Up to 75% have insufficient funds to retire on
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This sounds scaring isn't it?
CPF
A paltry payback
Up to 75% have insufficient funds to retire on. By Wayne Arnold. IHT
May 18, 2005
AS President George W Bush tries to persuade the US Congress that some Social Security payments should go into a personal investment account, the island state of Singapore is grappling with an extreme version of what he has proposed.
Singapore's national pension program places every penny a worker contributes - 33 percent of total pay - into a personal account.
Workers can choose whether to accept a guaranteed deposit rate from the government or chase higher returns in the property or stock markets.
Called the Central Provident Fund, Singapore's programme has succeeded in increasing home ownership and virtually eliminating the cost to the government of funding retirement by taxing the young.
But is the fund adequate for retirement? Not according to Leo Lim Tong, who after working 16 years as a hotel cook finds himself at 60 embarking on a career as a security guard at a local shopping center.
The returns on the fund, known locally as CPF, he said, are "only a little bit, not enough."
Nor did it work for Shu Ting Hoe, a career banker who retired at 57 thanks to an early retirement package from his employer. "Depending on CPF alone, it's not enough to retire," Shu said.
When the governing party took control of a newly independent Singapore in 1965, it rejected the idea of a welfare system that would drain public coffers and adapted the fund system left by the British, expanding it to channel savings toward social goals.
"Singapore doesn't purport to have a perfect system," Ng Eng Hen, the manpower minister, said. But he disputed the notion that the CPF provided inadequate returns.
Workers contribute 20 percent of their salary and their employers the equivalent of 13 percent, all of which goes into three accounts, including one for medical insurance and health care.
Once workers reach the retirement age of 62, they can either take their savings as a lump sum or begin drawing it down in installments.
If they have saved more than a minimum set by the government, they can begin withdrawing at 55.
The government pays a guaranteed interest rate on fund deposits that works out to about 3.4 percent.
Depositors can also invest their savings in mutual funds, insurance products or, to a limited extent, in individual stocks. Whatever they contribute, as well as any interest or profit earned on their money, is tax-free.
Mukul Asher, an economics professor at the new Lee Kuan Yew School of Public Policy here, estimates that as many as 75% of fund members end up without enough to retire on and that the fund delivers on average less than 30% of the average depositor's last salary.
That compares with 70 % in France and 45% in the United States.
Economists say the government uses the fund as a fiscal tool, periodically changing the contribution rates the way a central bank changes interest rates.
In the 1980s, the government pushed contribution rates as high as 50 percent to fight inflation.
After the Asian financial crisis in the late '90s, it halved the contribution from employers, to 10 percent, effectively giving the entire country a pay cut.
Allowing members to withdraw their savings for such government-ordained investments opens another hole in retirement planning, economists say. Asher calculates that 70% of all funds deposited end up being withdrawn, often to buy property.
In the 1960s, to enable its population to move out of slums, the government began allowing citizens to withdraw CPF savings to buy public housing.
Singaporeans today withdraw more to pay for property than they do for retirement, a situation that leaves many asset-rich and cash-poor. Many are loath to sell, economists say, because property values have fallen by roughly a third in the past decade.
Ng said that most elderly property owners were sitting on profits that could fund their retirements. Cultural pressure to own and pass along a home dissuade many from selling, but "they can live with their children," he said.
Although caring for the elderly is part of traditional Asian values, critics of the system say relying on the young to care for the elderly amounts to just the kind of generational tax that Singapore's system was supposed to avoid.
Perhaps the most worrisome feature is the record on Singaporeans investing their own funds.
According to Asher, CPF members on average lose 15 percent on their investments. When they pick individual stocks, they lose even more - about one-third. -
Compare the current interest rates and inflation rates -- we'd get a pretty good idea how fast the value of our money is shrinking in the bank.
The 75% would most certainly become a heavy burden on the greying nation of Singapore. However, while it is never too early to start planning, this is not a problem that could be solved easily just through financial planning. While some are spending too much to bother on any planning, some are earning too little to spare any on planning.
Hope the Finance Minister could come up with a more constructive plan than gambling on Singapore's future and warming to rich neighbours for scraps. -
I am glad most Singaporeans have woken up to this sad fact- the non-elitists are all going to retire with a huge HDB mortgage to worry about, and nothing much left in their bank accounts.
Most Singaporeans will be left with very little precious except devalued S$ in the bank.
So you see, this is the plan - ensure ordinary people don't get too rich. Too many rich people equates more financial support for the opposition parties.
The only people allowed to be richer are bankers and board directors in Government Linked Companies.
And many MPs and ex-Generals are board directors. All receiving big fat bonuses and directors salaries.
The absolute control and utilisation of CPF moneys can only be conjured by a heartless and cunning politician, and Lee Kuan Yew is one such man in history.
I am waiting patiently for his era to be over, so that life can return to normalcy, minus all the interferences and control by an aging despot and his band of elitists.
I accept this claim that LKY built Singapore to what it is today - a massive slave camp for working Singaporeans. -
No wonder the govt now not talking about the Swiss standard of living. Let alone the gentler, kinder society or the hip, happening Singapore.
Remember the time where they blocked out the stretch of Orchard Road every sunday during the last week of the month and had loud music blaring? Such a great idea, so great that it end with the pinoy maid and the bangra workers wild partying. So much for the tourists and the Singaporean. -
The government is actually moving in the opposite direction now by trying to brainwash people into accepting lower standards of living, telling people not to be choosy and take up menial jobs with meagre wages, regardless of education level.
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duplicate.
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so how?? scary le!!! -
even though we know it there is nothing we can do to correct the situation. i strongly believe the worst is yet to come!!!
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Let see...here are some possibilities:
govt decides to raise retirement age to 67 or 70, while increasing the age you can draw out your cpf to say...60 or 62?
govt decides to raise employee cpf contribution to 30 % while reducing employer's contribution to 10%?
govt lowers the interest rate on our cpf accounts?
or maybe......govet increases the minimum sum to 200,000?
the possibilities are endless! -
its a bleak future I see and the struggle will be harder and harder ... when I tell people this story... they laff that I am so negative and wicked to wish bad on some family clan and their dogs... and then avoid me later for fear that big brother is watching
I am already scouting around to see if there will be any of those low level jobs left (if not already snapped up by our foreign "talents") when I get old. This I am really not kidding. I cannot think of retirement cause already I know I will never have enough savings when I am old. I guess back then people believed the things the govt said and didn't do the maths. Now the first batch aged and we see first hand the effects of the policy and its true intention.
Its hard to imagine the young people all well educated and working as janitors while our high paying jobs goes to white skin foreigners who claims to be talents. Its heartbreaking to see an old person on the street, still working when they worked so hard all their lives but is left with nothing. Its very hard to swallow that this might be my future that I will not be able to relax but had to hurry up (or get the boot when there is complains since there are so many oldies waiting in the queue for your job) and serve rich kids whose parents are related to some clan or foreigners who got rich just by working hard in their country. It does feel very sad to live in singapore and see this things happening. You know, I felt that by giving birth, I am making the next generation suffer worse fate as a worker ant in singapore.
Best of all, when I tot we already have enough parasites and then the parasites open the doors to more foreign parasites. -
dont understand why they could be bothered to raise the retirement age to 65 when employers are practising ageism.Originally posted by av98m:Let see...here are some possibilities:
govt decides to raise retirement age to 67 or 70, while increasing the age you can draw out your cpf to say...60 or 62?
govt decides to raise employee cpf contribution to 30 % while reducing employer's contribution to 10%?
govt lowers the interest rate on our cpf accounts?
or maybe......govet increases the minimum sum to 200,000?
the possibilities are endless! -
Oh because some one lived beyond 80 and assume all people would but then someone forgot we don't drink tonic every day or play golf to pass time. Most of us are trying to make ends meet. When we hit 65, our bodies are so worn out, I don't know if we would be visiting CPF on a wheelchair or walking support.Originally posted by av98m:Let see...here are some possibilities:
govt decides to raise retirement age to 67 or 70, while increasing the age you can draw out your cpf to say...60 or 62?
govt decides to raise employee cpf contribution to 30 % while reducing employer's contribution to 10%?
govt lowers the interest rate on our cpf accounts?
or maybe......govet increases the minimum sum to 200,000?
the possibilities are endless!
the system always favour the employer. So be not surprise if anothe crisis comes around, employers might rally and drop their contribution further and freeze our wages. Meanwhile, some transport company will sing some tunes and then prices of necessities will go up, cost of living will also go up.. But then during those long winded wayang sessons they like to play on TV, someone will say, the cost of living compare to that base year 1998 (which is the boom year) shows that it is level and in fact might be down. *fake chuckle* And all the dogs also chuckle together.
When disasters struck our neighbours, somehow there's always funds for them. Then when our own people ask for some help, somehow the funds are not accessible to us. Then to ensure the funds are topped up, ERP rates are increased, perhaps tax laws adjusted to cream deeper, gst increase to get more and whatever combination you can some out .. and maybe the system might get creative, tax the air we break or the farts we let out. Maybe we have to install a cash card on our heads so that we are charged when we walk in and out our own HDB flats.
Ah the CPF is a large large pool of monies that is invested everywhere. The returns on these investments are pretty hugh but the interest rate is sadly pitiful but then there is a lot of hierarchy to feed. As long as we don't see it, even not paying a single cent of interest, is also possible as long as the system can explain away the people's doubts which I am sure they can, afterall most of us don't know these instruments well enough .. and who dare to talk back?
Well they can raise it to a point where we can never see it, touch it or feel it. In fact, I had this gnawing feeling that by the time I am an ancient dino, I doubt very much I will get it back ... because the current bb-boomers are getting to that point and will drain the system. Once the govt learn of it, policies will be put around drawing out cpf and so can you imagine the many barriers we will face when we are eligable to draw our CPF?
Thinking of the worse case scenarios... Best case scenario... maybe N Korea might get crazy and boom everyone in the region... hahaha! -
because the people who implement it do not have to suffer that discriminationOriginally posted by dragg:dont understand why they could be bothered to raise the retirement age to 65 when employers are practising ageism.
a new paying post is created for them -
Precisely, raise the retirement age to 65 FOR WHAT!?!?!????
When people who are 35 years old onwards, have difficulty getting employed, how in heck are people in or nearing this age group going to be employed and working????
What's worst, most parents (like mine) in their late 50s are dealing with monthly medical costs of around $300 per month, and yet, they can't use their CPF because they're deemed still capable of supporting themselves by way of a job, or by way of their children!
If by way of a job, which employer in Singapore would willingly employ someone in the mid 50s who has medical conditions? If by way of their children, how on earth, are children able to have babies? Not unless their children are making S$6,000.00 per month each! So is the system, and the calculation meant to be only effective for the rich and well heeled?
The majority are average income earners, so where's the logic?
Where's the LOGIC?
It's a cold and heartless system to live by! -
What can we do? They wasted my parents' lifetime and both of them are still struggling to make ends meet. Are they going to waste mine and my kids too? They probably wasted one third of mine. No way could they touch my kids, because I am going to sent them away from this place. They would study, live and settle down somewhere else! There got to be a stop somehow, and it's going to stop here!
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The idea of working beyond 62 yrs of age is appealing when you're working in a highly paid cushy white collar type job while being chauffered around and surrounded by bodyguards and lackeys. For the rest of us, drive taxi, clear plates at foodcourt or work in fastfood restaurant lor. I'm already seeing a significant increase in the number of elderly reaching into rubbish bins for drink cans to sell, collecting old boxes, or worse, eating others' leftovers at fiood centres. Heartbreaking. At the risk of sounding morbid, perhaps dying young in Singapore is a good thing.
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Leave this place if you can.Brush up on your English skills.It is a fact that our ITE graduates are eligible for a Green Card in the States.Our skills are needed abroad.
We have slaved and sweat blood for this nation, but this establishment has only paid lip service to the ideals we pledged in unison as kids.We serve 2.5 years of NS to protect our loved ones, surely not to defend this crap that is spewing out all over the place.
Find your place under the sun.It's not getting any better and anyone who thinks so is deluded or in cahoots to stifle you. -
leave this place, while they continue to benefit from what we have a share......??
don't want ne.....
can we tell them to do the way we want??
I want ......bla bla bla.....too long to list here
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I plan 2 work till 75... leaving myself about 7 yrs to enjoy retirement.Originally posted by av98m:The idea of working beyond 62 yrs of age is appealing when you're working in a highly paid cushy white collar type job while being chauffered around and surrounded by bodyguards and lackeys. For the rest of us, drive taxi, clear plates at foodcourt or work in fastfood restaurant lor. I'm already seeing a significant increase in the number of elderly reaching into rubbish bins for drink cans to sell, collecting old boxes, or worse, eating others' leftovers at fiood centres. Heartbreaking. At the risk of sounding morbid, perhaps dying young in Singapore is a good thing.
In the meantime, enjoy life as much as much possible.
Rationale? There will not be enuff funds/children/govt grant/wat ever to let one retire and enjoy the same standard of living at the same time anymore. It is happening in most of the developed countries where the birthrate is not enuff to substain the replacement.
Once u get over this mental block... life would be simpler...
IMHO -
I must say you're very optimistic about your life expectancy, and employability.Originally posted by diggo:I plan 2 work till 75... leaving myself about 7 yrs to enjoy retirement. -
i agree. my target is 60 yrs old.Originally posted by av98m:The idea of working beyond 62 yrs of age is appealing when you're working in a highly paid cushy white collar type job while being chauffered around and surrounded by bodyguards and lackeys. For the rest of us, drive taxi, clear plates at foodcourt or work in fastfood restaurant lor. I'm already seeing a significant increase in the number of elderly reaching into rubbish bins for drink cans to sell, collecting old boxes, or worse, eating others' leftovers at fiood centres. Heartbreaking. At the risk of sounding morbid, perhaps dying young in Singapore is a good thing.
dont think i have enough to leave longer than that.
might not even have enough to make it until 60.
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Seriously I would love to work for as long as I can contribute but if you had not noticed that in SG, age work against you. Like AV said, now old folks are so poor they had to turn to scraping left overs, drink cans, cardboard boxes, working in poorly paid janitorial service and get yelled at by youngsters and bullied by employers. My own parents had hit 70 and guess what, my dad had to pick drink cans, scrap metal and cardboard boxes from factories and rubbish dumps to survive. You can say I am a bad kid to let my folks do that but family survival is at stake and the govt will never pity us if we fail to pay the bills.Originally posted by diggo:I plan 2 work till 75... leaving myself about 7 yrs to enjoy retirement.
In the meantime, enjoy life as much as much possible.
Rationale? There will not be enuff funds/children/govt grant/wat ever to let one retire and enjoy the same standard of living at the same time anymore. It is happening in most of the developed countries where the birthrate is not enuff to substain the replacement.
Once u get over this mental block... life would be simpler...
IMHO
By the time all we all get to 60s, because of changes in medical science and that we are better educated/sound of mind and actually be able to contribute to society but are we able to get jobs that allow us to contribute? My operations team in US had a 50 year old lady and the youngest in the operations team is in his id 30s (no one employ youngsters cause they are really unreliable and inexperienced - we don't like youngsters cause they like to do cowboy things and let us oldies clean up). We have 60 year old System Admins who is asked to stay on cause his service is valuable to the company. Age is not a concern nor a factor and in fact there is a law that states that age discrimination is disallowed. So because of his age and years of experience, he is one of the highest paid SA in office. But over here, the first to get the chop is always the older folks and staff are though of as a burden to the company, not assets. we can never compare to other developed world in terms of dealing with labour issues because the system here does not work this way.
But would this mindset change happen at all in the employers? Is there an example that is set by the govt for the employers (who are mostly following the leader)? Birth rates are not going to supply enough people but most asian employers management style and mindset are really narrow and stubborn. Most pay lip service that they "change" but actually, underneath its still doing the same thing and calling it a different name. (Isn't that what our 'leaders' do - so employers learn fast). Therefore, my humble opinion is that it might change perhaps 3 generation after me and all i know is that when I get old, I will have to settle for a janitorial job even though I might be a MBA. -
Our govt seems to have this strange obsession with "keeping the workforce young" that is paving the way for ageism in Singapore. It is however not applied across the board as you can see many ancient specimens still sitting on their asses in parliament and other top positions in both the private sector and GLCs.
It is ironic, to say the least, that the cpf scheme, with its monthly deductions, high minimum sum requirement, late withdrawal age(assuming you even have anything left to withdraw) causes the most suffering for the very people that cpf is supposed to help, the lower income group.
I also know some people, who for one reason or another have been unable to get employment after being laid off, are finding it hard to make ends meet. Now, they have very healthy cpf balances (200k ++) but they can't touch a single cent for another 15 years or so. One commented that he'd probably have to kill himself to get the govt to release the money to his family. -
Very true.
All our CPF already gone into paying for our hse./ HDB.
By the time we reach 55, there isn't much left to withdraw.
We also have to support our elderly parents + kids so our Medisave would have dried up.
Interest from bank savings are low, investment in shares & unit trusts don't give good returns + salary not keeping up with increases in cost of living.
In fact expect to be jobless when u get older cos nobody wants to employ old workers.
U cannot downgrade cos prop. prices are still down, also if u sell, where to stay?
Very depressing, that's why govt wants casino cos less taxes to collect in future. -
many many many more examples of 'no do what they preach' ne...
