CPF savings 'may not be enough for old age'

You mean the Ministers only realized this now?? Suffice to say CPF is woefully insufficient for retirement (due, in part, to the high housing prices which is draining everyone's OA). Everyone should think about investing their own money to obtain returns to grow one's wealth.

The Straits Times
Feb 29, 2012
budget debate: THE ELDERLY
CPF savings 'may not be enough for old age'
MPs call for rise in contribution rates for all over long term

By Rachel Chang

SINGAPOREANS may not have enough Central Provident Fund (CPF) savings for their retirement, MPs warned yesterday.

About a quarter of the parliamentarians who spoke on the first day of the Budget debate flagged this issue, saying the Government should relook how CPF funds can be boosted.

Three said the elderly and low-wage workers have worryingly meagre CPF savings. Three others insisted that CPF contribution rates must rise for all Singaporeans over the long term.

Said Mr Zainudin Nordin (Bishan-Toa Payoh GRC): 'Having more resources upon retirement would mean that workers will be less reliant on the Government for their needs later in life.'

Finance Minister Tharman Shanmugaratnam announced in his Budget statement last week that to boost the retirement savings of older workers, employers' CPF contribution rates for those aged between 50 and 65 would rise by up to 2.5 percentage points.

While praising the move, MPs suggested that it did not go far enough.

Ms Jessica Tan (East Coast GRC) wants the rise in contribution rates to also apply to workers above age 65. Older workers may be physically slower, she said, but competence often turns on knowledge and experience too.

Mr Zainudin suggested the Government raise the interest rates that CPF funds accrue. A rate of 2.5 per cent - what the CPF currently pays on funds in the Ordinary Account - will grow a $1,000 balance into $2,098 over 30 years. If the rate went up to 5 per cent, for example, it would grow to $4,322.

A higher interest rate would give older workers the means to a comfortable retirement, he added.

A CPF system less strictly tied to days spent at work was Non-Constituency MP Lina Chiam's wish.

In some countries, women can get 'pension credits' when they are on maternity leave, in recognition of their role as caregivers. The CPF model should be similarly evolved to build a better social safety net for women, she said.

Going one step further was Nominated MP Mary Liew, who said a Ministry of Health report in 1984 noted the Government's desire to ultimately raise the CPF contribution rate to 50 per cent, while delaying the age at which workers can withdraw those funds to 65.

The rate is currently 36 per cent, and the withdrawal age is 55.

She cited Lee Kuan Yew School of Public Policy economist Hui Weng Tat, who had produced figures showing that the current CPF contribution rate will not yield sufficient retirement funds - even before Singaporeans drain their accounts to pay for property purchases. He said 42 per cent would be a more sustainable figure.

Ms Liew also noted that when CPF contribution rates were slashed - as they were during economic crises in 1986, 1999 and 2003 - close to a decade passed before they were restored.

For a 30-year-old who earned $1,000 a month in 1985, this meant foregoing $30,000, excluding wage cuts and interest. 'This $30,000 would have meant a lot to our low-wage workers,' she said. 'The workers are the elderly of today, and because of their sacrifice, we have progressed as a nation to where we are today.'

Calling for the Government to review what a reasonable CPF rate would be for Singaporeans to retire with dignity, she concluded on a note of appeal: 'Please, no more CPF cuts!'

rchang@sph.com.sg

Quote:You mean the Ministers only realized this now?? Suffice to say CPF is woefully insufficient for retirement (due, in part, to the high housing prices which is draining everyone's OA). Everyone should think about investing their own money to obtain returns to grow one's wealth.

I think otherwise. Going by the investment records of the masses by CPF, most people actually lose money in investment.
Retrainings, changing mindsets, restructure workflows are the ways to help these elder workers. But most importantly, the cost of living that can be controlled internally must be controlled!(properties' prices, transport costs, educational costs and taxes).

I think the government should seriously consider delisting the two transport operators since shareholders' and commuters' interests are not aligned.

(29-02-2012, 08:56 AM)yeokiwi Wrote: I think otherwise. Going by the investment records of the masses by CPF, most people actually lose money in investment.
Retrainings, changing mindsets, restructure workflows are the ways to help these elder workers. But most importantly, the cost of living that can be controlled internally must be controlled!(properties' prices, transport costs, educational costs and taxes).

I think the government should seriously consider delisting the two transport operators since shareholders' and commuters' interests are not aligned.

I agree the transport operators should not even be listed companies in the first place.

However, the problem of internally controlling prices is that it's almost impossible to do so as Singapore is an open economy, and remember that we somehow seem to be "importing" millionaires by the truckloads, making our country one of the most expensive and one with the highest proportion of millionaires, even as the poor struggle to get by.

I agree that everybody should manage their own money for retirement. time to scrap the cpf or modify it. They should make having CPF compulsory or at least encouraged for middle and lower income bracket as a safety net. For those who earn high net income why the heck do they need to have any safety net?

yeokiwi Wrote:But most importantly, the cost of living that can be controlled internally must be controlled!(properties' prices, transport costs, educational costs and taxes).

Hear, hear. I continued to be amazed at Singapore Government English where HDB subsidy means "discount from market" instead of "at or below cost". It is painfully obvious that housing is the single biggest expenditure of most citizens' lives. Yet the government refuses to acknowledge that its "household asset" policy has merely transferred wealth from future generations to the present i.e. current homeowners' prosperity is derived from the impoverishment of future homeowners who have to overpay relative to their income.

The amount of money the average person can earn in a lifetime is limited (short of being an entrepreneur, senior manager in a huge company, or a Member of Parliament). Therefore if the person is to have more to live on in old age, he/she must spend less during the working years. The obvious target for reduction is the mortgage.

It is not that I think HDB flats should cost $10,000 forever. But if the aim of the HDB is provide affordable public housing then the principle behind pricing has to be rethought. In my personal view, new flat prices should be indexed to income, so that prices rise and fall automatically with general income levels, instead of merely being studied, debated and occasionally adjusted. In this way, increased prosperity will still result in rising prices, so that owners can still benefit, but because prices are indexed to income, the new flats will remain affordable to first-time buyers.

They always used this type of English. They try to convince, then confuse, then twist words.

For CPF, basically they have set the limit of $25000 and the balance let the account holders invest the balance. Do not use the 40% limit, which is very confusing.

At 55 years old, allow the citizens to buy an annuity and let them have some money to tie over their expenses immediately and not wait until 62 years old. The annuity should be peg to the public financial scheme which is about $400.

Hope they could change the CPF system for the better.

Let's 1st ask the PAPAYA to increase our CPF's interest rate of return. At least tracking or on par with the rate of annual inflation. Then people can have other hopes from these bunch of millionaire Elites. i doubt it is possible. Why? Think of the figure of a pyramid. The population of a country is almost always based on this figure in terms of anything. Sad.... That's life.

> Let's 1st ask the PAPAYA to increase our CPF's interest rate of return.

They are already being very generous. Pay u 2.5% and 4% respectively.

What u should ask, is review their land policy pricing... So the HDB brand new flats are reduced downwards and couples pay down over 20 years instead of 35 yrs. So we have flat and CPF build up from 40+ years.

And the remaining CPF, use it to invest in good stocks.

I waited patiently and bought Raffles Medical, Yanlord, Keppel Land. It's a 40 - 150% return now.

As for my SRS which I kept adding till I stopped last year, it's a 100% return...

So in good times, look for great stocks. In bad times, empty your cartridge, simple as that.

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> At 55 years old, allow the citizens to buy an annuity and let them have some money to tie over their
> expenses immediately and not wait until 62 years old. The annuity should be peg to the public
> financial scheme which is about $400.

> Hope they could change the CPF system for the better.

Simply buy a good stock with solid cash flows... SIA Engineering and Starhub are good bets now. SIA Engineering is a solid bet next 5 years.

No scheme is good for all... key is knowledge... but some citizens expect govt to do everything for them... its a reliance mentality

(29-02-2012, 10:29 AM)Temperament Wrote: Let's 1st ask the PAPAYA to increase our CPF's interest rate of return. At least tracking or on par with the rate of annual inflation.

Strongly agree! How can we be "forced" to leave money in CPF, only to be eaten by inflation?

Government has to raise the "minimum sum" every now and then - because the $120k I had in SA was not earning enough interest to offset inflation, so I had to top up. In other words, I pay because CPF board is not getting enough return. Worse still, SA can only be used to buy "balanced funds" etc. Sad. Please give me back my hard earned money...

(29-02-2012, 10:43 AM)Contrarian Wrote: I waited patiently and bought Raffles Medical, Yanlord, Keppel Land. It's a 40 - 150% return now.

As for my SRS which I kept adding till I stopped last year, it's a 100% return...

Personally, I do not believe that above market gain can be achieved by all. If every investors and traders are doing the same as what you are doing, it will basically reduce your gains.

In the stock market,
many of them lose money.
some of them achieve market return.
a small group gets above market return.

There are many success stories here in valuebuddies that we may think that it is a piece of cake to get above market returns consistently.