What will life be like if CPF is never implemented?

last SG · 2009-08-20T19:53:05+00:00

Worldwide, CPF and similar schemes are designed to provide a lumpsum plus steady stream of income post-retirement, or a lumpsum when you quit/lose your job....

WoBuPaNi SG

So, singapore is the only unique country that the government takes 20% of ur monthly salary into a so called bank that you can withdraw when u are 62(used to be 55 until PAP decides that we should work until 62 before we can retire) or when u are sick. What if there isnt such a thing? Will life be the same? or will life be worse/better without it? And how do cpf really contributes to your retirement when you only get monthly payment from the cpf board(instead of withdrawing whatever amount you want) when u reached your golden age .. if you can live that long.

To me i feel that cpf has its pros and cons. You can rely on it for medisave when you are sick etc etc. But for lower income families, that draw less than 1.5k a month it makes no sense to take 20% out of it making the family harder to make ends meet for that month if the person is the sole bread winner.. What are your thoughts about CPF? Good that it helps us to save? Or bad that it always take much of ur hard earned money into a invisible bank that you can see only when u reach a certain age.

I dont see other countries struggling without a so called CPF aka Social security savings plan.

deepak.c SG

They are just exploiting common folks, pay you pathetic interest for the use of your capital, compare with Hong Kong's MPFA, which advises you on the investment for your retirement based on your risk profile, you make your own investment choice. The Hong Kong government provides a guarantee for your funds, but the choice of investment is certainly yours, it doesn't pay you a cheap interest rate of 3.5% for the use of your capital like CPF.

For CPF there is a $60,000 cap before excess can be used for investment, there are like 3.2 million CPF members, so you get cheap of $192 billion (provided everybody has $60k in their account, the current Total CPF balance is $153 billion).

http://www.mpfa.org.hk/eindex.asp

The CPF pays you 3.5% for the first $60,000. If you look at the Return on Equity (ROE) for a blue chip company, say OCBC, there isn't a year where the ROE is below 6.3%. It's like me asking you to put your money with me, I pay you 3.5% while I make investment gains of 6.3% to 13.4% (average for 10 years is 11.3%). For UOB, the ROE for the past 5 years has never been below 10.8%.

So are CPF members getting good returns for their retirement savings or are we just being exploited?

OCBC 10 Year Historical Financials

UOB 5 Year Historical Financials

shade343 SG

OCBC and UOB DO NOT guarantee the ROE nor do they gurantee they will alwauys be profitable, CPF GUARANTEES your 3.5%.

desirefan SG

Well i have friends in HK who think that we are lucky to have cpf to help ease off the payment of housing loan.

trashbag SG

OCBC and UOB DO NOT guarantee the ROE nor do they gurantee they will alwauys be profitable, CPF GUARANTEES your 3.5%.

Insurance also guarantees your 3.5% and you can draw ot a lump sum at the end of the policy

sgdiehard SG

I dont see other countries struggling without a so called CPF aka Social security savings plan.

Other countries have their Social security plans, just which one is better in the individual's opinion. people in countries without any kind of social security plan usually wish there is one.

you make your own investment choice

hehe, when they lost money on Lehman they demonstrated to get money back, so much for making own choice, but others bear the consequence. make money, I made the right choice, lose money I got conned.

OCBC, there isn't a year where the ROE is below 6.3%. ...For UOB, the ROE for the past 5 years has never been below 10.8%.

you can use your CPF money to buy OCBC and UOB shares, or any other shares, depending on your own risk factor, which is how much are you able to lose and don't put the blame on others.

You can also use CPF to buy houses, buy low sell high, its your choice.

angel7030 SG

Well i have friends in HK who think that we are lucky to have cpf to help ease off the payment of housing loan.

Very true, not only HK, many countries are envious about our CPF system, and yet here, our own local keep complaining,...another praise I get from some other countries' citizen is that we also have a very good tripartite relationship, even they copied it and use in their own country, it cannot work.

Kenashi SG

the only gd thing i can see for cpf is a way to control inflcation.

less disposable income ppl will spend less hence the standard of living will not skyrocket

seyKai SG

who on earth would be able to save 34.5~40% of his monthly income?

those highly paid can do it but what about those lower income group?

and at the end of the day, you dun even get to see your money

I would prefer to manage my own money than lending to them.

"MONEY NOT IN YOUR POCKET IS NOT YOUR MONEY"

citymax SG

who on earth would be able to save 34.5~40% of his monthly income?

those highly paid can do it but what about those lower income group?

and at the end of the day, you dun even get to see your money

I would prefer to manage my own money than lending to them.

"MONEY NOT IN YOUR POCKET IS NOT YOUR MONEY"

sgdiehard SG

who on earth would be able to save 34.5~40% of his monthly income?

those highly paid can do it but what about those lower income group?

and at the end of the day, you dun even get to see your money

I would prefer to manage my own money than lending to them.

"MONEY NOT IN YOUR POCKET IS NOT YOUR MONEY"

in some countries people pay 40% tax! I rather save 40% than pay tax.

whether you see your money or not depends on how long you expect to live.

Unfortunately it is true that many people can't manage their money well enough for old age. It is well known singaporean men are rich at the age of 55, think how long does it last for many?

SOME MONEY NOT IN MY POCKET IS MY MONEY, the credit cards I sign, the housing loan I take....IT IS NOT JUST THE MONEY IN MY POCKET THAT I MANAGE.

ispyyy SG

We have to pay more tax to support aging population.

Not much difference.

Cram SG

http://www.mpfa.org.hk/eindex.asp

So are CPF members getting good returns for their retirement savings or are we just being exploited?

OCBC 10 Year Historical Financials

UOB 5 Year Historical Financials

http://mycpf.cpf.gov.sg/CPF/About-Us/CPF-Stats/CPF_Stats2009q2.htm

Gives you a clearer picture of the state of CPF finances.

Notice only 1.6m members are active. This was much lower, at 1.3m end of 2004. Then a steady rise - 1.38m end 2005, 1.46m end 2006, 1.54m end 2007 and 1.61m end 2008, thanks also due to steady rise in number of PRs.

Imagine 5 years down the line: Even if 100,000 PRs, each with 100,000 in their accounts, decide to jump ship, the govt will be poorer by $10 billion. Now you know why we need foreign talent.

seyKai SG

in some countries people pay 40% tax! I rather save 40% than pay tax.

whether you see your money or not depends on how long you expect to live.

Unfortunately it is true that many people can't manage their money well enough for old age. It is well known singaporean men are rich at the age of 55, think how long does it last for many?

SOME MONEY NOT IN MY POCKET IS MY MONEY, the credit cards I sign, the housing loan I take....IT IS NOT JUST THE MONEY IN MY POCKET THAT I MANAGE.

some countries tax the rich n give to the poor and look after you wen u aged

the credit you sign n the hosung loan u take is MONEY YOU OWE and NOT YOUR MONEY

angel7030 SG

http://mycpf.cpf.gov.sg/CPF/About-Us/CPF-Stats/CPF_Stats2009q2.htm

Gives you a clearer picture of the state of CPF finances.

Imagine 5 years down the line: Even if 100,000 PRs, each with 100,000 in their accounts, decide to jump ship, the govt will be poorer by $10 billion. Now you know why we need foreign talent.

that is only yr imagination, and hardly there can be 100k peoples making 100k at CPF in 5 years, at least for a lay PR, it will takes 10 to 15 years, by then they will have start a family and stablise here, by then, they will be quite old and not much place to jump to..So, the govt idea is to attract millions and hope that at least 1/2 will make it here.

And franky speaking, many are looking to get PRs, they dun wan to go back to their country.

deepak.c SG

OCBC and UOB DO NOT guarantee the ROE nor do they gurantee they will alwauys be profitable, CPF GUARANTEES your 3.5%.

The historical average returns of a diversified portfolio in any market ALWAYS beats the returns from your savings rate of 3.5%!

Don't blame you, cause you have no firm foundation in Economics or Finance.

From the inception of Dow Jones to year 2000 , through it's ups and down from the great recession, the recession in 1970, the big company stock still manages to give an annual average return of 11.05%. CPF gives you 3.5% and pockets the rest of the 7.55%, don't underestimate the value of 7.55%. If you have $10,000 compounded by 11.05% for 40 years (your productive working life), you will have $661,824 by the end of 40 years.

A central bank can always guarantee the paper value in your CPF, because it has the authority to print more money when it's required, but then again to control the inflation due to more retirees withdrawing funds they can increase CPF minimum sum like what they are doing recently.

deepak.c SG

Well i have friends in HK who think that we are lucky to have cpf to help ease off the payment of housing loan.

HK has an even better system, I posted the link but I guess you didn't read.

MPFA, it's a fund where the funds are managed by the investors themselves, government only advises the members on their investments, also the government provides a financial guarantee for the funds.

deepak.c SG

Insurance also guarantees your 3.5% and you can draw ot a lump sum at the end of the policy

Insurance in other countries offer more than 3.5%.

deepak.c SG

I dont see other countries struggling without a so called CPF aka Social security savings plan.

Other countries have their Social security plans, just which one is better in the individual's opinion. people in countries without any kind of social security plan usually wish there is one.

you make your own investment choice

hehe, when they lost money on Lehman they demonstrated to get money back, so much for making own choice, but others bear the consequence. make money, I made the right choice, lose money I got conned.

OCBC, there isn't a year where the ROE is below 6.3%. ...For UOB, the ROE for the past 5 years has never been below 10.8%.

you can use your CPF money to buy OCBC and UOB shares, or any other shares, depending on your own risk factor, which is how much are you able to lose and don't put the blame on others.

You can also use CPF to buy houses, buy low sell high, its your choice.

Lehman brother was more of the banks' hardselling and withholding certain information from investors. That's why investors in Hong Kong got their money back and you can't use a single event to generalise about the whole market, like I said before you need a diversified portfolio to reduce the risk, not putting your eggs into one basket. In any case, whether the market is good or bad, there will always be companies losing money and filing for bankruptcy, it's just that when there market dips, there are more companies closing, but then those who survive will take over the bankrupted company's share. Diversification would need about 30 different company stocks.

Also, don't forget that CPF (government) has the funds necessary to diversify into many investments, with diversification the risk are reduced, they are able to get a higher return from the investments. But what they do is to pocket the difference between your 3.5% and their investment gains, they are just merely exploiting CPF members' cheap source of funds.

I think you are totally unknowledgable about CPF, don't you know that there was a cap of $60,000 before you can even make an investment, it was mentioned in a previous National Day Rally. Where are you from?

angel7030 SG

HK has an even better system, I posted the link but I guess you didn't read.

MPFA, it's a fund where the funds are managed by the investors themselves, government only advises the members on their investments, also the government provides a financial guarantee for the funds.

CPF is not an investment account, HK is an option for its peoples, Hongkees are gamblers, the govt only provide a minimal guarantee on their Class AAA funds and not all the other investment funds.

Many Hongkees are living on the street with no roof on top of them, a mere shop rental is costing them US$5000 per mth comparing to us at US$2000 in a normal shopping centres, the Govt is hands off in all work related and industrial business, u need to pay money to get a job, bus drivers need to pay about US$10000 to secure a job, same goes to taxis, u need to pay US$30000 to get a taxi with a licence, it is a survival or gone case, many are living on loan and pay, pay and loan situation. And with the arrival of Chinese from Shenzhen and Guandong..the peoples of HK are crying to no avail. The best they can do is invest in RMB, like i do.