Many years ago, I was proud of our Central Provident Fund system. It was simple and good for the people. It allowed them to accumulate their savings for old age. Later, it was used to purchase a HDB flat at an affordable price.
I will be writing on what the changes that I like to see in our CPF scheme, that will make it good for the people, and for the Government.
I want to say something about why things had turned out to be so bad for the CPF. The people who manage the CPF, i.e. the Ministry of Manpower (and its predecessor ministry) and the policy planners (i.e. the scholars) were not practical people. They were planners.
This is the type of system practised in Singapore that has produced convoluted systems, not only in CPF but in health care, immigration and many other areas of our life.
The CPF system started to be changed, for the worse, after 1985. Many changes were introduced that had negative impact on the scheme and produced worst outcome for the citizens. Today, I can only say that our CPF scheme is complicated, convoluted, confusing and is not producing the right outcome.
I will be writing on what the changes that I like to see in our CPF scheme, that will make it good for the people, and for the Government.
I want to say something about why things had turned out to be so bad for the CPF. The people who manage the CPF, i.e. the Ministry of Manpower (and its predecessor ministry) and the policy planners (i.e. the scholars) were not practical people. They were planners.
Worse, they were too arrogant to consult the experts in the field. As an actuary and the head of a life insurance company, I could give them some useful ideas - but they were too proud to ask me or to discuss my suggestions (even after I wrote to them). They prefer to find their own solutions - in their ivory tower. These planners later become recruited as ministers in our Government and continue the same approach.
This is the type of system practised in Singapore that has produced convoluted systems, not only in CPF but in health care, immigration and many other areas of our life.
Nothing will change until a clear signal is sent through the General Elections.
ReplyDelete40% votes for the Opposition is not a strong signal. You only get 4 seats.
Singaporeans need to target at least 60% votes for the Opposition.
This will probably get 6 seats for the Opposition because of gerrymandering.
But at least the signal is less ambiguous.
No matter how much CPF has deviated from its original course, providing savings for retirees and funding to buy properties, nothing incenses us more than having no say to manage our moneys at retirement, with the retained minimum sum jacked up at their whim and fancy, and the forced mandatory
ReplyDeletesubscription to the Annuity plan.
Dun know who is more an idiot at managing money, the GIC Board of Directors or the ordinary retired worker. Not all retirees gamble in the sin casinos or keep toy boys and girls to play with, or lose money in some glitzy investments like what GIC did in some far away places.
Most of us just want to enjoy our retirement with adequate money to spend. CPF has no moral right to hold back our money, and their actions to release to us in bits and pieces, create much suspicions in our mind, looking at the tract record of GIC's losses in foreign glitzy banks and real estates in Europe and America.
Well said, Mr Tan.
ReplyDeleteThe inbreeding within the pap perpetuates flawed policies
How many Ministers of Manpower does it take to change a light bulb?
ReplyDeleteAnswer:
One. But the light bulb must be at least 55 years old.
Until this year, those who kept their CPF savings after 55 were allowed to make partial withdrawal from their OA first, leaving their SA to earn more interest. Now, CPF deduct from the SA first. Also, any increase in MRA and MMS is retrospective. The interest earned is not enough to keep up with this increase. Those who did not withdraw the full amount at age 55 may end up being able to withdraw less than the amount at age 55 because of this ruling.
ReplyDeleteThe fatal mistake that PAP made was to allow CPF to be used pay for property starting in the late 1980s. Previously, CPF can only be used to pay for 1-time downpayment, cap at about 25% of the property value. The rest you need to pay by cash.
ReplyDeleteAfter Singapore's first big recession in 1985/86, the property market was stagnating. To help increase govt's profits in land sales and also help fellow crony banksters, PAP liberalise CPF to allow paying 100% of property price.
Overnight, this created artificial liquidity for property, at the expense of future retirement funding. The masses rather use the CPF money to buy houses and jack up prices, since they cannot smell & touch the CPF money anyway. This situation caused a vicious cycle as more liquidity bid up property prices, and hence more CPF money has to be used up to buy property, leaving less & lesser for the real purpose of retirement.
PAP has already opened Pandora's Box and I don't think it's possible to correct it without the Nuclear Option of wiping out the economy and all the people, and start from scratch. US economy has been criticised as being overly financialised over last 30 yrs. Singapore's problem is being overly "propertised" over the last 25 yrs --- everything from health of our 3 banks, health of our GLCs, cost of living and even wealth of families, all depend on property prices.
Jokes About Changing Singapore (light bulbs)
ReplyDeleteHow many Ministers does it take to change a light bulb?
Answer:
One. But it requires balls to climb up a ladder to change the light bulb.
rex comments as follows,
ReplyDeleteThe comments of Anonymous 2.40 pm above well summarises the greatest folly of the PAP government.
CPF is a personal-to-holder private retirement fund savings of individuals with differing intelligence and ability, and one's cpf should never have been allowed to do long-term loan installment funding of properties (most of which pay the bank interests and benefit the banks) which result in a vicious cycle of increasing prices due to "easy" funding from one's cpf. CPF is meant to be for retirement use. By letting it be used in huge amounts to finance property it simply means that for a lot of common folk (not the elites) there is no more retirement money left for the golden years. The policy of allowing CPF to be used for housing, actually contributes a lot to escalating property prices and as a double whammy depletes the precious retirment funds, in particular, of the common folk.
For the elites, there is no problem to use cpf funds to purchase property becaue they have other sources of funds when they retire. But the policy is a big killer for the common folk, it is no joke.
The wrongdoing gets into a black hole when Mah Bow Tan says that flats are affordable becaue of 30 year loans, payable by CPF savings again.
It is a very very very gross mistake. A 30 year loan financed from one's retirement funds is an extremely bad mistake. It can lead to a subprime crisis, that is to say, loans are given to people who actually cannot afford it and they default in the period of the 30 years in large numbers. Singapore will go the way of greece if the number of defaulters start to snowball.
rex
Property in Singapore cannot be cheap because land is expensive, even for HDB flats.
ReplyDeleteIf not, it is tantamount to “illegally raiding the reserves”.
Didn't one ex minister said something to that effect? Although he lost his minister post, he did not lose his seat in the last election.
In the final analysis, using CPF to pay for the property is a scheme which is more beneficial to prolong the life of ruling PAP than to retire happily and peacefully for many common Singaporeans judging from their bad experiences.
ReplyDeleteDid Mr Tan Chor Jin say 60% of the above 55 did not withdraw their money from CPF???
ReplyDeleteMr Tan, you are more than right Sir !
ReplyDeleteAs others have commented, my cohort may be about the last to be able to say that the CPF was not-too-bad. That is provided we did not go on the up-grading route blindly and have a fairly good paying salary all these while !
Are we missing something here if 60% of those above 55 do not withdraw monies from their CPF??
ReplyDeleteIs it "do not withdraw" or is it "cannot withdraw"?? Very big difference. And I believe it is the later.
ReplyDeleteRead :-
ReplyDeleteAn illegal raid on the reserves? Mr Mah Should Explain About Ballooning Land Costs
http://de-leviathan.blogspot.com/2011/04/illegal-raid-on-reserves-mr-mah-should.html
This is where our CPF money will go...!
I disagree with many about CPF being used for property. Without which many wouldfn't have roof over their heads.Of course abuses abound by some howlian and exploiters to benefit themselves by flipping one after the other.
ReplyDeleteIf they are not used for housing they will be plundered by predatory insurance agents, the so called investment experts to enrich themselves.Why today members cannot have enough to buy CPFlife or to meet the minimum sum or have a large balance at 55 is because insurance salesmen 'helped' to tikam tikam it away on behalf of the members. Surprised? No..how could so called financial experts pass tikam tikam exams have any knowledge and skills in investment other the tikam tikam skills? If you have used one please check your investment whether it has worked any harder than leaving in the CPF?
The sovereign debts of Singapore ;borrowed from the citizens like from CPF agency, but citizens just don't get to know the exact amount 'borrowed' , when it is going to be paid back to the CPF accounts holders.
ReplyDeleteto anonymous @11.51
ReplyDeleteYour reasoning is rather shallow pal, let me explain.
You said that cpf helps to pay for expensive property. The issue is that the properties are getting expensive BECAUSE cpf is allowed to be used. therefore,an artifical feeling of "affordability" is created, which drives up prices, which benefits the building developers, banks, and government mostly because they earn huge interests on housing loans in the mass market.
It is a vicious cycle, can't you see?
The only way to break the cycle and soften the prices of property, is to have partial financing of properties allowed only, not wholesale huge amounts up to 30 years financing from CPF funds leaving nothing for retirmement.
As with many things in life, we are talking about Balance. A compromise solution would be like someone mentioned above, in the old days, CPF was only allowed to be used for housing but up to a limited amount. We have to be very careful about what is the purpose of CPF, it is for retirmement.
It is because many common folk have depleted their CPF for paying housing loans, that is the reason why we "suddenly" see all this money-no-enough issues of the retiring population now. You can't have the best of both worlds, but there is absoultely no balance in the current CPF policies, and the 30 year loan thingie is a disasterous policy mistake which benefits nobody but the banksters!!
Secondly your idea that if cpf is not allowed to be used for housing, then greedy insurance agents will plunder it through unsrcupulous products. The answer to that is so simple. Just pass a law that the CPF money CANNOT be used to buy insurance products other than TERM INSURANCE simple as that. In fact, i lost quite a bit of money 11 years ago to buy "CPF Approved Investment Products" (Tech Stocks). This is nonsense. CPF money should not be allowed to buy investment products with risk. There is no such thing as risk free product. "CPF Approved" gives people the impression it is exceptionally safe.
CPF is retirement fund and should have been operated primarily as retirement fund. At most maybe 10 or 20% of one's CPF retirement fund, should be releasable for housing and investment purposes. How do the Malaysian EPF system work? I dont think they allow 100% use of EPF, and they are right!! Malaysia is smarter!
IF the CPF management policies were correct, then we wouldnt have all these problems coming up "suddenly" when the baby boomer generation is now reaching retirement age in huge numbers.
There is a complete lack of foresight by the CPF policy makers and high Government in the last 20 years, therefore today we are seeing the fruits of their "labour" - rotten fruits for the common folk.
But for the higher wage earners, all these stuff are non issue of course, because it is good for thme that CPF can be used for housing, they earn lots of money in other ways. The policy benefits tremendously the higher wage earners, whilst the common folk are so stoned that they dont even know they are stoned and can praise the govt for allowing CPF to be used for housing to help defray the costs of housing.
It is a vicious cycle of deception, pal!
rex
/// After Singapore's first big recession in 1985/86, the property market was stagnating. To help increase govt's profits in land sales and also help fellow crony banksters, PAP liberalise CPF to allow paying 100% of property price. ///
ReplyDeleteThe cure was more deadly than the disease. The property slum in 1985/1986 was largely due to HDB pushing out humongous number of flats in time for the 1984 General Elections. If I remember correctly, it was a record - more than 40,000 flats in one year.
So, the "solution" was to liberalize the use of CPF money. One bad decision/policy begets another bad decision/policy.
Jokes About Changing Singapore (light bulbs)
ReplyDeleteHow many Ministers of National Development does it take to change a light bulb?
Answer:
One. But it will take you 30 years to pay for the new light bulb.
CPF has over the decades transform from a citizen benefiting scheme to become the world's greatest Ponzi scheme.
ReplyDeleteHow does Ponzi scheme work? You get the initial funding from initial investors. Subsequently, you pay the 'earnings' to the initial investor from the later investors. This goes on until there are no more new investors to fund the 'earnings' of previous investors. This is when the Ponzi scheme collapse.
The brainchild of all Ponzi scheme will never tell the investors where and how the funds are invested or the profit and loss.
When the Ponzi scheme starts to become unstable, more lies will be churned to make it difficult for investors to get back their 'earnings'
Does this sound familiar?
"CPF has over the decades transform from a citizen benefiting scheme to become the world's greatest Ponzi scheme...When the Ponzi scheme starts to become unstable, more lies will be churned to make it difficult for investors to get back their 'earnings'"
ReplyDeleteThe way they are withholding and deferring payouts is terrifyingly similar to Ponzi. Of course the guys running the Ponzi will never admit to the account holders that they are running a Ponzi, instead the monies are in profitable, very long term investments. When the 60.1% awake from their slumber, we may have an Arab Summer!
Saycheese