simply let everyone withdraw more for retirement, that is just redistributing the same small pie, pushing the problem to later. I agree with the author that the main problem is CPF is not enough (see #31). In that case, the real solution is to grow it or supplement it with more ‘welfare’ support.
Now the thing is many people seize upon the issue of CPF not being enough and try to muddle it with the issue of ‘removing controls and rationing’ of CPF.
Firstly, it does not address the root problem but merely postpone it.
Secondly, it makes sense to do it and that is why many countries follow the principle of “control/rationing retirement funds” in the various retirement systems they implemented. (#61)
I suspect unlike you, many people deliberately muddle the two issues to argue for a freer hand in spending the money! =)
The crux of the issue, like all else, is the absence of checks & balances. Its like your money is being held by a mafia gang telling you that it is safely yours until retirement and they keep finding excuses to delay dishing it out or reducing it. The worst is, this “mafia gang” is above all law and there is nothing to stop them, no authorities, no laws (laws are made by them), in other words they ahve absolute power to do anything. In this scenario, if you can put your money with a legitimate, regulated pension fund investment company, you will feel safer.
72) Flipflop
I assume you are one of the smarter few who put your $$ with Lehman brothers
instead of cpf , who may run away with your money one day.
Let’s clear the air, cpf can be used for investment, your medical bills, your HDB purchase. You will eventually get back your money at 65, which is meant for your retirement ( and medical bills which at this age is usually the case )
Although not spectacular, there will 2.5% interest growht that is guaranteed by the government, so your $ is not sitting there doing nothing.
Upon death, your money will go to the people of your wish or your immediate family.
So the whole arguement here is that
1. Government take away your money
2. You will die by 65 and not see your money
So my question is:
1. will you be disciplined enough to save your 20% and not buy a new subaru wrx?
2. even if you are savvy enough, will your investment institution be guaranteed not to collapse or default till you are 65?
I am sure there will be comments like
” i can invest and have greater growth”
” People do not have enough to eat”
i am very sure there are alot of investors who can get more than 2.5% return with their money, but are you sure as a government running a country, they will say: Hey take your money and invest in stocks and shares and get spectacular return but do not come looking for us when you lose it all”
or
” Look, i will keep at portion of your earnings and give you back with a bit interest with our country stamp guarantee”
For those who say people may need the money to feed themselves, well it is like putting your money in another pocket and taking it out, you are still using the money meant for yourself when you retire, yes you tide over, but if you cannot have enough now and take from the future , you will be much more worse off when you hit 65.
Besides people who cannot even feed themselves now probably cannot even contribute to CPF, they should be thinking of help schemes and not cpf.
So the reason why they are doing this is mainly to ensure the aging population will have some savings to tide them over whateven cost they may encounter good or bad, it is no different from pension fund in US and mind you, those are not immune to financial risk and mismanagement.
So why is it pushed to 65 instead of 55? I do not want to think of our government as saints but it is a practical decision:
1. Aging population with longer life expectancy
2. More problems encounter at 65 instead of 55 ?
3. if retirement is set at 65 , you probably will have to work until then and gov will have more money to invest ?
So you are complaining that you cannot touch your money and will die by then, i am sure your family can find some use with it, and you are one of those that probably don’t buy life insurance.
Lastly, the problem that CPF is not enough.
Well i think i think it is supposed not to be enough, i pressume it is supposed to be part of your savings. If you can answer my 2 questions above and get spectacular year on year returns with your 20% then yes it is not enough, but CPF i believe is meant for Common people and as such it is planned with that in thinking , and even rich people may go broke some day and CPF will act as a parachaute saving for them.
If CPF which is your saving is not enough, then maybe you are not saving enough?
OR
You are not earning enough …..
I am not Pro-gov but i see this CPF as a pension/savings for the aging as well as
a source of income to invest. This is what is called nation planning.
If not , you can always vote against them and take your 20% to buy your WRX.
Enuff said.
Weiqin #73
You are either saying that Lehman is the only investment company around that is legitimate & regulated or you are saying that I am one of the smarter FEW who cannot read the small prints.
Can the Govt actually guarantee that this compulsory savings will be there for retirement and medical? What if there is a change of ruling party in the Govt? What if the ruling party do a runner? Who can guarantee they won’t unlike Lehman?
As CPF money is allowed for investment (more like shares speculation), what if its lost in the ‘investments’?
I think most people do not fault the idea of CPF, but have doubts on the people in charge of the funds.
aiyoyo
own $, decide by the owner how to use ma, correct?
unless the fund manager super good, then manage people’s $,
else still back to basic, owner manage own $ la, simple logic…
aiyoyo
aiyoyo
They scared you so stupid mah (Weiqin #73), anyhow spend your money buy car, buy Lolex, buy toto, then got no money later on, or dump your money in Layman and lose all. But hor, I tot PM said Sporeans so educated & employable some more leh (means must be clever to make money), I oso wonder then how come cannot ownself look after own money. Weiqin said hor, we will all kenna conned by Layman, so better let gahmen (God) look after our money lah.
hi RW,
post #71 on July 10th, 2009 2.04 am
////I suspect unlike you, many people deliberately muddle the two issues to argue for a freer hand in spending the money! =)////
yeh, you have a point too. there are enough old men who may be tempted by young foreign women to empty their CPF kitty.
but i think there should be more flexibility for people in this extra-ordinary difficult times, afterall there are real cases where mouths need to be fed, kids need money for travelling expenses, what more for some with maids, pets, so on….
Lee on how to keep Singaporeans from rioting by working with no retirement
Mr Lee: “…..A society will remain cohesive only if there is a certain sense of equity and fair play. If I have unbridled capitalism, winner takes all, like in America, and have an underclass, I will find my minorities over-represented and the society will be in jeopardy. They will riot.
“So, what do we do? We raised the levels of the losers. We give them homes which they will not be able to buy, we give their children equal education in schools they otherwise can’t afford, health services and so on and so on and where they have lost jobs because the jobs migrated and they were not educated enough to take the jobs that’s coming that requires higher skills, all right, you take this job, his lower pay, we make it up. Here is Workfare, give you the extra, but continue work. If you stop working, we are giving you nothing. We want no layabouts. You work, we make up. So, you find ingenious ways to keep them working and sufficiently rewarded so that they feel they are not abandoned and as a constant challenge and constant adjustment during this period.”
….read full text of “TRANSCRIPT OF MINISTER MENTOR LEE KUAN YEW’S INTERVIEW WITH ARNAUD DE BORCHGRAVE OF UPI ON 2 FEBRUARY 2008 AT ISTANA” at http://www.channelnewsasia.com/annex/MMinterview.pdf
77) mice is nice
///yeh, you have a point too. there are enough old men who may be tempted by young foreign women to empty their CPF kitty. ////
drool…. : )
Quote :
“We raised the levels of the losers..”
Look at his choice of words. He divides his people into winners and losers.
You can tell he harbours contempt for the majority as they are being seen as ‘losers”. They are only fit to live in pigeon holes.
I feel so sorry that the man, often solely credited by the media for Singapore’s success, is still around. What special herbs he is taking to prolong his existence?
But don’t despair, like all the dictators and emperors that have come and gone, this nightmare will soon come to past. No one can conquer death.
By the way, the man is a good friend of Henry Kissinger.
Read this :
Dr. Henry Kissinger wrote: “Depopulation should be the highest priority of U.S. foreign policy towards the Third World.”
National Security Memo 200, dated April 24, 1974, entitled “Implications of world wide population growth for U.S. security & overseas interests.”
Kissinger is very much alive today. They went to the Bohemian Grove (powerful rightwing industrialists, financials, politicans) gathering where Mr Lee was mistaken for being a waiter. Bohemian Grove list -http://obscurantist.com/texts/bohemian-grove-membership-list/
You can tell what sort of people associate with men like Kissinger. The man credited with Singapore’s success also said he favoured John MCain as America’s president instead of Obama. John Mcain, a rightwing Republican, is a warmonger and believe only in the language of force.
Very telling, isn’t it?
Hi all who want to see changes,
I guess we have all spoken much here. You may like to see my suggestion for change advocators at http://theonlinecitizen.com/2009/07/more-and-more-jobs-available-but-nobody-wants/comment-page-2/#comment-86776 (67) creducator
Can anyone guarantee that CPF contributors won’t end up like victims of “Lehman”?
That is the paradox of Singapore. They say that CPF is good for you so that you cannot anyhow suga-suga invest and blame the government for poor investment. And yet the CPF money are taken by the gov for hind investment, and then no one blame the government ? Guarantee 2.5% ? Please lah. Guarantee what ? Minimum sum and special account increase like no-man land too, these increase and CPF interest not increase ?
65 years old ? last time, I heard the oldman says 67 years old, and it surely increase with time. O…. annuity coming soon… that i’m going to pee my pants.
Did the gov even do what it preach about hind investment ? They gamble on your behalf, lose money and you pay for it ? Not true. When gain money, “show us the money” we ask. No, Shut Up, they say, “because that is for your own good”.
Working like ponzi scheme and then pretend it is not.
Have not read every post on this thread but there seems to be misunderstanding or confusion on a number of issues regarding CPF. Here are my 2cts worth on:
1. CPF takes care of retirement.
No, it can only supplement your other savings/investments for retirement. As S’pore $ interest rates had been low for many years, CPF savings have not grown fast enough to offset inflation. Basically, one has to scale down one’s lifestyle in retirement if CPF alone is relied on.
2. CPF pays low interest
Actually it is higher than savings & FD rates for some time now. In fact some who had more than their minimum sum on reaching 55 actually left what they could take out in CPF to earn the higher interest. They seem to have full confidence in the CPF Board. Someone posted that CPF is a Ponzi scheme. This peculiar anomaly of paying a higher interest may bolster his view.
3. Minimum sum & age at which CPF money can be withdrawn keeps rising.
This is due to losing battle with low interest rates. At age 55 or whichever age CPF money can be withdrawn, the minimum sum is locked in for a number of years (previously 7 years) to grow the sum. It is then withdrawable, the amount depending on the interest rate at the time the minimum sum is placed in an annuity scheme. For those who retired years ago the annuity scheme paid a good monthly sum till death. Sorry, for those who are retiring soon, the same amount put in an annuity would pay less. Hence, the increase in the minimum sum in future looks likely so that a certain sum deemed appropriate for a retiree
can be paid out. Withdrawal age has to increase to allow the minimum sum to grow over a longer period.
4. Why cap salary for which CPF has to be paid?
For the employer’s benefit. Previously the employer had to match CPF paid by employees – 20% of wage for employee & employer. CPF probably reckoned that employers would find it most expensive to pay 20% for someone who says earns $10000 p.m. Employer’s contribution is less now after some tweaking during the bad times so maybe the cap can be increased.
Lastly, on ways CPF scheme can be improved. Mainly on its attempt to have one size fit all and to last a lifetime after retirement. Below a certain amount, let the guy take it all.(ha ha). Set a reasonable minimum sum and pay the monthly sum calculated for a lifespan of 80. If the guy lives past 80, the state continues to pay the monthly sum. How long can the guy rely on the state?
The picture gets clearer as points are put forward here. I can only agree to one purpose of CPF – for mortgage payment. The reason that it is for retirement is completely flawed. As for medical, we still have to rely on private insurance as the CPF schemes are pathetic.
When you pay towards a private pension scheme, the company puts at least 80% of your money in safe investments, guaranteeing a decent rate of return, with the remaining up to your choice of risk. So if the rate of return is high (when economy is good), the money accumulates and IT IS YOURS, YOUR MONEY IS GROWING IN TANDEM WITH THE VALUE OF THINGS.
With CPF, it is cash savings that we are talking about, with a miserable interest rate. Of course the money will depreciate in value due to inflation by the time you retire. Therefore CPF savings for retirement will NEVER be adequate.
85) Mike2cts
Thank you for your positive contribution. You add value to the discussions in TOC.
Your point about one size fit all is very valid.
In all national schemes, that is always the problem. It becomes a blunt tool and will inevtitably cut some the wrong way.
“In all national schemes, that is always the problem. It becomes a blunt tool and will inevtitably cut some the wrong way.” – KopitiamApek
Would fully agree if you are referring only to Singapore! Its not necessary like this in most First World Democratic countries.
the more i revere MMLee,the more i fear him.I do not know why.Have i fallen into
a trap of some kind of cultic force?.