Somebody once commented that our CPF scheme could be something like
the Ponzi scheme.
The CPF system was started by the British Colonial Government as a
small scale retirement funds for those in the Civil
Service willing to participate in such a scheme - on top of
their pension.
It was during the Self-rule period of LKY's government that
expanded this scheme into a compulsory national scheme to create
funding for the government programmes.
With the CPF monies largely used in the creation of FIXED ASSETS
that are non-liquid (with no ERP schemes during the 50's through
80's to recover the investment into infrastructures) - the
interests paid on CPF savings will have to come from an ever
increasing number of CPF savers.
The number of NEW CPF savers will have to exceed the number of
OLDER CPF savers that are retiring and intending to withdraw their
ballooning account with compounded interests earned annually.
This scheme works fine as long as the population continued
to grow.
Unfortunately, the population growth came to a sudden stop with
the successful implementation of the Family Planning Scheme that
LKY forcefully pushed ahead despite the warnings of social planners
to the future pitfalls - (LKY had admitted as much in retrospect
almost 40 years later).
The CPF need a large base of every increasing number of new
participants to support those leaving the scheme - and the
structure is like a pyramid with a large base at the bottom and a
small apex at the top representing the older CPF holders
leaving.
With a shrinking population, the baby-boomers of the 1950's
through 1960's will be retiring during the years 2001 onwards - and
the pyramid is now in an inverted position, with its large pyramid
base at the top, and its narrow apex pointing downwards and
represent the shrinking population entering the workforce to make
CPF contribution.
This precarious situation was already noted when Howe Yoon Chong
was tasked to study this problem but disguised it as a study on the
"ability of the CPF accounts sustaining the retirees into old
age".
This resulted in the first delay payout age of 55 years to 60
years, then pushed further to 65 years, and then with a frozen sum
to last till 85 years.
Other plans were introduced to cut off sums from our CPF
accounts into Medisave, and Medishield; and further programmes for
old-age support insurance schemes.
If this is not a legitimized PONZI scheme - what can it be ?
It has all the structure of a pyramid.
