A Straits Times reader, Mr Manuel Nathan, recently wrote in to
ask what are the lowest possible payouts for the CPF Life
plans.
He was concerned that the Guide to CPF Life published by the CPF
Board had stated in fine print that the payout
range based on CPF interest rates of between 3.75per cent and
4.25per cent does not represent the lower and
upper limits of the payout.
In its response, Mr Lo Tak Wah, Director (Retirement and
Investment) of the CPF Board avoided answering the question
altogether, preferring instead to stick to the propaganda that CPF
Life is designed to have less volatile payouts and that
inflation-indexed payouts are not feasible. (See:
CPF Life designed to have less
volatile payouts.)
The real reason why the CPF Board avoided
answering Mr Nathan’s question is because the lowest
possible payout is zero dollars.
As recent as July last year, it was revealed in Parliament that
there was a provision allowing the CPF Board to stop
payments in the event that the Lifelong Income Fund becomes
insolvent.
Even Madam Halimah, chairman of the Government Parliamentary
Committee for Manpower, had earlier noted that she found this
clause “quite disturbing“.
In the article “STOP THE WAYANG, just return us our
CPF!“, I said:
Mdm Halimah has a curious sense of humour and a vocabulary to
match. This clause is not merely disturbing. It is monstrous
because it allows the Government to completely shirk its
responsibility and accountability to Singaporeans in the event that
the Lifelong Income Fund becomes insolvent due to its mismanagement
and incompetence.
Let me clarify my views of CPF Life again.
Without any transparency from the Government or from CPF Board,
Singaporeans will never know the criteria by which payouts are
decided. The CPF Board has the authority to modify payouts based on
changes in life expectancy or changes in prevailing interest rates,
but any decision can ultimately be made without any
accountability to the public because the exact details are never
disclosed.
There is no way to hold the Government accountable should the
Lifelong Income Fund become insolvent due to mismanagement, nor is
there any way of being assured of a fair and decent CPF Life payout
since the CPF Board can arbitrarily change the payouts at its own
discretion without any need to justify its decision to the
electorate.
There is no evidence to suggest that the Government has designed
CPF payouts to be less volatile. In fact, by their own admission,
CPF payouts are expected to be low because the CPF funds are being
invested in Government securities that currently yield a very low
rate of return.
The refusal to index CPF Life payouts to inflation is also
daylight robbery. If inflation persists at 3% per annum for the
next 20 years, the value of CPF Life payouts would be halved. This
means that the standard of living enjoyed by elderly Singaporeans
would fall by half.
Compulsory annuity is nothing but asset confiscation
disguised as retirement planning.
It is high time Singaporeans told the Government that it
cannot rescue a pyramid scheme gone bad by merely adding another
layer.
http://www.sgpolitics.net/?p=3751#more-3751