Saturday, May 31, 2014

Adopt a constructive approach

Sam Tan said:
Beware Fellow Singaporeans, It is PAP deliberate ploy to constantly provoke and attack WP in parliament to create DRAMA (corner WP to say and do wrong things) so that PAP can take these words/ actions against WP in next GE campaign ACCUSE WP for being an irresponsible/ destructive Opposition like those in other countries.

Hence convince Singaporeans to stick with a one party system so that PAP can control Singaporeans with their iron fists and implement all policies they want without consultation, debate and obstruction from Opposition and Singaporeans.

Remember this, every alternative policy/ suggestion has its pros and cons and PAP will attack the cons of whatever WP suggest and WP will never win the debate with PAP majority in the parliament.

The pugnacious approach of our PAP leaders is not constructive. They set a bad example. 
They should be open minded to get the views of other people and seek a better solution to many of the "elephants in the room", i.e. problems that they have been ignoring or unable to solve for a long time.

Friday, May 30, 2014

Does the CPF Minimum Sum include the amount set aside for Medisave?

Someone asked:

I am curious about CPF Minimum Sum and Medisave Minimum Sum. If I am not mistaken, the Retirement Account compromise of Ordinary Account + MediSave Account + Special account once the person turns 55. So should not it be the minimum sum for CPF wef 1 July 2014 be $155,000 and out of that, $43,500 from the Medisave? Need correct interpretation please

The minimum sum for retirement is $155,000 and for Medisave account is $40,500. Together, the total is $195,500.


Can a person earning $3,000 at age 25 meet the minimum sum at 55?

To answer this question, I present two scenarios:
a) Moderate salary increase. 
b) Low salary increase. 

The results can be found here:

Monday, May 26, 2014

Analysis of CPF Life


A CPF member reaching age 55 in or after 2014 will have the "minimum sum" portion of the CPF savings transferred to CPF Life. The member is given a choice of two plans, known as the standard and basic plan, which gives a monthly payout from age 65, payable for life, and a bequeath to the family on death. If the member does not exercise a choice, the default choice is the standard plan.

The standard plan has a higher payout than the basic plan, but give a lower bequeath to the family on death of the annuitant.

The PDF below contains an analysis of the payout and bequeath and helps the CPF member to decide on the choice of the plan to opt.

Your CPF savings are safe

 I wish to address the issue on whether the CPF is able to pay off all its members, if it is dissolved today. 

The annual report of the CPF at 31/12/2012 showed total amount owing to CPF members to be $230 billion. This is invested in Singapore Government Securities totaling $229 billion, with a few other billions invested in other assets.

If CPF were to be wound up, will the government be able to pay the $229 billion?

The answer is clearly "yes". The reserves of the government comprises of $198 billion in Temasek Holdings, $305 billion in MAS and "over $100 billion" in GIC. The total is over $600 billion.

If this were to happen, will the government be able to sell the assets to raise $230 billion to pay the CPF members? There is no need to. If the government were to issue bonds of $230 billion, that is backed by the $600 billion of actual assets, it should have not much difficulty.

Another way is for the government to "print $230 billion" of money to pay back the CPF members.

The actual amount that the government needs to pay back the CPF members will be much less than $230 billion. The outstanding loans owed to the HDB (which is a part of the government) should be a large sum. Surely, if the government were to pay back the CPF balances, the members should also pay back the balance of the HDB loan?

If you wish to verify my figures, you can check them here:

The winding up of the CPF is completely hypothetical and inconceivable. I have used this scenario to illustrate that the savings in the CPF is safe, and that the fear that there is no money to pay back the CPF balance is totally unfounded.

However, I do not support the current system where most of the savings are stashed away by an ever increasing minimum sum. This has to be reviewed, and a portion of the savings should be allowed to be withdrawn at age 55, even if the savings is inadequate to meet the minimum sum.

Tan Kin Lian

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