Major CPF policy shift on the way

[CCUV]

Medisave life? Another mystery....Maybe health ministar can give us the figure of patients that discharge out of hospital without paying....those patients not paid are under government books but with medisave life everyone pays for those who can't pay and the government books will have no liability. The medisave life premium looks great for the first five years,cpf holders will get a shock by end of 5 years when they "recalculate" the premium .....hmm...another mystery

[Retired@52]

Pls do rest your case.

Alot of financial engineering in cpf....for e.g most cpf holder use cpf to pay for housing loan but how come they are charged an interest for using their money? Effectively cpf holders are funding the governement portions of interest payment.

Can't help but to put in another 2 cents worth...haha...really must rest case...sleepy

They are not using their money, they are borrowing from the CPF which is your money & my money so they have to pay you & I the interest. CPF takes the difference, 0.05%

[CCUV]

So you can see,I can go on with mystery

[sg550319]

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!!

The cpf system has failed badly my friend,you might have a different view. A good system wouldn't ask the cpf holder to extend their retirement age and all those boastful media saying about temasek and gic excellent return had not translate into better return without government increasing gst. I rest my case

actually you dun have a case. pl understand the system before throwing rocks. case in point, find out what is the new OZ retirement age.

fyi, i top up everything possible in CPF.

[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.

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!!

The cpf system has failed badly my friend,you might have a different view. A good system wouldn't ask the cpf holder to extend their retirement age and all those boastful media saying about temasek and gic excellent return had not translate into better return without government increasing gst. I rest my case

actually you dun have a case. pl understand the system before throwing rocks. case in point, find out what is the new OZ retirement age.

fyi, i top up everything possible in CPF.

Seriously good for you if you choose to top up,I have nothing against people who think cpf is great.I personally wouldn't with those goal post changing rules. There are pension system which are way superior than sg. It all depend how you see things,half empty or half full.

[CCUV]

Cpf is always and is going to be a heated and emotional issue to discuss. I am in the camp of self reliance. With self reliance one will always take an extra step to make things work for yourself and your family. The best gift that you can give to your family and yourself is actually financial freedom,with financial freedom you have an option not to down the bitter pill, with financial freedom you have more choices in life.....watch our for the great stock analysis by the bros and sista in vb

[level13]

Seriously good for you if you choose to top up,I have nothing against people who think cpf is great.I personally wouldn't with those goal post changing rules. There are pension system which are way superior than sg. It all depend how you see things,half empty or half full.

I would also prefer the mechanism of CPF not to change. Who doesnt want stability? That said, can you hold the life expectancy and individual needs constant as per 20 years ago? If you can pls let me know, i will gladly vote you into government.

[HitandRun]

As many will know, the CPF proceeds are invested together with the nation reserves in exchange for SGSS bonds. For an ordinary middle income CPF member, he/she is likely to obtain returns of 3.5% to 4% annually. But how much is the investment accurred from the reserves? Over the past 20 years, the returns has been 6.5% p.a. Given this line of thoughts, CPF may not be a liability. Small trivia: As of now GIC's portfolio is approximately 45% equities, 10% property and rest in bonds and cash.

That is only part of the story. If you look at the govt's balance sheet, a lot of the funds are also "idle", just sitting as cash (more than $100 billion IIRC). So the govt is actually, doing a "loss making" business paying CPF members a higher yield than what their cash is yielding.

If you refer to CPF's website, members' balance amount to approx $270 billion. Net withdrawals for housing is approx $120 billion, so net balance is approx $150 or so billion. Therefore, the govt can easily fund an en masse withdrawal by cpf members from its cash hoard.

On the other hand, one could insist that cpf members have the "right" to be invested, ahead of the govt's own funds, into investments by GIC or Temasek. But are members willing to live with a higher volatility and lower liquidity?

[CY09]

http://www.gov.sg/government/web/content...evelofdebt

Last few paragraphs

Annually about 50 billion is set aside for the current year expenditure and a few billion is to be kept aside as foreign exchange reserves

[specuvestor]

Hi Specuvestor,

Is CPF really a government liability? This is a debatable point. IMO, it is not a liability for now based on current circumstances. In addition, yes I am in the camp for higher returns

As many will know, the CPF proceeds are invested together with the nation reserves in exchange for SGSS bonds. For an ordinary middle income CPF member, he/she is likely to obtain returns of 3.5% to 4% annually. But how much is the investment accurred from the reserves? Over the past 20 years, the returns has been 6.5% p.a. Given this line of thoughts, CPF may not be a liability. Small trivia: As of now GIC's portfolio is approximately 45% equities, 10% property and rest in bonds and cash.

As I have said in another CPF related post on VB, the insurance industry offers similar products with returns ranging from 3.1% to 4.75%. In the process of doing so, insurers make billions out of this while paying CEOs/agents a fat pay check and millions in advertising. These 3.1% to 4.75% returns tend to be smoothed out returns because insurers are aware of the 1) volatility of the market and 2) the general population unwillingness to stomach negative returns. This is why insurers smooth out their portfolio returns, resulting in a low but consistent yield of 3.1 to 4.75% despite the ups and downs of the market

Hence as a custodian of Singaporeans' retirement funds backed by a non-profit policy managing these monies, my personal view is that the returns can be bumped up to reflect fairness to CPF members

IIRC GIC return is 6.5% in US DOLLARS term As per discussed in the other CPF thread, people complain why Malaysia can give 6% for MPF without taking into context that SGD is likely to hit 3 with MYR probably in next 18-24 months. Risk is not volatility of MYR vs SGD hence MPF pays more... Its the consistent downside that is the risk

As OPMI aptly say, returns compared to insurance has to be risk adjusted ( and again I'm talking about downside risk) Every year i get the statement from CPF that shows me the 2.5-4% interest... Have VBs actually track their bonus payment in their insurance? In 20 years time they will tell you that the forecasted returns cannot be matched then what do you do? This is not theoretical: i am one of the victim of AIA's failed self funding Critical Year policy scheme after paying for almost 18 years. STILL paying school fees cause the opportunity cost will keep compounding next 20 years.

@CCUV reading on Roy's blog does not give you the whole picture. We can see that quite clearly from the rhetorical questions that you dont quite understand how it works, which is why it continues to be a mystery. For example SSGS issued at 4% is not going to affect the 10 year SGS yield

We actually have another thread on CPF discussion
http://www.valuebuddies.com/thread-5216-...l#pid83956

To somewhat answer Temperament's question, no most of the time you dont get back your RA money substantially under CPF Life nor get your value back for Medishield Life. They have insurance components which means that most people are going to subsidise the 20% that needs the money. Thats the hard truth of how it works but it makes a lot of sense policy and social wise. You wont know if you are going to be the 20% that will get terminal disease or live to 100, and my guess is most people wont like it when they are net beneficiary