27 August 2007

CPF and its creaky assumptions

As Singapore's economy changes, with structural unemployment and widening wage differentials, is the Central Provident Fund scheme still able to provide all the answers? Full essay.


Anonymous said...

undoubtedly this is a good opportunity for the government (and if they were quicker off the mark, the opposition) to reconsider the whole issue of welfare, with annuity as the focal point

in a annuity scheme, people who die earlier subsidize people who live longer; if an old age pension scheme is used (e.g., every citizen above 85 receiving $300 direct from the government), the long living people are subsidized from taxation income; there is no real reason to believe either to be better in principle, but as a matter of practicality, the latter is simpler to administer and less likely to cause unhappiness - the fact that few people take up the currently available annuity schemes shows CPF members generally do not understand/like the idea


George said...

I like your article. Well written and balanced. But, I suspect the govt have hidden agenda.

When such large sums are 'siphon off', they are effectively taken off CPF responsibility - meaning CPF will not have to pay interest for them - and represents a huge source of interest-free funds for the govt to use as it sees fit for successive periods of 30 years, and from which it can easily fund the miserly few hundreds for the still surviving 85 years oldsters among us, some 30 years later.

Maybe you can work out the sums involved for successive generations of '55-sters' according to the annuity sum (when finalised) that will be removed from their accounts. I am sure it would be an eye-popping eye-opener for Singaporeans of the sort of ride that the govt is taking us on. We have a very creative govt.

Reminds me of the Slater Walker story which went along the following lines: A man and a pig went into business. The man suggests going into the ham business. Not knowing better, the latter agreed. Guess who will have to be carved up to supply the raw material for the ham?

recruit ong said...

what about ministers' pensions? Since people are living longer and getting their cpf money later, ministers should also follow suit and not be exempted. They should also start getting their pensions much later.

Anonymous said...

I find it very hard to fathom that after the CPF policy has been implemented, why must the Gahmen now suddenly change the rules of the game. Doesn't this imply that in the first place, the CPF scheme has been a failure? I do not see how without giving me a choice, why should the Gahmen now :

1) Dictate to me that I cannot withdraw the minimum sum at age 67?

2) Dictate to me that I must purchase an annuity ?

3) Dictate to me that I can only withdraw the minimum sum by installments only upon reaching 67 years ?

As rightfully pointed out by one of the ST forum writers, I fully agree that there is a complete breach of the trust on the part of the CPF Board if they are going ahead to change the rules governing member's withdrawal of the CPF retirement savings as and when they think fit.

Why can't they apply the new rules instead only to the new CPF contributors ?