Major CPF policy shift on the way

[CY09]

"The 3 per cent increase to the Basic Retirement Sum is lower than the average annual increase in the Minimum Sum of about 6 per cent per year since 2003. It is expected that among the cohort of CPF members turning 55 in 2020, about 7 in 10 active members will be able to accumulate enough CPF savings to meet their Basic Retirement Sum, it added." - CNA

The basic retirement sum at 2020 is approx $93,300 but only 7 out of 10 active members can hit it and get a monthly payout of $650!! To para phrase, 7 out of 10 active CPF members will be able to set aside $93,300..... Is CPF's $650 monthly payout sustainable to this group? I highly doubt so.

My prediction is that our government will try to boost our CPF savings by either a one time top up or some other policies

[aspeed]

"The 3 per cent increase to the Basic Retirement Sum is lower than the average annual increase in the Minimum Sum of about 6 per cent per year since 2003. It is expected that among the cohort of CPF members turning 55 in 2020, about 7 in 10 active members will be able to accumulate enough CPF savings to meet their Basic Retirement Sum, it added." - CNA

Last year, before this proposed changes to CPF, they also say about 7 to 8 person will be able to meet the min sum requirement.

http://www.straitstimes.com/news/singapo...owth-polic

Anyway, I don't see much changes in the recent proposal, except for the option to withdraw a 20% lump sum at age 65 and new enhanced retirement sum.

Basic Retirement Sum is same as pledging property previously, where the min sum is half, which is exactly $80.5K (for those 55 next year).

Full Retirement Sum is same as what it is now.

Enhanced Retirement Sum - this is new.

[CCUV]

All these talk about not having enough for retirement was down partially not having a good enough return on cpf....all these talk wouldn't even surface if return are reasonable. The government solution had always been don't make your problem my problem,it is time the government stand up and be counted to pick up some of the liabilities.

[specuvestor]

^^What kind of returns do u think is reasonable?

I dont think it is government's liability. This is retirement planning and it is a social issue which is a problem that the government has to tackle. There is a difference. Drug abuse is a social issue but it is not government's liability

What the government is indirectly responsible for in this maths is the inflation rate which they had fared badly in past 5 years due to asset inflation.

It would be a mistake if govt doesnt claw back CPF use in housing together with this 20% payout. People should remember the sad stories when we used to have 50% withdrawal allowed. Nothing new under the sun

As we discussed in the CPF thread, $161k is not an ideal minimum sum yet. With 20% withdrawal we probably need closer to $250k as min sum. But this is not politically acceptable until people can do their own maths.

NB reverse mortgage of HDB is long overdue... optimal way of solving the asset rich cash poor situation

I'm disappointed that they didnt use this opportunity to claw back the amount of CPF that can be used for properties

But they have introduced the ERS which is very close to the mooted $250k. Besides this absolute number, there is a big difference between reaching this $250k when one is 50 vs when one is 65 when the interest earn is 4%

Besides hinting the min sum should be $250k, they are also indirectly hinting the retirement age should be around 70

[Jacmar]

All these talk about not having enough for retirement was down partially not having a good enough return on cpf....all these talk wouldn't even surface if return are reasonable.

I have to disagree with your view on this and the rest of those in the camp that says CPF should give us better returns. Just to be clear I was not in govt before and don't want to launch into a political debate on this.

Sure who don't want to get more for your savings but it comes with a risk. the CPF can give you more but are you prepared that in some yrs there might be zero or negative returns? In this world of near zero interest rates where can you get a risk free returns of >2.5%? In fact I still have my CPF OA $ which I can withdraw(I am pass 55) in there as I cannot find a risk free rate better than 2.5%. do let me know if you do.

The govt by giving >2.5%(some amt as much as 4.5%?) for your cpf money is already indirectly giving money to the pop when they could easily go out and issue bonds with lesser interest. just go look at what govt bonds paying now. as Oliver says we want more!!

[corydorus]

I thought the returns from CPF is quite reasonable for guaranteed returns on protected sum. If we need to rely on Gov to produce better returns than ourselves something is seriously wrong. Furthermore CPF is the basic social safety net so as not to be burden to the society.

We need to do much more than that for ourselves to achieve reasonable quality retirement life. I would suggest we need to start looking into the mirror on what we can do rather than being dependent on the gov. At the end of the day taxpayers are the ones who will bear all the commitment of the gov if the sum do not add up.

[crosscalibre]

as specuvestor has said: How do you balance between personal needs and minimising social cost, yet knowing it is insufficient, is a hot seat I don't want to be in either

there are impt stakeholders to consider in this, the solution will not be as simple as the govt taking on more liability..

[yeokiwi]

Personally, I think they should have give more thoughts on how to restructure jobs so that more can be employed happily past their retirement age at reduced intensity.
A healthy 70+ age person can easily work part time(2-3 days per week) as social workers, educators, clerks, front desks or even more sophisticated jobs.

A subsidize pay from gov for a retiree to work in Macdonalds. Why not?(work 2-3 days and get full week pay)
Anyway, if they wait to die, the country probably will spend more money taking care of them.

[Temperament]

Personally, I think they should have give more thoughts on how to restructure jobs so that more can be employed happily past their retirement age at reduced intensity.
A healthy 70+ age person can easily work part time(2-3 days per week) as social workers, educators, clerks, front desks or even more sophisticated jobs.

A subsidize pay from gov for a retiree to work in Macdonalds. Why not?(work 2-3 days and get full week pay)
Anyway, if they wait to die, the country probably will spend more money taking care of them.

Very good. I think Australia though a welfare system some old folks do have to work part time to be on the welfare. IIRC.
Of course, if you don't want to work part time(aka too rich to work) then your welfare claim should be reduced or voluntarily given up.
Right now only the Elites of Elites can work until they die. And it's $million tax payers' money. LOL!

[Chongy]

Basic for people without much CPF saving or those who prefer to manage their investment?

Enhanced for those who prefer to earn steady income stream from (without actively managing) this part of their networth?

What if the person leaves at 68? Can estate get part of the money back?

So life expectancy seems to play a part too.