Why CPF Life payout keep dropping?

[po2wq]

In 2009, $117,000 payout in the table given is very different from the one computed now ...

sinkies life has gotten chippa evryday ...

 

[winnipegjets]

wwabbit has been solidly with the opposition and his record is here in SBF for all to see.

The annuity issue has no easy solution. I'm all for the abolition of compulsory annuity, but with the caveat that if you squander your life savings on wine, women and song, society will not be asked to save you.

Destitution in old age in singapore is currently caused not because people squander their life savings in their golden years, but because they reached 55 without any savings to speak of. There are always a variety of reasons ranging from illness, domestic problems, a messy divorce, personal bankruptcy, being cheated in business, or spending too much hanging flowers, and so on.

If CPF is liberalized, destitution may rise slightly because some people will do as wwabbit says, squander their life savings in their golden years. But then if you are 55 of sound mind and you still do that, I think society should leave you to get fucked.

I say liberalize our CPF and let people be responsible for their lives, for good or for ill.

Most people, everywhere, are clueless on managing their finances. That's the reality of life.
That is where government has a role. A public pension system - not saving system - is a good tool to enable for retirees live decently in their twilight years. The pension fund will be able to invest at a lower cost and generate higher returns with lower risk than individuals.
The CPF compulsory savings is an abysmal failure for retirement income.

 

[zhihau]

It's not perfect - the Mercer report lists a few places where it needs improving, but the basic principals are sound.

good grief! basic principals are sound? punching a hole in your retirement fund is sound? taking away your own rights to utilize your monies in which ever way you want without your permission is sound?

good luck to you

 

[zhihau]

The CPF compulsory savings is an abysmal failure for retirement income.

very vile to say the least!

 

[zhihau]

wwabbit has been solidly with the opposition and his record is here in SBF for all to see.

bro,
i meant what i said, the sheep deserves the wolves!

 

[wwabbit]

good grief! basic principals are sound? punching a hole in your retirement fund is sound? taking away your own rights to utilize your monies in which ever way you want without your permission is sound?

CPF Life does not "punch a hole in your retirement fund". It takes a portion of your retirement find and provides you with a guaranteed retirement income for life.

It is not true that we can do whatever we like with our money. We are, for example, obliged to pay taxes and our credit card bills. We are not allowed to launder money or to buy illegal drugs with our money. There are cases where money can technically belong to us but can legally only be released to us if certain conditions are met, e.g. trust funds, escrow accounts, and CPF account.

 

[zhihau]

CPF Life does not "punch a hole in your retirement fund". It takes a portion of your retirement find and provides you with a guaranteed retirement income for life.

wah piang...
maybe i should be this specific:
the CPF coupled with the HDB punches a hole in the retirement fund.
CPF Life without an option for folks to opt out is outrageous.
if CPF Life is such a good scheme to begin with, folks will willingly buy in, why the need for a compulsion?

anyway, good luck to you

 

[wwabbit]

wah piang...
maybe i should be this specific:
the CPF coupled with the HDB punches a hole in the retirement fund.
CPF Life without an option for folks to opt out is outrageous.
if CPF Life is such a good scheme to begin with, folks will willingly buy in, why the need for a compulsion?

You need to elaborate more about how "CPF coupled with HDB punches a hole in the retirement fund."
Your CPF *is* your retirement fund. If you use your CPF to purchase a HDB flat, then yes, your retirement fund will be reduced. Surely you can't be suggesting that we should all receive HDB flats for free to keep our retirement fund intact?

Your next argument is a classic Argumentum ad Populum fallacy. In any case, compulsion is required so that people that squander their money will not pose a social burden on the rest of the nation.

 

[winnipegjets]

You need to elaborate more about how "CPF coupled with HDB punches a hole in the retirement fund."
Your CPF *is* your retirement fund. If you use your CPF to purchase a HDB flat, then yes, your retirement fund will be reduced. Surely you can't be suggesting that we should all receive HDB flats for free to keep our retirement fund intact?

The government allows you to use your retirement fund to purchase your flat so that you won't feel or see the pinch of the overinflated flat. Why can't the government run the CPF like a pension plan? 25 percent of one's salary goes into the CPF ...and all we get is the meager return of 2.5 percent or in rare occasion, 4 percent. Our savings is being eaten up by inflation!!!!! The government gets cheap money to build flat that is sold to us at 2X profits!
Look at pension scheme elsewhere ...the teachers pension fund in Ontario, Canada, pays 60 percent of best 5 years salary. To earn that pension, teachers contribute 12 percent of their income, matched by the employers. That fund is healthy and sustainable. Why is the government not willing to turn CPF into a pension scheme? Because by doing so, there goes the cheap money that it plows into Temasek, GIC and HDB.
The government is using our money to screw up is the short story!!!!!

We are not asking for free flats ...just actual cost plus a 10 percent margin to cover the operations of the HDB. The land cost should not be included. Consider that as the subsidy.

Your next argument is a classic Argumentum ad Populum fallacy. In any case, compulsion is required so that people that squander their money will not pose a social burden on the rest of the nation.

The current CPF scheme does not help the majority of sinkees; there isn't money enough saved for retirement. So, your social burden contention remains.

 

[winnipegjets]

CPF Life does not "punch a hole in your retirement fund". It takes a portion of your retirement find and provides you with a guaranteed retirement income for life.

So, the CPF Life is a pseudo pension. Why not turn the CPF into a pension scheme? The reason why the government won't is that then the cheap source of funds disappears as the CPF funds will need to be well invested to generate the returns to support the pension fund. And we know how poorly the fund managers in Temasek and GIC perform.

 

[zhihau]

Your next argument is a classic Argumentum ad Populum fallacy.

my conversation with you on this topic ends here, you won't buy my points, i won't buy yours.

 

[zhihau]

The current CPF scheme does not help the majority of sinkees; there isn't money enough saved for retirement. So, your social burden contention remains.

you can talk till the cows come home and that fella wouldn't budge. the consolation: he votes for the opposition and that's good enough.

 

[zhihau]

So, the CPF Life is a pseudo pension.

the only batch of folks who truly benefitted from CPF are those who retired in early 90s.

the only way to stop the MIW from changing the parameters at their whims and fancy is to vote those kutus out!

only then we, the electorate, can push for a greater say.

 

[wwabbit]

The government allows you to use your retirement fund to purchase your flat so that you won't feel or see the pinch of the overinflated flat. Why can't the government run the CPF like a pension plan? 25 percent of one's salary goes into the CPF ...and all we get is the meager return of 2.5 percent or in rare occasion, 4 percent. Our savings is being eaten up by inflation!!!!! The government gets cheap money to build flat that is sold to us at 2X profits!
Look at pension scheme elsewhere ...the teachers pension fund in Ontario, Canada, pays 60 percent of best 5 years salary. To earn that pension, teachers contribute 12 percent of their income, matched by the employers. That fund is healthy and sustainable. Why is the government not willing to turn CPF into a pension scheme? Because by doing so, there goes the cheap money that it plows into Temasek, GIC and HDB.
The government is using our money to screw up is the short story!!!!!

We are not asking for free flats ...just actual cost plus a 10 percent margin to cover the operations of the HDB. The land cost should not be included. Consider that as the subsidy.

The current CPF scheme does not help the majority of sinkees; there isn't money enough saved for retirement. So, your social burden contention remains.

So, the CPF Life is a pseudo pension. Why not turn the CPF into a pension scheme? The reason why the government won't is that then the cheap source of funds disappears as the CPF funds will need to be well invested to generate the returns to support the pension fund. And we know how poorly the fund managers in Temasek and GIC perform.

CPF Life is absolutely a Pension Scheme. You are mistaking CPF with CPF Life (or CPF Retirement Account). A pension scheme is a scheme that provides an income after retirement, which is what CPF Life (and the old Minimum Sum Scheme) provides. CPF is a social security scheme that provides for housing (Ordinary Account), retirement (Special Account which becomes Retirement Account) and healthcare (Medisave Account). Many other countries also include unemployment benefits in their social security scheme, but CPF does not do that.

The concerns that you have expressed are actually against the CPF-OA, and I do agree with many of them. However, these concerns don't really have anything to with the CPF Life which is the topic of this discussion. The SDP manifesto proposes completely doing away with OA, focusing on SA/RA and converting MS into a single payer healthcare scheme, and I can see the merits of that proposal. However, simply raising the interest rate of our OA is a terrible solution - there will some dire consequences of that. If you like, we can continue to discuss this on a separate thread.

I think the the majority of Singaporeans should be able to survive with the CPF Life payouts assuming that the minimum sum is met and housing is paid up. I will be able to survive on $800/month today (based on $100k in CPF Life) although I probably have to give up on a car. Those that need more are probably living a more extravagant lifestyle, and either will need to cut down, move to a cheaper country, or they most likely already have more savings outside of CPF. Now there is a concern about the people that don't meet the minimum sum, and I think more should be done to the government to help these people.

The OTPP is a good scheme. CPF-SA/RA follows the same principles but is more complex because of the tie-ins with the rest of CPF. Contribution rate to SA is low - 6-9.6% of salary compared to 23% for the OTPP, but CPF-RA has the minimum sum 'cap', and funds from OA and MS (behind MS minimum sum) gets automatically transferred into the RA at age 55. The problem with the OTPP is portability. My sister in Toronto has been in and out of the scheme a couple of times as she changed jobs, and each time it has been a pain going through paperwork for pension transfers. Nice thing about CPF is that all employers in Singapore are under it... definitely suits the job hoppers better. Also, note that in pension income is taxable in Canada, whereas CPF withdrawal is tax-free.

 

[McDonaldsKid]

I think the the majority of Singaporeans should be able to survive with the CPF Life payouts assuming that the minimum sum is met and housing is paid up. I will be able to survive on $800/month today (based on $100k in CPF Life) although I probably have to give up on a car.

Good reply, but the above might not be true due to medical costs. That's a separate discussion though.

 

[theDoors]

CPF Life does not "punch a hole in your retirement fund". It takes a portion of your retirement find and provides you with a guaranteed retirement income for life.

It is not true that we can do whatever we like with our money. We are, for example, obliged to pay taxes and our credit card bills. We are not allowed to launder money or to buy illegal drugs with our money. There are cases where money can technically belong to us but can legally only be released to us if certain conditions are met, e.g. trust funds, escrow accounts, and CPF account.

ehh erlow

there is no fixed payout for CPF life hor

 

[PMPunk]

The purpose of CPF has been distorted by our PAP Ministars. After buying flat we are left with crumbs.

 

[wwabbit]

Good reply, but the above might not be true due to medical costs. That's a separate discussion though.

Medisave account is still around after age 55, as well as medishield coverage. So, medishield will cover most medical costs, and medisave will cover the rest. Of course, if medisave not enough then you are screwed, but that's a separate discussion as you said.

ehh erlow

there is no fixed payout for CPF life hor

The payout amount is not fixed, but you are guaranteed a monthly payout for life.
As with any life annuity pension plan, the payout amount will vary with interest rate as well as life expectancy.

 

[zhihau]

The purpose of CPF has been distorted by our PAP Ministars. After buying flat we are left with crumbs.

CPF started out nice and good, then it became a monster.

 

[Thick Face Black Heart]

Let's cut the long story short. Please answer these questions:

(a) Why are Singaporeans unable to retire in grace? Why has our CPF which is supposed to help us retire failed us?

(b) Why are the monthly payouts subject to the whim of the govt which can decrease it anytime based on changes in mortality rates and inflation rates?

(c) Does the govt serious expect a person to survive on a few hundred dollars of CPF Life payouts every month when the cost of living is so bloody high?

(d) Why is our CPF savings interest rate one of the lowest if not the lowest of all national-level retirement schemes in the world?