The CPF Time bomb that began ticking in 1984

[scroobal]

30 years ago, in March 1984, then Minister of Health released the Report of the Committee on the Aged. It recommended that the withdrawal age be pushed from 55 to 60. The Howe report was done with good intentions and the research did show that there was an issue with the CPF then. In view of the cacophony of protest including amongst PAP supporters, the govt chose to introduce the minimum sum retention at 55.

The PAP knew 30 years ago that this was ticking time bomb. What did it do?

Instead of looking into it, the CPF funds were used to make the Prime Minister's wife look good. She was brought into the State Sovereign Fund Temasek in 2002, 18 years later when the bomb began ticking.

CPF funds forms close to 2/3rd of total government investment pool that goes into MAS and GIC. From these returns they are then used to build state assets which are then passed at interesting values to Temasek. Yes, the CPF funds do have a part to play where Temasek's success is concerned.

One family ruled this country or influenced its rule for 49 years including the last 30 years. Should they answer to this level of neglect. Mind you in the intervening years they took great pains instead to carve out an impassive compensation scheme for the political leaders and the top hierarchy of the civil service. While nothing was done to diffuse the ticking bomb.

 

[longbow]

In my opinion, the biggest issue is the return on CPF funds. At the very least it has to have an inflation adjustment built into it. And since the GIC and Temasek have done very well over the last 30 years in terms of Return on Investment,the government should retroactively re-adjust CPF funds to account for inflation. Both GIC and Temasek should have no issues topping up the CPF accounts for the inflation since they have been generating return way about rate of inflation . Now to help with fact that people are now living longer, this retroactive inflation top up adjustment could go into an annuity plan. Anyway this is basically people's $ and what is so wrong with giving them a better return.

There is logic to the government changing the withdrawal rate from 55 and having this minimum sum - people are just living longer. And unlike pension and the retirement plans in other countries, once this CPF $ is withdrawn there is no other safety net. The gov has come to realise that some annuity type scheme where an individual can get a check from the gov on a monthly basis (like how it is the case in other countries) is important. Question is how to fund this. One solution is to change the withdrawal age. But why not use the gains from CPF funds made by GIC and Temasek to help fund this annuity.

For example, say in a given year, GIC pays 2.5 percent to borrow from CPF, inflation is 3.5% and GIC reports 8% return on investment.

So step 1 top up CPF accounts by 1 percent to adjust for inflation - topup money goes into annuity account. This still gives GIC a next gain of 4.5% (8%- 2.5%-1%).

Step 2 give 1/2 (2.25%) of this next gain to CPF account holders in the form of a special top up for their annuity account. The remaining 2.25% GIC keeps for to top up CPF accounts for years where net returns returns are below rate of inflation.

Everyone gets the inflation adjustment. Rules could be made to only divert the additional annuity top up (step 2) to citizens below a certain income, those with no CPF in their accounts (taxi drivers, contractors). To encourage contributions by individuals to this annuity scheme the government could set up a dollar for dollar matching scheme for contribution into this annuity account and encourage people not to withdraw at 55 but to transfer $ into annuity account and get a $ for $ matching grant (children could put $ into their parents and grandparents annuity account for CNY etc.

To further sweeten the pot, gov could give special one time grants into the annuity accounts for NSMEN. This helps differentiate between Singaporeans that served and those that did not.

The above should not be any shock to the finances of GIC and Temasek as it merely an accounting move in the short run since all the top up money goes into the annuity scheme that will only start paying out years from now.

 

[Papsmearer]

In my opinion, the biggest issue is the return on CPF funds. At the very least it has to have an inflation adjustment built into it. And since the GIC and Temasek have done very well over the last 30 years in terms of Return on Investment,the government should retroactively re-adjust CPF funds to account for inflation. Both GIC and Temasek should have no issues topping up the CPF accounts for the inflation since they have been generating return way about rate of inflation . Now to help with fact that people are now living longer, this retroactive inflation top up adjustment could go into an annuity plan. Anyway this is basically people's $ and what is so wrong with giving them a better return.

There is logic to the government changing the withdrawal rate from 55 and having this minimum sum - people are just living longer. And unlike pension and the retirement plans in other countries, once this CPF $ is withdrawn there is no other safety net. The gov has come to realise that some annuity type scheme where an individual can get a check from the gov on a monthly basis (like how it is the case in other countries) is important. Question is how to fund this. One solution is to change the withdrawal age. But why not use the gains from CPF funds made by GIC and Temasek to help fund this annuity.

For example, say in a given year, GIC pays 2.5 percent to borrow from CPF, inflation is 3.5% and GIC reports 8% return on investment.

So step 1 top up CPF accounts by 1 percent to adjust for inflation - topup money goes into annuity account. This still gives GIC a next gain of 4.5% (8%- 2.5%-1%).

Step 2 give 1/2 (2.25%) of this next gain to CPF account holders in the form of a special top up for their annuity account. The remaining 2.25% GIC keeps for to top up CPF accounts for years where net returns returns are below rate of inflation.

Everyone gets the inflation adjustment. Rules could be made to only divert the additional annuity top up (step 2) to citizens below a certain income, those with no CPF in their accounts (taxi drivers, contractors). To encourage contributions by individuals to this annuity scheme the government could set up a dollar for dollar matching scheme for contribution into this annuity account and encourage people not to withdraw at 55 but to transfer $ into annuity account and get a $ for $ matching grant (children could put $ into their parents and grandparents annuity account for CNY etc.

To further sweeten the pot, gov could give special one time grants into the annuity accounts for NSMEN. This helps differentiate between Singaporeans that served and those that did not.

The above should not be any shock to the finances of GIC and Temasek as it merely an accounting move in the short run since all the top up money goes into the annuity scheme that will only start paying out years from now.

U are not understanding the crux of the issue. The interest rate is a red herring. Even if CPF gives you a 50% interest rate, what good is that when you have already squandered more than 50% of your CPF on overpriced HDB flats and the monthly servicing of them, plus what good is a high rate when it gets harder and harder to get access to it through the CPF constantly moving the goalpost via longer retirement dates, higher minimum sums, etc. ? I can offer you a very high interest rate, but it does not help u at all when u cannot access it when u need it.

 

[Sinkie]

In my opinion, the biggest issue is the return on CPF funds. At the very least it has to have an inflation adjustment built into it. And since the GIC and Temasek have done very well over the last 30 years in terms of Return on Investment,the government should retroactively re-adjust CPF funds to account for inflation. Both GIC and Temasek should have no issues topping up the CPF accounts for the inflation since they have been generating return way about rate of inflation . Now to help with fact that people are now living longer, this retroactive inflation top up adjustment could go into an annuity plan. Anyway this is basically people's $ and what is so wrong with giving them a better return.

There is logic to the government changing the withdrawal rate from 55 and having this minimum sum - people are just living longer. And unlike pension and the retirement plans in other countries, once this CPF $ is withdrawn there is no other safety net. The gov has come to realise that some annuity type scheme where an individual can get a check from the gov on a monthly basis (like how it is the case in other countries) is important. Question is how to fund this. One solution is to change the withdrawal age. But why not use the gains from CPF funds made by GIC and Temasek to help fund this annuity.

For example, say in a given year, GIC pays 2.5 percent to borrow from CPF, inflation is 3.5% and GIC reports 8% return on investment.

So step 1 top up CPF accounts by 1 percent to adjust for inflation - topup money goes into annuity account. This still gives GIC a next gain of 4.5% (8%- 2.5%-1%).

Step 2 give 1/2 (2.25%) of this next gain to CPF account holders in the form of a special top up for their annuity account. The remaining 2.25% GIC keeps for to top up CPF accounts for years where net returns returns are below rate of inflation.

Everyone gets the inflation adjustment. Rules could be made to only divert the additional annuity top up (step 2) to citizens below a certain income, those with no CPF in their accounts (taxi drivers, contractors). To encourage contributions by individuals to this annuity scheme the government could set up a dollar for dollar matching scheme for contribution into this annuity account and encourage people not to withdraw at 55 but to transfer $ into annuity account and get a $ for $ matching grant (children could put $ into their parents and grandparents annuity account for CNY etc.

To further sweeten the pot, gov could give special one time grants into the annuity accounts for NSMEN. This helps differentiate between Singaporeans that served and those that did not.

The above should not be any shock to the finances of GIC and Temasek as it merely an accounting move in the short run since all the top up money goes into the annuity scheme that will only start paying out years from now.

You're as naive as it comes.
Besides that, what proof you've that we're living longer?

You seem to buy into CPF scheme and only quarrel on the returns and NOT THE RETURN.
That is as naive as it gets. If the govt is hell bent on not returning the CPF, you think it will retrospectively give you additional interest?

Fat hope or else you're still sucking on that PAP pacifier.

The ONLY solution is return the CPF in full at 55 and figure out a way to scrap CPF moving forward for those who've not reached 55 yet.

Those who had used CPF to fund their HDB, keep that amount of funds in the CPF. The rest, convert into raw cash and return to the people.

Don't even think of asking for extra from one who is trying to keep the money from you in the first place.

 

[eatshitndie]

enough of this "cpf time bomb" repetitive bs on sbf. you're beginning to sound like a naggy auntie devoid of sex asking for a fuck, any fuck lousy or bad, so your chee bye itch can be scratched for once in your virgin lifetime. it's sounding like a broken record, getting stale, annoying, and tiresome all rolled into one. *yawn* seriously, we need to keep all cpf boliao threads in one. it's not about cpf anymore, it's about personal egos getting a boost with individual threads by saying "i told you so." that is about the lamest ego trip implied phrases ever on online forums, if one has been an online user for two decades.

 

[Leongsam]

enough of this "cpf time bomb" repetitive bs on sbf. you're beginning to sound like a naggy auntie devoid of sex asking for a fuck, any fuck lousy or bad, so your chee bye itch can be scratched for once in your virgin lifetime. it's sounding like a broken record, getting stale, annoying, and tiresome all rolled into one. *yawn* seriously, we need to keep all cpf boliao threads in one. it's not about cpf anymore, it's about personal egos getting a boost with individual threads by saying "i told you so." that is about the lamest ego trip implied phrases ever on online forums, if one has been an online user for two decades.

No different from my "I owe everything to LKY" mantra.

 

[eatshitndie]

No different from my "I owe everything to LKY" mantra.

"ang mo is the best" mantra is more believable.

 

[ChaoPappyPoodle]

Transgender Loong will be slayed at the polls once the overpriced HDB is linked to dwindling CPF and minimum sum. THen to nail his coffin we link the salaries of his daddy, husband and itself at GIC and Temasek and the people will froth with anger and vote out this insipid and foolish man. Imagine 500 million being paid in salaries to the Lee Familee from the people's CPF funds. The transgender dragon will be slayed indeed.

 

[winnipegjets]

In my opinion, the biggest issue is the return on CPF funds. At the very least it has to have an inflation adjustment built into it. And since the GIC and Temasek have done very well over the last 30 years in terms of Return on Investment,the government should retroactively re-adjust CPF funds to account for inflation. Both GIC and Temasek should have no issues topping up the CPF accounts for the inflation since they have been generating return way about rate of inflation . Now to help with fact that people are now living longer, this retroactive inflation top up adjustment could go into an annuity plan. Anyway this is basically people's $ and what is so wrong with giving them a better return.

There is logic to the government changing the withdrawal rate from 55 and having this minimum sum - people are just living longer. And unlike pension and the retirement plans in other countries, once this CPF $ is withdrawn there is no other safety net. The gov has come to realise that some annuity type scheme where an individual can get a check from the gov on a monthly basis (like how it is the case in other countries) is important. Question is how to fund this. One solution is to change the withdrawal age. But why not use the gains from CPF funds made by GIC and Temasek to help fund this annuity.

For example, say in a given year, GIC pays 2.5 percent to borrow from CPF, inflation is 3.5% and GIC reports 8% return on investment.

So step 1 top up CPF accounts by 1 percent to adjust for inflation - topup money goes into annuity account. This still gives GIC a next gain of 4.5% (8%- 2.5%-1%).

Step 2 give 1/2 (2.25%) of this next gain to CPF account holders in the form of a special top up for their annuity account. The remaining 2.25% GIC keeps for to top up CPF accounts for years where net returns returns are below rate of inflation.

Everyone gets the inflation adjustment. Rules could be made to only divert the additional annuity top up (step 2) to citizens below a certain income, those with no CPF in their accounts (taxi drivers, contractors). To encourage contributions by individuals to this annuity scheme the government could set up a dollar for dollar matching scheme for contribution into this annuity account and encourage people not to withdraw at 55 but to transfer $ into annuity account and get a $ for $ matching grant (children could put $ into their parents and grandparents annuity account for CNY etc.

To further sweeten the pot, gov could give special one time grants into the annuity accounts for NSMEN. This helps differentiate between Singaporeans that served and those that did not.

The above should not be any shock to the finances of GIC and Temasek as it merely an accounting move in the short run since all the top up money goes into the annuity scheme that will only start paying out years from now.

Why not change the CPF to a pension? A pension plan provides a stable retirement income for its participants and leave the investing to the professionals ensuring a better return and low management fee. GIC is now adopting the Canadian Pension Plan investment mode. The CPP is fully funded to pay the current rate for 75 years. So, why not adopt the Canadian Pension Plan model for a Sinkapore Pension Plan?
I won't hold my breath on it under this government as the CPF is for them a source of cheap funds to generate income for god knows who.
Toss them out and let the WP, which is more in tune with the people, to implement a pension plan for sinkees.

 

[longbow]

We are all living much longer than say 40 years ago. It is a fact - just read up on life expectancy and you will see. If majority dies at 65 then you will see no insurance companies selling term life up to 70. They will all go broke! The insurance folks know best about how long you will live.

I guess it all depends on how one views it. If you think the money is gone and do not trust gov then of course you want money back at 55.

I am looking at it from point of view that money is there and that we need to tweak the system to make it more equitable. An additional 2% over 30 years on 100K is around 80K, almost double the money. These adjustments can be a significant difference to the retirement system

Regardless, I believe that we as a society need a form of a pension/annuity scheme. Withdrawal at 55 with no safety net is plain silly.

You're as naive as it comes.
Besides that, what proof you've that we're living longer?

You seem to buy into CPF scheme and only quarrel on the returns and NOT THE RETURN.
That is as naive as it gets. If the govt is hell bent on not returning the CPF, you think it will retrospectively give you additional interest?

Fat hope or else you're still sucking on that PAP pacifier.

The ONLY solution is return the CPF in full at 55 and figure out a way to scrap CPF moving forward for those who've not reached 55 yet.

Those who had used CPF to fund their HDB, keep that amount of funds in the CPF. The rest, convert into raw cash and return to the people.

Don't even think of asking for extra from one who is trying to keep the money from you in the first place.

 

[longbow]

U are not understanding the crux of the issue. The interest rate is a red herring. Even if CPF gives you a 50% interest rate, what good is that when you have already squandered more than 50% of your CPF on overpriced HDB flats and the monthly servicing of them, plus what good is a high rate when it gets harder and harder to get access to it through the CPF constantly moving the goalpost via longer retirement dates, higher minimum sums, etc. ? I can offer you a very high interest rate, but it does not help u at all when u cannot access it when u need it.

Higher interest rates on the $ that you have sitting in CPF will help one's situation. An additional 2 to 3% over 30 years is significant. Without cost of living adjustment makes it even worse.

If we get higher rate of return then the minimum sum will not be as large. The problem is they pay 2.5% but when they calculate minimum sum/annuity they factor 5 to 6% inflation. That is the problem and that is why we have more and more money sucked into minimum sum.

HDB - These are NOT subsidized flats! If they removed HDB and just get the free market to build housing for 90% of the population, I suspect we would pay about the same price for such a flat. They are "overpriced" for being "subsidized" flats but are fairly priced for market rate flats. You look at price of HDB flat, factor in 5 years loss of rental revenue, no assigned plot of land, no en-block potential, restrictions on rental and sale (can only sell to certain ethnic groups) and no carpark, you are probably within spitting range of pte market flats.

No government in the world with a free market economy can afford to sell truly "subsidized" flats to 90% of population

The gov should instead build truly subsidized flats for the bottom 10% of the population (flats for those making say, under $3K a month). It is all a matter of semantics.

 

[ChaoPappyPoodle]

Higher interest rates on the $ that you have sitting in CPF will help one's situation. An additional 2 to 3% over 30 years is significant. Without cost of living adjustment makes it even worse.

If we get higher rate of return then the minimum sum will not be as large. The problem is they pay 2.5% but when they calculate minimum sum/annuity they factor 5 to 6% inflation. That is the problem and that is why we have more and more money sucked into minimum sum.

HDB - These are NOT subsidized flats! If they removed HDB and just get the free market to build housing for 90% of the population, I suspect we would pay about the same price for such a flat. They are "overpriced" for being "subsidized" flats but are fairly priced for market rate flats. You look at price of HDB flat, factor in 5 years loss of rental revenue, no assigned plot of land, no en-block potential, restrictions on rental and sale (can only sell to certain ethnic groups) and no carpark, you are probably within spitting range of pte market flats.

No government in the world with a free market economy can afford to sell truly "subsidized" flats to 90% of population

The gov should instead build truly subsidized flats for the bottom 10% of the population (flats for those making say, under $3K a month). It is all a matter of semantics.

You obviously have no idea what the PAPzis stand for and what they have thus far done to Singaporeans who purchase HDB housing. With higher interest rates and over priced public housing Singaporeans will be paying more in interests for their HDB mortgages since a very large percentage of Singaporeans will be using their CPF. The issue now is to vote out the PAPzis. Don't waste too much time on alternatives and options because these will always be twisted to suit their needs and then the mainstream media will propagandize the new scheme to no end and we are back to square one.

 

[longbow]

Why not change the CPF to a pension? A pension plan provides a stable retirement income for its participants and leave the investing to the professionals ensuring a better return and low management fee. GIC is now adopting the Canadian Pension Plan investment mode. The CPP is fully funded to pay the current rate for 75 years. So, why not adopt the Canadian Pension Plan model for a Sinkapore Pension Plan?

I won't hold my breath on it under this government as the CPF is for them a source of cheap funds to generate income for god knows who.
Toss them out and let the WP, which is more in tune with the people, to implement a pension plan for sinkees.

I cannot agree with you more. There has to be a basic pension/annuity plan. The Canadian plan is one possibility. Is it fully funded? What I was trying to offer is a way to move from the current plan to an annuity type plan using GIC gains for the last 30 years. We are talking about tens of billions that can help us transition into an annuity type plan by using this $ to top up the annuity.

 

[rushifa666]

Why are you still endorsing the forceful extraction of the average citizen's wealth? Are you Robin Hood? It's never their money, why should they have any say over how you choose to use yours? Any savvy investor can make lots more than risk free bs. My returns on the last crisis alone is more than whatever scraps they can " give" me for a lifetime of CPF contributions. I really should entrust my money to a bunch of clowns who were one of the biggest losers during the same period. Even American news called them stupid

 

[batman1]

The MIW are really blood-suckers,after sucking your blood dry,they still want to eat your bones.

 

[Lionheart]

what time bomb
the only time bomb i know is the opp time bomb
utter stupidity and idiocy
that 's the time bomb all singaporeans should be aware

 

[Lionheart]

The MIW are really blood-suckers,after sucking your blood dry,they still want to eat your bones.

you are simply blind
did your blood kana sucked
did your bones run dry
or it's your fault that you patronised gaylands

 

[bakkuttay]

kopiunca horkowkan......

 

[rushifa666]

what?they let kopidog escape AGAIN? mas selamat is a rank amateur compared to the rabid escape artist!

 

[ykhuser]

csj already give up already.
he know the 60% will not believed anything.
now he just keep quiet and bo char.