http://i.imgur.com/knvsBI3.png
Assume the inflation rate of 3% which is the inflation rate of past yrs (this is highly conservative as prolonged use of QE and low interest risk spurring elevated inflation.in the coming years)
Assume a nearly incompetent manager is hired to manage the funds and he generates zero real.return only manage 3% to match inflation.
The trick is the 10 yrs lockup of $155K during which it earns nothing.
The $155K after.10 yrs grows to.$208K@3% return.
After that they pay abt 9.5K a yr on the standard scheme.
Per annum $208K will generate abt $6K.
This means your.principal.decrease by $3.5K on the first yr ....you repeat this calculation for 21 yrs until age 86.
At age 86, there is about $100K-120k or so from your.original. sum. If you drop.dead , your beneficiaries get $0 at age 86.
The CPF Life.scheme makes $100K or more surplus per person on a super conservative assumption of 3% returns on funds. It can go up much higher if returns are higher above inflation.
The govt can again use its old trick of lending this money cheaply to GIC and in effectively transfer this surplus to GIC.
Based on the above CPF Life becomes another reserve/surplus building exercise for the PAP.
Most of the pple who suffer are middle and lower income groups whose main savings is in CPF.
Financial analysts who look at this has recommended Pple to sign up for the basic scheme insead of the standard scheme to minimize their loss
Assume the inflation rate of 3% which is the inflation rate of past yrs (this is highly conservative as prolonged use of QE and low interest risk spurring elevated inflation.in the coming years)
Assume a nearly incompetent manager is hired to manage the funds and he generates zero real.return only manage 3% to match inflation.
The trick is the 10 yrs lockup of $155K during which it earns nothing.
The $155K after.10 yrs grows to.$208K@3% return.
After that they pay abt 9.5K a yr on the standard scheme.
Per annum $208K will generate abt $6K.
This means your.principal.decrease by $3.5K on the first yr ....you repeat this calculation for 21 yrs until age 86.
At age 86, there is about $100K-120k or so from your.original. sum. If you drop.dead , your beneficiaries get $0 at age 86.
The CPF Life.scheme makes $100K or more surplus per person on a super conservative assumption of 3% returns on funds. It can go up much higher if returns are higher above inflation.
The govt can again use its old trick of lending this money cheaply to GIC and in effectively transfer this surplus to GIC.
Based on the above CPF Life becomes another reserve/surplus building exercise for the PAP.
Most of the pple who suffer are middle and lower income groups whose main savings is in CPF.
Financial analysts who look at this has recommended Pple to sign up for the basic scheme insead of the standard scheme to minimize their loss
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