Uncle Leong: Every SG is Short-Changed by $1M by SeePeeF! 60%, Song Bo?

[makapaaa]

[h=2]CPF: Did every Singaporean lose $1m?[/h]

June 10th, 2014 |

Author: Contributions

07.06.2014 Return Our CPF@HLP - Leong Sze
Hian


Speech at CPF protest

In my
speech during the CPF Protest (Return My CPF) on 7 Jun at Speakers’
Corner, I said that Singaporeans may be short-changed by about $1 million
because we probably pay the lowest real rate of return amongst national pension
schemes in the world, historically in the last 25 years or so.

How to calculate lost $1m?

Quite a number of people have asked me as to how the figures can be
derived.

Difference between 3 and 6% from age 21 to 65?

So, here’s an example.

If you start work at say 21 years old with a salary of $1,500 – increasing at
4% per annum until age 65 – at 3% interest, you would have accumulated
$1,491,087 at age 65.

Average overall interest rate on CPF accounts?

As there is no disclosure as to what is the average overall interest rate on
all the different CPF accounts (Ordinary 2.5%, Special, Medisave and Retirement
4.0% plus an extra 1% on the first $60,000) – we have assumed the average
overall CPF interest rate of 3% in the above computation projection.

If the nominal rate of return is say 6% (the historical average real rate of
return after adjusting for inflation of national pension schemes in the world is
we believe about 4%) – you would have accumulated $2,953,777.

Difference of $1.5m in 44 years?

So, you may in a sense, have been short-changed by $1,462,690 ($2,953,777
minus $1,491,087)! And we have not even factored in the difference in the
returns of 3% (6 minus 3%) from age 65 onwards until death under the CPF Life
scheme which pays 4% on the Retirement Account balance plus an extra 1% interest
on the first $60,000 only (with any excess CPF that can be withdrawn but is left
in the CPF earning 2.5% only).

Assumptions?

Note: We have assumed a 4% increase annually in the salary because the
annualised real total wage growth from 2003 to 2013 was 1.5% and historical
inflation in Singapore is about 2 plus % – and the Government’s target for real
wage growth for the decade is 30% (2.7% per annum). Also, assuming that CPF
contribution rates and ceilings may also increase in nominal terms in the future
because of inflation, in line with the 4% salary
increase.

SY Lee and Leong Sze Hian

 

[GoldenPeriod]

We have been cheated of so much money. The excess returns have gone into the pockets of a very select group of people.

 

[emeritus CB]

Bullshit Leong is another NUMBERS CONMAN who used to be on PAP side, and defected. Playing the same NUMBERS Bullshit.

 

[soIsee]

Crazy folks you guys are.

I bet if you are not a loser today and are very well off, even though you have CPF, you would not give 2 hoots to all these nonsense.

So what does the statement above tell you?

Go make your own serious money . Time does not wait. Don't go trumpeting such nonsense. If you have plenty of your own money in your pockets, you will laugh at what is the amount termed as Min Sum.

The above applies if you are NOT a loser to begin with hor.

 

[chootchiew]

WHAT ! 1 mil ! just give me $500k I close case lah. I song you song everybody song.

 

[winnipegjets]

[h=2]CPF: Did every Singaporean lose $1m?[/h]

June 10th, 2014 |

Author: Contributions

07.06.2014 Return Our CPF@HLP - Leong Sze
Hian


Speech at CPF protest

In my
speech during the CPF Protest (Return My CPF) on 7 Jun at Speakers’
Corner, I said that Singaporeans may be short-changed by about $1 million
because we probably pay the lowest real rate of return amongst national pension
schemes in the world, historically in the last 25 years or so.

How to calculate lost $1m?

Quite a number of people have asked me as to how the figures can be
derived.

Difference between 3 and 6% from age 21 to 65?

So, here’s an example.

If you start work at say 21 years old with a salary of $1,500 – increasing at
4% per annum until age 65 – at 3% interest, you would have accumulated
$1,491,087 at age 65.

Average overall interest rate on CPF accounts?

As there is no disclosure as to what is the average overall interest rate on
all the different CPF accounts (Ordinary 2.5%, Special, Medisave and Retirement
4.0% plus an extra 1% on the first $60,000) – we have assumed the average
overall CPF interest rate of 3% in the above computation projection.

If the nominal rate of return is say 6% (the historical average real rate of
return after adjusting for inflation of national pension schemes in the world is
we believe about 4%) – you would have accumulated $2,953,777.

Difference of $1.5m in 44 years?

So, you may in a sense, have been short-changed by $1,462,690 ($2,953,777
minus $1,491,087)! And we have not even factored in the difference in the
returns of 3% (6 minus 3%) from age 65 onwards until death under the CPF Life
scheme which pays 4% on the Retirement Account balance plus an extra 1% interest
on the first $60,000 only (with any excess CPF that can be withdrawn but is left
in the CPF earning 2.5% only).

Assumptions?

Note: We have assumed a 4% increase annually in the salary because the
annualised real total wage growth from 2003 to 2013 was 1.5% and historical
inflation in Singapore is about 2 plus % – and the Government’s target for real
wage growth for the decade is 30% (2.7% per annum). Also, assuming that CPF
contribution rates and ceilings may also increase in nominal terms in the future
because of inflation, in line with the 4% salary
increase.

SY Lee and Leong Sze Hian

In my calculation, I used a 30-year time period and an annual contribution of $10k to the CPF. Using the CPF rate of 2.5 percent, the sum after 30 years is $450k. If the same amount is invested in an S&P ETF, the final amount would be $1.3 million.
$300k is the principal. CPF pays you $150k after you have loaned them that amount for 30 years. Your loss is $850k!
If I used 40-year period, you would have lost more!