MPs offer ideas to improve CPF

[sgd]

Actually, there is NO NEED to give a higher return to EVERY CPF member. For a more equitable society, those who have lower income should have a higher return for their CPF. I am quite alright if the lower income Singaporeans get a higher return or topup yearly in their special accounts. It will help them to build up their retirement funds.

For those rich folks, 2.5% or 3.5% do not matter much at all.

Very well said. That is the attitude Singaporeans must have, whichever party you support. I wish more people will think like this. It cannot be that if the policy doesn't benefit me it is bad; if I am good at managing my own money, CPF is bad, doesn't matter if the average Singaporean is not very good with his/her own money.

it's not top-up or higher returns that people really want, I can tell you what they really want is to see their savings back into their pocket that was promised to return to them when they retire.

unless you don't have hdb or housing loans to service or family to feed who really has 155k sitting idle in their accounts to meet this requirement? rich of course no need to say anything.

people in their 40's now who are employed even with high wages still have around 10 years working productivity but after service loan feed family how many can meet this requirement still? but once in their 50's the earning power drops there's very little chance anybody still going to get high wages at this age.

and I remember reading somewhere cpf special account may also stop at 55yo because logically they take out combine of oa+sa set aside for minimum sum requirement.

[Freenasi]

the returns of the cpf oa is not low. its a risk free return that is as a short duration bond. if the government stick to that we should be getting less than 0.5%. but they were generous to stick with 2.5%

same as sa. they peg it to the 10 year sgs bond rate. we should be getting 2.9%

I wouldnt think its totally risk free return. The guarantor is the gov itself, but who guarantee the gov? Imagine u goto a bank and the banker tell u this investment product is guaranteed by the bank itself, and boast how big stable the bank is, u should not believe the marketing gimmick.

If this is a ponzi scheme, where every year money is input more than the output (small amount given to those >65yrs), it w "seem" that the cash flow is always positive. But nobody know wat is happening inside the black box, and its potential danger.

[level13]

I second that, I too wish to invest 100% of my OA into stocks

Very well said. That is the attitude Singaporeans must have, whichever party you support. I wish more people will think like this. It cannot be that if the policy doesn't benefit me it is bad; if I am good at managing my own money, CPF is bad, doesn't matter if the average Singaporean is not very good with his/her own money.

That is why I am suggesting to Govt that I do not need any return on my CPF OA. Just allow me to invest 100% in stocks! In case forumners think that they will have to subsidise my retirement if I lose all that money, don't worry, my CPF SA is already > CPF minimum sum.

I would like to refer a post of Mr. Tan Chuan-Jin in a blog, on CPF

"Unfortunately, most savers are unable to achieve good returns with low risk. Many have lost money because they chose the wrong products to invest in, or because of market downturns that occur in their retirement"
- from the recent issue of The Edge

Should CPF policy be individualized? May be too difficult, if not impossible technically? How to access the able and unable? Hm...

Thats why for every national policy implementation, as long as the majority benefit, we should proceed. Kudos to the government for having the guts to do that.

Unfortunately, not everyone think this way. Most of them will ask "Whats in store for me?" and "How does it benefit me?".

National policy cannot be customised to every whim and fancy. Monetary cost is too high and operationally its not feasible. Besides, this is not the direction we (SG nation) as a whole should take.

Can you imagine the government asking each and everyone what they want in every national policy?

[HitandRun]

All along we know CPF is a scheme that "you look after yourself".
.
.
.

Uncle temperament

Actually, I cannot understand the reason for all your angst. To me as a bystander, it appears to me that you are already a big beneficiary of the current system, just like my parents' generation were.

[HitandRun]

Should CPF policy be individualized? May be too difficult, if not impossible technically? How to access the able and unable? Hm...

Yes, it can be! With current IT systems, it should be a cinch. I can think of several ways, e.g.

1. Total balance > minimum sum in OA and MA.
2. At least minimum sum in SA.
3. Investment Returns > 100k
4. etc.

Do you realise that current CPF rules punish successful investors while rewarding poor investors?

[nsengkia]

Just to share that the Singapore Ministry of Defence did at one point try to introduce a scheme more akin to Malaysia's EPF then to Singapore CPF. As to be expected, when the market went down, complaints went up. An extract from the Statement By Minister For Defence At 2004 Budget Debate (see http://www.defense-aerospace.com/article...16%29.html) is as follows:

"Retirement and SAVER Scheme

Sir,

Dr Ong Chit Chung has asked about the SAVER scheme. . .

In 1998, MINDEF implemented a 23-year career for our officers. . .

To support this new career structure, MINDEF introduced the SAVER scheme. This scheme offers our officers accelerated career advancement and a very good salary and benefits package. A key feature of SAVER is a generous superannuation scheme to support their transition to a civilian career when they leave the SAF. This is designed such that an SAF officer in his 23-year career would earn close to 75% of what his private sector counterpart would earn in a 40-year career. Since its inception, the SAVER scheme has met its objectives of improved recruitment and retention of officers and timely leadership renewal.

. . .

Dr Ong has also referred to some complaints by retired officers that they did not get good returns from the SAVER scheme. Now, let me explain. The SAVER fund is no different from other pension funds, it's invested and we have explained to our officers that they should take the long-term view. In fact the returns are slightly higher than the benchmark which the fund compares itself to. SAVER benefits are invested with a view to giving good returns over the long term, based on a strategy of balanced asset allocation. There may however be a few years when the performance of the fund is negative, and there may be a small minority who leave the SAF at that point where the returns are negative. The performance of the fund as I've said so far, have been better than our benchmark, and better than numerous established pension funds in the market. Our officers also have the option. They can move their retirement benefits into a more conservative portfolio two years before their retirement, depending on their risk appetite. But of course if they do that and if the investment makes exceptional gains in those two years, then they will not benefit from those exceptional gains. But those are the risk-return benefits. However, having now run the fund for about six years, MINDEF is reviewing the fund structure to fine-tune it to see whether there are better options, more options, that can be developed to meet the needs of the fund members at the various points of their careers."

So my take is that no system is perfect.

Cheers!

[CY09]

One possibility is make a cpf account (sa or ma) nvr possible for withdrawal. This eliminates the probability of workers cashing out at the wrong time

[specuvestor]

Should CPF policy be individualized? May be too difficult, if not impossible technically? How to access the able and unable? Hm...

Yes, it can be! With current IT systems, it should be a cinch. I can think of several ways, e.g.

1. Total balance > minimum sum in OA and MA.
2. At least minimum sum in SA.
3. Investment Returns > 100k
4. etc.

Do you realise that current CPF rules punish successful investors while rewarding poor investors?

I think the idea of letting one invest OA in stock for excesses of SA + OA > MS makes sense.

The current CPFIS rules is based on simple regross % maths, which is why it have such abnormality of "punishing" successful investors. Basing on nominal amount could be better way of managing it (include or exclude Housing amount?)

But like I posted earlier, track record of CPF investors in aggregate is not fantastic to be able to argue against a 2.5% fixed return.

the returns of the cpf oa is not low. its a risk free return that is as a short duration bond. if the government stick to that we should be getting less than 0.5%. but they were generous to stick with 2.5%

same as sa. they peg it to the 10 year sgs bond rate. we should be getting 2.9%

I wouldnt think its totally risk free return. The guarantor is the gov itself, but who guarantee the gov? Imagine u goto a bank and the banker tell u this investment product is guaranteed by the bank itself, and boast how big stable the bank is, u should not believe the marketing gimmick.

If this is a ponzi scheme, where every year money is input more than the output (small amount given to those >65yrs), it w "seem" that the cash flow is always positive. But nobody know wat is happening inside the black box, and its potential danger.

The bank doesn't print money. The government does. It is risk free if we do not include purchasing power considerations.

Thats why for every national policy implementation, as long as the majority benefit, we should proceed. Kudos to the government for having the guts to do that.

Unfortunately, not everyone think this way. Most of them will ask "Whats in store for me?" and "How does it benefit me?".

National policy cannot be customised to every whim and fancy. Monetary cost is too high and operationally its not feasible. Besides, this is not the direction we (SG nation) as a whole should take.

Can you imagine the government asking each and everyone what they want in every national policy?

Agree. People often confused between aggregate benefit and individual benefit

Republic means the people elect a representative to represent them in policy making. Hence even before going to policy making the representative also has to weigh the opinions in his own constituency and select which opinion makes most sense ie filter. Idea that every opinion/ voice will be addressed is impossible.

[funman168]

Yes,there are lots of scheme that they can implement to improve our cpf returns.
Yet they rather do nothing...

[Drizzt]

the returns of the cpf oa is not low. its a risk free return that is as a short duration bond. if the government stick to that we should be getting less than 0.5%. but they were generous to stick with 2.5%

same as sa. they peg it to the 10 year sgs bond rate. we should be getting 2.9%

I wouldnt think its totally risk free return. The guarantor is the gov itself, but who guarantee the gov? Imagine u goto a bank and the banker tell u this investment product is guaranteed by the bank itself, and boast how big stable the bank is, u should not believe the marketing gimmick.

If this is a ponzi scheme, where every year money is input more than the output (small amount given to those >65yrs), it w "seem" that the cash flow is always positive. But nobody know wat is happening inside the black box, and its potential danger.

you can talk about conspiracy theory all we want, but the government is a triple a rated entity.