Tuesday, March 30, 2010

CPF for housing = Miserable Retirement?

The average amount a person on pension draws when he retires is >50% of his last drawn salary in other developed countries. A Singaporean would draw between 8% to 26% of his last draw salary (See report below) according to a research paper by Ng Kok Hoe. The reason for this? 68% of the of annual CPF contribution is spent on housing and 18% on health leaving only 14% for pensions.

Remember in Nov 2009 Mercer reported that the CPF is poorly ranked for inadequacy, and a govt expert came out to defend the CPF? [Link]. The govt expert's defense of the CPF was that home equity can be unlocked to achieve adequacy[Link]. Minister Balakrishnan recycled this argument in yesterday's debate with Ng Kok Hoe. This argument is incorrect because other countries don't require its retirees to lose their home to raised funds for retirement...and the fact that Singaporeans have to mortgage or sell their homes in order to retire properly reinforce the point that many netizens have raised that the cost of housing is too high in Singapore and it will lead problems later on. If home prices become unsustainable due to an ageing population which we will inevitably face, we will see a decline in home equity which will worsen the retirement problem.

Mar 29, 2010
Spirited debate on CPF
By Marissa Lee

THE workings of the Central Provident Fund (CPF) and whether it provided enough for retirement fuelled a spirited debate at Monday's inaugural Ee Peng Liang Seminar on Aged.
The spark came from a paper presented by National University of Singapore (NUS) social work graduate Ng Kok Hoe, which highlighted that a Singaporean would draw between 8 per cent and 26 per cent of his last drawn salary from the CPF at age 65.

Mr Ng, who is pursuing his doctorate in social policy at the London School of Economics, questioned if this was enough, as other countries seemed to hit 50 per cent or more through their pension schemes.

Mr Ng's paper showed that 68 per cent of annual CPF contribution is spent on housing, while health took up 18 per cent and pensions 14 per cent.

Debating it were Minister for Community Development, Youth and Sports Vivian Balakrishnan and Dr Lee Soon Ann, senior fellow at the department of economics at NUS. Dr Balakrishnan took the point there was no perfect balance to how CPF should be spent, but noted that Singaporeans had 'by and large got it right so far'.

As to whether the payout was enough, he said one should not discount the equity tied up in housing. There are schemes which allow Singaporeans to sublet their homes or downsize for cash, letting them 'extract liquidity out of equity', he said.


http://vonhayek.blogspot.com/ said...

There is no good ways to save up for retirement except investing in our own children.

CPF is a cruel violation on private property by our government.

The original design is not perfect but did contain some good intentions. But as our saving grows, it aroused the PAP's desire to rob our hard earn income.

PAP subsequently liberalise CPF on housing. The bubble from late 80s eventually collapse during 1997.

I believe CPF should be abolish. When a citizen has too much saving, it will eventually ends up in pockets of elites.

Anonymous said...

To the author of Singapore Mind,

Dear Sirs,

I am a student at the university of Amsterdam. At this moment I am in the end phase of my study and have started to conduct research for my thesis to complete my master in political science. In my thesis and related research I aim at analyzing blogs in Singapore that focus on Singaporean politics, including for instance political issues, political system critics etc.

I would be very grateful if you could send me the links of the most authoritative or well known and well regarded blogs writing about Singaporean politics you know next to your own blog. Maybe you have friends who also write on these matters. If you could forward my e-mail to them and ask them to respond to me, that would be great. Alternatively you could send me their e-mail address or url so that I can contact them myself.

I have one more request. Is it possible that you would cooperate with me and that you answer some questions I will send to you in a few weeks? The questions will be about blogging in Singapore.

Thank you very much for your help!

Yours sincerely,

Sarah Nienke van Voorthuisen

Anonymous said...

Most people in developed countries don't have to lose their homes in order to unlock money from it.

In the end, what are we doing NS to defend?

Our right to lose jobs to cheaper FTs? Our right to not have enough money to retire when we are old?

Singapore clearly won't take care of us when we are in need. Should we then, taken care of Singapore?

Anonymous said...

no wonder the old dino said if our property prices don't go up, we'll be in deep shit.

i say we kick out all pap elites, claw back our money from them and bite the bullet to straighten out this 50-year-old mess.

Anonymous said...

Why are Singaporeans so dumb and daft??

Opportunity is now made for You to invest in other countries now that the end is almost here for everyone to see. Do You need your leaders to tell You point blank?

Thank your saviors and move off! Before your SIDs(currency) become bananas.

family man said...

The fact that Viven Bala says we got it right most of the time - I think he knows he is lying and he is sitting on a time bomb. I live in a HDB flat, I do not wish for a high resle value, cos I know my sons need a place to call home at a reasonable price, that will also allow them to retire gracefully.
PAP ministers need to relook all these policies - and not tie up our monies in endless min sum scheme.

Anonymous said...

home prices cannot be ridiculously priced, agreed. but if we suppressed its true value when other similar cities are rising, the risks of foreigners invading our prime land is highly plausible in a free market system.

that said, you brought nothing into world and you shall also leave with nothing may be be a good philosophy to build on.

lim said...

Just like family man, I too am concern that my children will find it tough to buy a house when they grow up..

Back in the 80s and 90s, our country is growing, and people generally can expect salaries to raise in tandem with cost-of-living, but sadly, this is no longer the case now, with failed policy of massive foreigner influx that, instead of creating jobs with decent pay to singaporeans, ended up depressing wages to 3rd world standard...

We need to do something NOW to change this sad state of affairs, so VOTE out pap for good, even if it means we have to clear up the mess created by pap...

Anonymous said...

the best way to claim the rights to our own hard-earned money is to leave this country.

we are being bullied into a miserable retirement and the only choice we have now is to seek a better life elsewhere!

http://vonhayek.blogspot.com/ said...

I believe there is never a possibility Singaporean can get back their CPF monies unless we migrate.

Given our elites has blown our treasury by failed investments over the years, they could never be counted to fulfill their CPF liabilities.

They are not able to devalue our currency to create a de facto default. Reason, qualitative easing comes will a high risk of inflation that drive interest rate sky high.

That will bankrupt many families that already highly leverage on housing loans.

The other option is to keep CPF interest ridiculously low to rip Singaporean off.

Next followed by restrictions in CPF withdrawal.

Lastly, of course, the import of foreign talent to ensure our leaky coffer is adequately funded by their contributions.

Our public debt is already higher than Greece http://en.wikipedia.org/wiki/List_of_countries_by_public_debt. Fortunately, PAP's counter party is SG citizen while Greece is Wall Street.

Anonymous said...

"CPF for housing = Miserable Retirement?"

Not a ? but a !

Solution is to start early with a high income job OR

do a profitable business

AND SAVE money on your own OR

strike Toto OR

born rich OR

all of the above.

Then retirement will be far from miserable. Frankly, no other way.

Anonymous said...

Vivian has got his brain stuck into his ass.

Anonymous said...

The old people in Australia are very well taken care off. First they can get a government pension of about $2,200 a month for a couple even if the house they are living in is worth $millions. They have free medicals and heavily subsidised medicines. Transports in some states are also free. I see plenty of old people driving around. I also see them enjoying their daily walk in the park. There are also plenty of programs to enrich their lives like organised outings. For the really incapable there is meals on wheel and a program for people to come to tidy up the house on a dialy basis. For the sick, there is free community transport to and from the clinic. Sometimes the medical workers attended to the patient at home.
The Australian system puts the Singapore system to shame.

Anonymous said...

I want tomove to Australia liao

Anonymous said...

My 2 brothers are already in Oz. Perhaps our gov officers should go down under and study how a bus driver can live in a landed home and bring up 3 kids. I am told we become uncompetitive when our wages go up. How so? dt

Anonymous said...

I just had lunch with a local born engineer. He said with his sgd2000+ salary, he is not ready for marriage and raising a family. Main reason is that he to work overtime, cannot afford a HDB flat, ~sgd400 per each child he brings into this world. He also has to contribute to upkeeping his aged mother who stays with another sibling. The gov should study how an Aussie engineer can be competitive, raise a family and live a decent life. dt

The Pariah said...


As I put in my blog (para 3.4i):

At age 65:
Starve 1 month

At age 84:
Starve 4 months

just to pay annual premium for NTUC Incomeshield Enhanced Basic out of CPF LIFE Balanced Annuity!

Anonymous said...

CPF started as a retirement fund for Singaporeans.

As expected, along the way, the CPF through PAP started shifting the goalposts to suit their elite plans.

From the 60's to now, the changes that's been made show only this: Our savings through CPF will be stuck for as long as possible in CPF. The latest by PM Loong that sales proceeds from HDB flats will be clawed back to CPF is yet another trick that they have to hold on to our money!

Then again, how else can they do the song and dance routines in Temasek and GIC without our CPF money?

For what is worth, Singaporeans are always left holding the shit end of the stick while the PAPies continue to pay themselves millions and praise themselves for their jobs well done!

PM Loong, Mah & Vivian are so bloody smug and proud of the fact that retirees should sell their HDB flats to survive retirement.

So when we grow old,
Got house, no money!
Got money, no house!

And they keep thinking that they are God's gifts to Singaporeans.

Holy shit, just


Winking Doll said...


I think the late 80's to pre-1997 housing bubble was due to massive import of Hong Kong immigrants combined with HDB housing open to PRs purchase. They just flipped our markets and left after 1997 return to China, which also coincided with the Asian currency crisis. We see a repeat of this in the recent flood of immigrants. CPF, HDB and ICA have to share the combined blame.

@Sarah Nienke van Voorthuisen

FYI, some URLs besides Lucky (aka Singaporean Mind). Good luck!


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Anonymous said...

U elected them, so they become self claim God. They play God, they play U thru and thru, your Ass and All.
LHL say 'integrity' true, you earn they gamble and spend. They take by the millions, they don't blink an eye and don't care if u are poor. They simply scoop and scoop. Pariah !!!!

Anonymous said...

.... to question like this blogger but again http://topmleehsienloong.blogspot.com/search/label/Foreign%20Trash is scandalous but this blogger appears protected in a blog at http://topmleehsienloong.blogspot.com/ with the PM's face prominently featured beside the blogger since many years ago until now

are all her allegations there true as until now she and her blog has continued without her being charged/sued nor the PM asking her to take it down .... giving the impression that she has the PM's blessings because her "husband has been a loyal PAP supporter and grassroot leader for more than 30 years" and she has "many opportunities to approach" all the ministers and VIPs she named there ....

she can blog like this - so will my identity be anonymous if i donate whether i m a foreign trash or not