TR EMERITUS

The recent increase in the attacks on the CPF policies have shaken up many Singaporeans from their slumber but what really cements the increasingly negative perceptions of the CPF policies is the PAP government's inability to defend themselves. Historically, the typical PAP's 3Cs response to any criticism - Conversation, Counter-information and Charading - used to work on Singaporeans, but not in this case when real stories of retirees struggling for a living are seen everyday happening on the streets. As such, Singaporeans are more likely to believe the inadequacies of the CPF than the rookie Minister who makes blanket statements. However, the CPF might not have been a failed scheme by itself had it been supplemented and coordinated with other policies especially in the area of manpower, housing and immigration. The current CPF system is unsuitable for the environment it is in, even though we all agree that the fund should be self-sustaining and not cause a deficit in every year's Budget. Here are some of the design flaws of the CPF: 1) Minimum Sum without Minimum Wage The CPF Minimum Sum was set upon and increased by an incorrect barometer - inflation rate. This has caused much grievances especially when salaries have not kept paced with inflation. How should we determine the Minimum Sum when we do not have a Minimum Wage? The PAP worry that businesses may be unsustainable because of a Minimum Wage, but they do not worry if Singaporeans' lives would be sustainable with such a high Minimum Sum. Singapore should set a Minimum Sum which is based on a Minimum Wage that it should have implemented since ages ago. The right idea of a Minimum Sum of $155,000, is that the PAP government tops up whatever MS shortfall for those who do not meet the MS, say, by the age of 50 (or a few years before retirement), and not expecting people to face the inhumane choice of meeting the MS or continue working. 2) CPF interest rates pegged to market interest rate The CPF Ordinary Account interest rate is pegged to the 12 month fixed deposit and savings rate of the local banks. This is a recipe for disaster because if not for the legislated minimum amount of 2.5%, our CPF OA rate will be 0.21% per annum. Interest rate is vital because it not only helps to grow the CPF fund so we could depend less on wage growth, it preserves the fund value so it will not leak out to yearly inflation. The purpose of the CPF is to provide a retirement for account holders, and not to become a market-based saving account which pegs itself to the market interest rate and 12-month fixed deposit interest. Based on this mission, the CPF interest rate should rightfully peg to, arbitrarily and modestly speaking, 1% higher than that of the yearly announced inflation rate. 3) Retirement/Withdrawal Age pegged to average longevity It is a fallacy to believe when people are living longer, their employment age and economic-viable period magically lengthens. Raising the Retirement/Withdrawal Age must be justified with relevant facts that can prove Singaporeans elderly are getting healthier, lesser Singaporean elderly need more healthcare, the job markets are paying better and hiring old people etc. The longevity or median deceased age is not relevant and doesn't justify why should the average Singaporean be working longer. 4) Allowing CPF OA to purchase Housing When this rule was first introduced in 1989, HDB prices shot up and never came down since. The other unreported news was that the retirement fund of Singaporeans went down and never came up too. It is a zero sum game - the amount of wealth did not change. The resulting inflation of the HDB prices was marketed as "Capital Appreciation" of which homeowners will get to downgrade and earn a tidy sum for retirement, this however is what I would liken to a Ponzi fairy tale, where the later generations or later buyers will eventually find themselves in a position where no new buyers could afford their exorbitant HDB flats without destroying their retirement needs. Some would question if I would promote the other extreme, that to make people pay for their housing through cash and not by CPF, I would say yes because that was how our parents' generations bought their first HDB flats for two decades before 1989. 5) Separation of OA, SA and MA when you actually have so little The idea of fund segregation works if you have at least half a million sitting in your CPF after paying off the house, but to the average Singaporean who could only have barely up to $250K in CPF after working up to 67 years old, it is unlikely that you will be able to satisfy any single purpose of your needs in housing, retirement or medical. You will find that you are stuck in nowhere - too little in OA to buy a flat, too little in SA to retire and too little in MA to financially survive a major operation. For those with low CPF funds, they are often barely surviving with take-home cash i.e. a cleaner taking home $800 for a $1,000 salary, which leaves you really stuck in the daily cost of living too. We should consider a CPF-lite version for the low income earners, where at least 2 out of 4 needs could be sufficiently met while the other 2 aspects will have to rely on social benefits. Cheated Singaporean * The author blogs at Cheated Singaporean.  Read More →

PM Lee I refer to the 30 May 2014 Straits Times letter “Singaporeans responsible for building better future” by Ms Faith Connie Tham. Ms Tham is sad that Singaporeans feel the government is not doing a good job and encourages those who are not happy to travel abroad to experience high inflation, rampant crime and dirty streets in order to see the government in a different light. • Ms Tham, Singaporeans don’t have to go overseas to experience high inflation, we already are experiencing high inflation • Ms Tham should specify where abroad to travel to lest Singaporeans end up going to Denmark, Australia, Finland, Japan, Austria, Switzerland, Sweden, Germany, New Zealand, Canada and the United States and feeling even more unhappy. • If low crime and clean streets is all that we need to be happy, what are we pushing for ever higher GDP for? What are we growing at all costs for? What we paying million dollar minister salaries for? Ms Tham reminds us that our low crime rate and clean, efficient public transport are what people in other countries pray for that we should not take for granted. But Hong Kong, Japan and most First World nations have low crime rates and efficient public transport. These are part and parcel of what constitutes First World living that First World citizens expect as a minimum. Only Third World citizens don’t expect First World comforts. Is Ms Tham suggesting Singaporeans are merely Third World citizens deserving only of Third World living who should be grateful to be living in First World Singapore? Ms Tham asserts that it is our responsibility to work for what we want regardless of high property prices and high cost of living. Ms Tham doesn’t seem to think that it is the government’s responsibility to ensure affordable housing and low cost of living. Ms Tham should realize that the government obtained the bulk of Singapore’s land for as cheaply as $1 per square foot from the people. It is for this reason that the government is obliged to provide affordable housing to Singaporeans. It is also the prerogative of responsible governments all over the world to keep costs of living low. Ms Tham should not absolve the government from fulfilling its basic duty to the people which is the reason why people vote them in the first place. Ms Tham refers to training grants given to firms to develop employees, funds to encourage people to further their education, and grants to help entrepreneurs start businesses as examples of ways the government is helping citizens. Ms Tham should realize training grants don’t help Singaporeans who are laid off as the grants are given to firms, not to Singaporeans. Ms Tham should understand that any society will have more workers than entrepreneurs because not everyone can be an entrepreneur so again the entrepreneurship grant is useless to many Singaporeans laid off. Ms Tham urges us to embrace the future with a positive mindset and reminds us of our responsibility to build a better future. But pointing out mistakes and pushing for the country to go in the right direction isn’t negative. Similarly, blindly following the government and condoning its wrong path isn’t positive either. Our responsibility to Singapore’s future cannot be to sit back and take whatever the government throws at us, good or bad. Thank you Ng Kok Lim Straits Times, Singaporeans responsible for building better future, 30 May 2014 IT SADDENS me to read about bloggers who make unsubstantiated allegations and Singaporeans who feel the Government is not doing a good job. They claim to be speaking for Singapore citizens, but is that really the case, or are they just out to make a name for themselves? As far as I am concerned, I am happy with how things work in Singapore. Years ago, I believed the Government was not doing a good job because my parents had to struggle to give me the education I needed and I had to work very hard to realise my goals in life. I felt that the Government was not empathetic and unwilling to help improve the lives of Singaporeans. But once I started working and travelling to other countries, my perspective changed. I encourage those who are unhappy with life in Singapore to travel abroad. They will see the Government in a different light after they experience the high inflation, rampant crime and dirty streets in other countries. Our city has one of the lowest crime rates in the world, and we have an efficient and clean public transport system. These are things we cannot take for granted because they are what people in other countries pray for. Yes, property prices here are high and the cost of living is going up, but we have the responsibility to work for the life we want. People who say the Government is not doing anything to help its citizens should look at the training grants given to firms to develop their employees' skills, the funds to encourage people to further their education, and grants for entrepreneurs to start businesses. We should embrace tomorrow with a positive mindset. Singapore is our home and we have a responsibility to build a better place and future. Faith Connie Tham (Ms)  Read More →

Minister Chan Chun Sing Ok Folks, saw you choice for the topic for the next Informal Policy Disc (4 Jul 14, 8pm Buona Vista CC). Will do "CPF and Retirement Security". Here are some initial questions to ponder in preparation: 1. What are the objective(s) of any system that seeks to take care of our retirement needs? 2. What are the challenges for any social security system for retirement? 3. How do different countries seek to overcome these challenges and how have they fare? 4. How has our CPF system evolve and what are our current and future challenges? 5. How should we manage our current and future challenges? Beyond these system issues, we will also address the local/personal issues, such as: 1. What is the Minimum Sum about? How can we meet the Minimum Sum? 2. Where do returns come from and what is a "fair rate of return"? 3. Should we widen the usage for CPF Funds? 4. Should we adjust the withdrawal age and what does that mean? Pse indicate your attendance for us to estimate the logistics and space requirements. See you all. (Event Facebook Page: https://www.facebook.com/events/1496728117225849/) Chan Chun Sing Minister for Social and Family Development Second Minister for Defence MP for Tanjong Pagar GRC Source: www.facebook.com/ChanChunSing.SG  Read More →