Tuesday, January 05, 2010

CPF Reform and Political Change...

In my previous posting on CPF Life, I brought up the issue of the GIC borrowing from the CPF creating a form of regressive implicit tax and that undermines the ability of Singaporeans to retire by lowering returns. What I brought up is nothing new. This issue has been discussed many times and was brought again in 2007 during the Parliamentary debate on CPF Life. NMP Siew Kum Hong presented a strong case for the need for higher returns on CPF accounts[Link]. Even Chua Mui Hoong, yes, Chua Mui Hoong supported the idea of having the CPF better managed for higher returns:

"Raising CPF returns is manifestly the right thing to do.
It is true the Government faces political flak if funds under-perform, whereas the current guaranteed return is risk-free financially and politically. But a good government does not shirk from doing what it is right; instead it goes ahead and manages the risk.
Even as workers are urged to work longer, they should have the assurance that their old-age savings are also being made to work harder."
- Chua Mui Hoong, Straits Times, 9 July 2007[Link]
The Malaysia EPF achieved a real rate of return of 3.5% and the S. Korea pension fund had a long term real return rate of 5.4%. Singaporeans' real return on CPF is 1.5%. Low returns over the long term means that Singaporeans have to set aside 2-4 times more than people of other countries to retire. Singaporeans have the highest savings rate in the world yet retirement continues to be a problem.
MP Low Thia Khiang made a very simple, feasible and practical suggestion to address the (longer)longevity issue by setting up a longevity fund to handle the residual risk of extended longevity rather than use CPF funds which is already stretched.
But none of these suggestions that will improve the lives of ordinary Singaporeans actually matter as long as the PAP can retain its political hegemony without carrying out positive reforms. The status quo has resulted in a massive build up of reserves that can be used for investment overseas purchase of various overseas assets - the management of these vast amounts and control over various assets provide high paying jobs and opportunities for the elites.
The PAP govt will continue to pass the risk and burden that it should be managing to ordinary Singaporeans as long as they wield monopolistic power and retain control of the media. It is only when ordinary Singaporeans wake up and demand for positive changes that things will change for the better in Singapore and their lives will improve.


Anonymous said...

Any retirement issue has to take into account the cost of housing as well since it eats into a large part of a person's income.

sloke said...

Lucky, what is your take on the recent bond issuance by Temasek. they are paying around 4.5 percent albeit for USD. Lets assume currency risk to be neutral as it can appreciate or depreciate,how so we are only yielding 1.5 pct on the CPF. I can tell you the biggest concern for me now is how to make my savings (ex CPF) work. At this rate, having cash of 1 million will not allow one to live decently.

cy said...

Interest,dividend from GIC/Temasek should be returned to singaporeans.
It will also promote accountability and more prudent investing.

Anonymous said...

Retire to JB or Batam. Singaporeans when they retire should seek out cheaper locations to live out their twilight years. Why must you live on in Singapore after your retirement? With the money you have a cheaper location such as JB or Batam will give you a decent way of life. In Singapore you will only be occupying space and not contributing. Give up your space for those who can contribute and make Singapore progress further.

Anonymous said...

@ Anon 12:16
Why not just ask Sinkies to go and die when they cannot add value to the GDP growth, safe all the trouble of moving to JB or Batam.
Than you will have lots of space for FTs to contribute and further progress for Sinkapore!

Anonymous said...

Anon 12:16

There are other issues to consider other than simply moving to JB or Batam. Things like personal security and medical emergency.

Anyway, it is the responsibility of the Government to take care of its citizens. Why should we move elsewhere.

Anonymous said...

If after working so hard for all my life and I still have to end up retiring in a foreign land as a second class resident, then I would rather that Singapore continue to regress to a point where things become more affordable. The progress only seem to benefit a privileged few. :-(

Towkay said...

Singaporeans voted for PAP to build Singapore into a meritocracy where anyone who can contribute can stay here. Are retirees able to contribute more than a fresh young foreigner? If retirees cannot contribute, it is only right that they make space for people who can contribute by retiring to JB and Batam. Space is scarce in Singapore.

Retirees cannot eat their cake and have it too, they voted for PAP to create this system where only people with merit can prosper. Thousands of Singaporeans without merit have been let go under this system, now it is the retirees' turn to go and they want to change? Is this fair?

If retirees don't want to retire to JB and Batam, they should contribute (work) in Singapore till they are dead. PM Lee has already promised that Singaporeans will come first, so you can be assured for Towkays will reserve jobs for retirees. But of course they must change their fussy attitude and not shun $400 a month cleaner jobs.

Anonymous said...

you know what, I am starting to agree with Towkay, the older gneration of Singaporeans deserve it. The younger generation of idiots who think they are having a good life in the civil service deserve to sink with the ship. All other hands who wish to save their lives should go over board.

Anonymous said...

You are an ANIMAL or animal-like. You need to be DISCIPLINED. The work culture here is their way of disciplining you or to keep you under their rank and file so there is order and accountability and the highest authority, highest rewards and and highest honor shall be bestowed on those with the greatest talent in their respective field.

This is to achieve one united people,regardless of race, language or religion,to build a MERITICRATIC( NOT democratic) society based on elitist justice(money can buy justice(hypothetically) otherwise, go the way of mediation where there is no right or wrong) and INequality so as to achieve happiness, prosperity and progress FOR THOSE who make the most money$$$$$$$$$$$$$$$.

Alan Wong said...

So in other words, all our hard earned CPF savings have been a source of cheap funds for them to invest either to generate more funds or gamble away as losses at their very own pleasure ?

And our PAP leaders has been regarding us as suckers ?

Can we ever forgive them for taking us for a ride all these years ?

Anonymous said...


We already 2nd class citizens in our own land now.

Anyway if you can don't own a property alot of problems might be solved.

Anonymous said...

you are right . some how, meritocracy overshadowed democracy. some people have more rights than others in this kind of societ

I am a gucci products snobby so I know.

Anonymous said...

all your complains are basically stemmed from the fact that equality, and true democracy CANNOT coexist with meritocracy(in principle) and true democracy( regulations are necessary) by default of a capitalist society, why waste time complaining of unequal distribution of wealth(it all boils down to this)?

the root cause is that we revolve our lives around making money( we instill these values in all our kids - that's how scary). all our controversial values and respect come from building wealth.

who wants to derail that? the opposition?

give me a break. these people eat fat fat already(hypocrites) and now free to talk cok.

we adopt their ideology( or double/loose talk - most are middle class and above), we end up with MORE POOR people!!!

Anonymous said...

correction...fact is that equality and true democracy CANNOT coexist with meritocracy(in principle) by default of a capitalist society,

Anonymous said...

Dear Lucky,

Thank you for revisiting this crucial point about the citizens; right to claim their own CPF when they're left without any question of consent in the hands of authourities who seems deemed to lock us from full access of our hard-earned money.

I would like to offer some thoughts on this. I remembered not too long ago the Health Minister mentioned about Singaporeans, perchance, needing to relocate to retirement homes outside Singapore. Nearby islands in Indonesia and Johor were mentioned. I wonder if you remember this. I would think that the payouts that the government is aiming for future retiring Singaporeans works out to be between $150 to $400, depending on how you opt in. Is that is right, then it would make that the amount is more than sufficient for subsistence living for an individual Singaporean. This is because when you convert that to Malaysian ringgit or Indonesian rupiah, it works out well.

This would leave me a nagging doubt that they have a very long term plan about what they want to do with older Singaporeans when the time comes. Aiming that the population reach 6 million plus and with an aging group of native Singaporeans, I am expecting that there will be an implicit, if not, an explicit move in 20 years time towards this direction. We may not retire in Singapore in the future.

Anonymous said...

if there are poor people around, blame it on meritocracy.
if the malay community can't keep up and trapped in a vicious cycle of poverty, dysfunctional families and law breaking, blame it on meritocracy.
if you end up as a cleaner earning $600 a month, blame it on meritocracy.
if foreigners are invading our shores, blame it meritocracy
if you have aged and become undervalued and your pay slashed, blame it on meritocracy.
if you can't afford that hdb flat, blame it on meritocracy.
if you can't afford healthcare, blame it on meritocracy
if price of goods and services go up, blame it on meritocracy.
if you can't hold on to your job or loses that well paying job, blame it on meritocracy
if you are not getting any respect or been treated with indignity as a human being, blame it on meritocracy.
if you don't like LKY and think he is evil, for whatever reasons, blame it on meritocracy.
if the oppositions can't get into power and earn ministerial pay and fly here fly there, blame it on meritocracy
and and and if your cpf can't afford you your well deserve retirement, blame it on meritocracy.

butt butt butt,

you say, you are what you are, educated and well to do, because of...meritocracy and you believe and supports it and LIKE IT and GLORY IN IT(your daily papers featured successful people who thrive on meritocracy everyday.EVERY DAY WITHOUT FAIL).

if so, what the fuck you people talking about here?


PoliciesArePainful said...

Hi lucky, it is beyond doubt the CPF scheme that is meant for retirement is a flop, for many.

Perhaps you and like minded guys can reform the CPF scheme in the not too distant future. (not too long though)

You will know your idea has been a resounding success when 90% of the average earners say, "everytime I look at my monthly CPF statement I feel lucky".

Of course only Lim Swee Say and his fellow PAP stooges feel rich.

So to everyone who don't feel rich or lucky with their monthly CPF statement, make it right with your votes at the coming election.

Towkay said...

Is Lim Swee Say even on CPF scheme? I thought all ministers and senior civil servants are given pension, that means no CPF.

Anonymous said...

hello Towkay,
obviously you miss the statement made by Lim Swee Sway lah !
He said,'every time I look at my monthly CPF statement, I feel rich'.
I am sure he was telling the truth.
I believe when Ah Sway looks at his bank account, he will say, 'I feel orgasm.'

I think Ah Loong is not happy with Ah Sway for saying that publicly.

Anonymous said...

I tot if u earn 8k or more u don't keep in Cpf?

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