TR EMERITUS

CPF & YOU  I refer to the newspaper advertisement CPF & YOU – “Can we still use our CPF monies to service our housing loans after we turn 55?” Can use for housing after 55? “Yes … any amount above half the Minimum Sum in your Retirement Account can be used for your housing needs” How many have half of Minimum Sum? So, perhaps the key statistic to ask is how many Singaporeans who turned 55 last or earlier have more than half the Minimum Sum? For those who turned 55 this year, half the Minimum Sum is $77,500. I estimate the number who have at least half the Minimum Sum to be only about 30 per cent of all those who reach 55. (“Parliament: CPF replies that throw up more questions? (part 1)“, Jul 8) 70% cannot use CPF for housing after 55? Hence, does it mean that about 70 per cent cannot use their CPF after 55 to service their housing needs? Above half of Minimum Sum can use? As to ”And if you continue working after 55, as most do, you can also use your new Ordinary Account contributions for your housing loans” – is this not also subject to the requirement that one must have at least half the Minimum Sum first? How many servicing housing loans after 55? Perhaps the $64,000 question that I believe nobody has ever asked is “How many Singaporeans above 55 are still servicing their housing loans and are unable to use their CPF because they do not have more than half the Minimum Sum in their Retirement Account? At age 65 – full Minimum Sum transferred to CPF Life pool? Moreover, since under the CPF Life default Standard Plan – “One to two months before your drawdown age (DDA) (age 65), we will deduct the rest of your RA savings as the second instalment of your annuity premium” (the first half of your Minimum Sum was deducted at age 55 for your annuity premium) – does it mean that only CPF money above the entire Minimum Sum (currently $155,000 for this year’s cohort) can be used or housing after 65? And accordingly, how many Singaporeans are expected to have the full Minimum Sum at age 65 in the future, so that they can continue to use their CPF for housing after 65? Down graders and flat buyers beware? If you are downgrading or buying a flat after age 55 or 65, you must factor in the above – that half the Minimum Sum after age 55, and the full Minimum Sum after 65 has to be set aside before any excess can be used for housing.   Leong Sze Hian P.S. Come with your family and friends to the National Day protest on 9 August 12 pm to 6.00 pm at Speakers’ Corner https://www.facebook.com/events/271583499702725/   Leong Sze Hian Leong is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, has authored 4 books, quoted over 1500 times in the media , has been host of a money radio show, a daily newspaper column, Wharton Fellow, SEACeM Fellow, columnist for Malaysiakini, executive producer of the movie Ilo Ilo (26 international awards). He has served as Honorary Consul of Jamaica and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors and 13 professional qualifications. He blogs at www.leongszehian.com    Read More →

(29 Jul) - Malaysia Airline System Bhd. is facing an influx of passenger cancellations after the carrier’s second disaster this year, adding to the strains of a company that’s bracing for a fourth consecutive annual loss. Travel agents from Melbourne to Singapore, New Delhi and Malaysia Air’s home country said they’ve seen a spike in withdrawn reservations since MH17’s downing this month — with cancellations climbing above 20 percent in some places. The Samoan women’s rugby team switched to Thai Airways from Malaysia Air on July 27 for a flight to a world cup event in France. The cancellations may add to the financial difficulties of an airline whose state-run parent, Khazanah Nasional, estimated it only had enough cash to operate for a year even before the latest crash. Malaysia Air has suffered the loss of 537 people this year, as the airline industry heads toward its worst year in almost a decade for fatalities. Passengers “are very, very afraid about anything else happening again,” said Ann Chitumbalam, manager at Escape Travel’s branch in Petaling Jaya, who’s seen about 30 percent of Malaysia Air bookings through her office canceled. Ticket holders “don’t want to take a risk,” she said. .... While passenger traffic figures since the July 17 downing of Flight 17 aren’t available, Webjet in Melbourne estimates it’s canceled about a quarter of its Malaysia Air bookings since the disaster, which killed all 298 people on board and occurred four months after the disappearance of Flight 370. .... Thirteen of 15 analysts whose ratings are tracked by Bloomberg say investors should sell the airline’s stock while two say hold. The carrier’s shares have declined 29 percent this year, after dropping in each of the past six years. In June, before the latest disaster, Malaysia Air carried 3.1 percent fewer passengers than a year ago, the second straight monthly drop. The previous month saw the highest proportion of empty seats since 2009. .... While travelers and prices adjust to perceived risks, the downing of Flight MH17, 60 kilometers from the Ukrainian city of Donetsk, brought that region’s conflict back into the global spotlight. Rather than prompting a pause in the fighting, it risks escalating hostilities while world leaders pressure Russian President Vladimir Putin to speed an investigation. .... “I will not travel MAS,” Chen Shiying, a science tutor in Singapore, said in reference to Malaysia Air. He says he’s been shunning the carrier for some time because it is “suay,” or unlucky in the Hokkien dialect. “It might not be their fault, but still, I would want to avoid taking them.” [Read more:  The Jakarta Globe]  Read More →

An MRT station in Singapore Dear Mr Coclanis, I refer to your 29 Jul 2014 Straits Times article “S'pore's no utopia but still a good place to live in”. The government’s recent expansion or extension of social welfare does not surprise Singaporeans. Singaporeans know that the government is trying its best to win back votes after having suffered the stinging pain of the loss of a GRC back in 2011. All the recent hullabaloos can be traced back to 2011. Living standard Singapore’s material, social well being and living standard are well below that suggested by our high per capita GDP because: • Our wage share of GDP is lower compared to Western nations • If foreigners and foreign owned multinationals are excluded, the remaining indigenous per capita GDP (GDP of locals) is much lower • For the same GDP, we are putting in far longer hours • Most international indexes place Singapore amongst the highest cost of living. For the same per capita GDP, high cost of living means lower standard of living This is encapsulated in the Economist article “http://www.economist.com/node/17079148” which shows our relatively low standard of living compared to other countries like Australia, Hong Kong, Canada, Japan, France, Germany and Sweden despite us having higher or similar per capita GDP. First problem with Economist Where-to-be-born index Anyone who thinks that the Economist Where-to-be-born index tells us the actual quality of life in a country will be sorely mistaken. It does not. Instead, the Index tells us what the quality of life for that country ought to be based on regression. The problem with any regression is that the actual data points hardly ever fall on the regression line, so for practically all countries, the actual quality of life will deviate from what the Economist deems they should be. • The life satisfaction scores for 2006 (on scale of 1 to 10) for 130 countries (from the Gallup Poll) are related in a multivariate regression to various factors. As many as 11 indicators are statistically significant. Together these indicators explain some 85% of the inter-country variation in life satisfaction scores. The values of the life satisfaction scores that are predicted by our indicators represent a country's quality of life index. The coefficients in the estimated equation weight automatically the importance of the various factors. We can utilise the estimated equation for 2006 to calculate index values for year in the past and future, allowing for comparison over time as well across countries. [The Economist International, The lottery of life methodology - How we calculated life satisfaction, 21 Nov 2012, http://www.economist.com/news/21567049-how-we-calculated-life-satisfaction-lottery-life-methodology] Below is an example of a regression line between life satisfaction and per capita GDP (Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll, Dr Angus Deaton, page 4). Clearly, most data points don’t fall on the regression line. Take Russia for example, the regression line predicts that for Russia’s per capita GDP, it should be experiencing a life satisfaction score close to 6 (dotted line), but in fact, Russia’s life satisfaction score is only about 5. Coming back to Singapore, the strength of our underlying indicators leads the Economist to predict that we should be experiencing a high life satisfaction score of 8.0 that should put us in world No. 6 position. But in reality, our life satisfaction score is far worse than 8.0. Anyone who is impressed with our No. 6 position is merely being impressed with the high hopes the Economist have for us, not the reality of our experience which the Economist isn’t telling. The reality is that Singapore is ranked: • 33rd by United Nations World Happiness • 36th out of 129 countries in the Gallup World Poll (2007 – 2010) which asked people how satisfied they are with their lives as a whole • 37th in the World Values Survey which asked similar questions on life satisfaction • 109th out of 148 countries in the Gallup World Poll (2008 – 2011) which asked people how happy they were the day before • 97th out of 156 countries in the Gallup World Poll (2005 – 2011) which asked about joy and laughter the day before [Straits Times, Why Singaporeans are the happiest in the region, 17 May 2012] The reality is that Singapore scored: • 6.6 out of 10 and ranked 33 out of 156 countries for the question “How would you rate your life, on a scale of zero (worst possible life) to 10 (best possible)?” in the Gallup World Poll (2005 to 20011) • 6.8 out of 10 and ranked 36 out of 129 countries for the question “On a scale of zero (least satisfied) to 10 (most satisfied), how satisfied are you with your life as a whole?” in the Gallup World Poll (2007 to 2010) • 6 out of 10 and ranked 109 out of 148 countries for the question “On a zero to 10 scale, how happy were you yesterday?” in the Gallup World Poll (2008 to 2011) [Straits Times, How Singapore Scored, 17 May 2012] Second problem with Economist Where-to-be-born index According to the Economist, the indicator with the biggest weightage - the GDP is not the prevailing GDP but the forecasted one in 2030. After all, it is a Where-to-be-born index not a Where-to-be-now index. • Being rich helps more than anything else • A forward-looking element comes into play, too. Although many of the drivers of the quality of life are slow-changing, for this ranking some variables, such as income per head, need to be forecast. We use the EIU’s economic forecasts to 2030, which is roughly when children born in 2013 will reach adulthood. [The Economist International, The lottery of life - Where to be born in 2013, 21 Nov 2012, http://www.economist.com/news/21566430-where-be-born-2013-lottery-life] Since the Where-to-be-born index essentially predicts the future, we need to ask ourselves how good the Economist has been in making such predictions. Turns out the Economist also had a Where-to-be-born list back in 1988 and by comparing the two lists (http://www.businessinsider.com/wond-economist-where-to-be-born-index-2013-1?IR=T&), it is not hard to see that the predictions have been quite far off the mark. Alternatives to Economist Where-to-be-born index For these reasons, the Where-to-be-born index cannot be the closest thing to a Rawlsian index when other quality of life or life satisfaction indexes exist that are based on actual, real data. • World Happiness Report 2013, Singapore ranked 30th in happiness with score of 6.546 • Happy Planet Index 2012, Singapore ranked 90th with an index of 39.8 • Mercer Quality of Living Index 2012, Singapore ranked 25th • EIU Best City 2012, Singapore ranked 22nd • International Living Quality of Life Index 2011, Singapore ranked 93rd in Quality of Life final score • Gallup Global Wellbeing study 2010, Singapore recorded a miserable 19% thriving compared to 31% to 82% for Western democracies • Satisfaction with Life Index 2006, Singapore ranked 53rd with a score of 230 Given that so many international indexes put Singapore in a mediocre position for quality of living, life satisfaction or simply happiness it is hard to see how Singapore has acquitted itself well when judged by Rawlsian criteria. Others The supposed hallmark of Singapore moving quickly to recalibrate public policy has been for the worse, not the better for individual rights and personal liberties. It is now against the law to walk in a group of five, so five friends in Singapore cannot walk together in public without risking being hauled to jail. That’s how bad we have become. Singapore continues to languish near the bottom of press freedom and democracy index year in year out. Don’t make a habit out of aping our government in blaming citizens for its brain drain problem. Singaporeans are not so unrealistic that they cannot embrace or enjoy the lives many have led since happily moving on to Western countries. Judging by the rankings in the numerous alternatives to the Where-to-be-born index, there are plenty of places preferable to Singapore that one can land at. While Singapore is a good place to live in, it is far from being the best. Thank you Ng Kok Lim Straits Times, S'pore's no utopia but still a good place to live in, 29 Jul 2014, Peter A. Coclanis IN RECENT months, Singapore's government, for a variety of reasons, has expanded and extended its social welfare activities and made moves to redress problems arising from growing income inequality. It has, for example, increased health subsidies for the elderly. Through the National Wages Council it has also recommended significant wage increases for the poorest-paid members of the labour force. Such actions have surprised some critics, who have long believed that the Government was committed, first and foremost, to limiting its role and responsibilities in such realms to ensure that Singapore would not succumb to some of the problems associated with over-extended welfare states in the West. Even before the recent moves, of course, Singapore was well known for having created a social order and, indeed, a society that ranked at or near the top of international league tables regarding material and social well-being, as measured by such criteria as income and living standards, health care, education, global competitiveness, transparency, lack of corruption and global competitiveness. In so doing, Singapore also created a social order and a society that fare pretty well even when employing moral calculus much favoured by Western liberals. In A Theory Of Justice (1971), his master work on morality and political philosophy, the late Harvard professor John Rawls famously employed the time-honoured "veil of ignorance" thought experiment to evaluate the morality of political and social policy. Through this experiment, Professor Rawls attempted to establish a moral basis for a fair "social contract". He started from a hypothetical "original position", in which a group of individuals is tasked with developing principles and structures around which to organise a society. To Prof Rawls, the best way to ensure fairness and justness in the society so established is for those involved to proceed behind a "veil of ignorance", that is, a situation wherein "no one knows his place in society, his class position or social status; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like". With this veil in place, Prof Rawls believed, people would behave more rationally, impartially, empathetically and morally. In other words, the chance that a participant in the thought experiment might be placed in society as a woman or a racial/ religious minority, as a poor person or one with a physical handicap, as a person of below-average intelligence, or a person without social capital or connections - or some combination of the above - would lead people, at least at the margin, to establish principles and structures that were both fair and humane to all. Contemporary Singapore is no utopia and, like any other society, it has its faults (increasingly, income and wealth inequality among them). But in many ways it acquits itself well when judged by Rawlsian criteria. Obviously, few seriously question Singapore's achievements in meeting its citizens' "basic needs" - subsistence, quality education, access to quality housing and health care. But what about other Rawlsian concerns? In this regard, one might begin by pointing out that justice and fairness are, more than anything else, about meeting basic needs. Over the last half-century, Singaporeans have created a society that deftly balances material well-being, educational opportunity, merit and "the right to rise", personal safety and social security. It also extends such "benefits" to the overwhelming majority of its citizens, regardless of position. Although there is no one index that captures such social welfare accomplishments completely - the World Bank's Human Opportunity Index shows potential, but is still being developed - Singapore generally ranks highly in various international ranking schemes. According to the United Nations Development Programme's Human Development Index, for example, Singapore placed 18th out of 185 states and territories ranked last year, even though its position has been hurt in recent years because the index is now "inequality-adjusted". Perhaps the most comprehensive, currently available index is the Where-to-be-born Index, compiled by the Economic Intelligence Unit of The Economist. This index brings together weighted economic, social, and political data to establish a composite portrait of the overall quality of life in countries around the world. It includes measures of income, education, health, economic opportunity, job security, family life, gender equality, safety, community life, and governance, at least some of which can be viewed as imperfect proxies for fairness and justice. Last year, Singapore ranked sixth out of 80 countries and territories, behind Switzerland, Australia, Norway, Sweden and Denmark. The Where-to-be-born Index is the closest thing to a Rawlsian index we have. And Singapore, as we have just seen, scores very well indeed. Moreover, one of the hallmarks of Singapore over time has been the governing system's ability to move quickly and continually to recalibrate public policy. This being the case, it seems possible, perhaps even likely, that other elements important to Prof Rawls - such as individual rights, and personal liberties - will rise in relative importance in the social welfare equation in the years ahead. Singaporeans have reason to feel good about what they have created. Yet the country has a "brain drain" problem, arguably a function of rising or perhaps even unrealistic expectations. Let me end with another thought experiment which will perhaps reinforce the need for perspective. Ask yourself: If you had to land randomly anywhere on earth - behind a veil of ignorance, not with curriculum vitae in hand - how many places would be preferable to Singapore? The writer is Albert R. Newsome Distinguished Professor of history and director of the Global Research Institute at the University of North Carolina at Chapel Hill.  Read More →