An Open Letter to Singaporeans about Compulsory Annuities
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Hi fellow Singaporeans, I am angry at the recent compulsory annuities scheme that was proposed. To me, it is nothing more than sheer robbery. This was a letter that I have sent to the major newspaper TODAY, but it is understandable why they would not want to publish it. I present it as an open letter to all of you, so that we may question what the Government is really trying to do here.
The Bare Facts of Compulsory Annuities
I am writing in response to the recent compulsory annuity scheme that was announced by Prime Minister Lee Hsien Loong in his National Day Rally Speech. I am disappointed by the metaphysical “for your own good” and “Singaporeans don’t know how to manage their money” arguments put forward by the scheme’s proponents. I wish to point out to all readers the simple bare facts, and let them pass judgement for themselves.
* The life expectancy of the average Singaporean as of 2006 is 81.8 years. (Male 79.21, Female 84.59)1
* A “small portion will be set aside” from the CPF minimum sum for compulsory annuities. This has been reported to be $4000-$7000
* Annuity payouts will be $250-$300. What this means is in the best case scenario, it takes 4000/300 = 13.3 months to recoup the principal. This effectively means, discounting inflation, annuities will start paying out from 86 years and 1 month of age. The worst case scenario is 7000/250 = 28 months added to the 85 years of age. This means 87 years and 4 months of age before annuities pay out.
* The average Singaporean will die long before recouping the principal sum tied up in compulsory annuities. So what happens to the money if he dies? Will it be repaid to his estate? The Government so far has been silent on this issue. I think we all know what that means.
What are Singaporeans supposed to make of headlines such as “MAS ready to inject cash into market if needed”2 ? Liquidity is merely a euphemism for “paper money”. It is clear that if MAS injects cash, this will eventually result in a rise in prices, an increase in the price level. With the constant inflation wrought by these injections, fixed incomes from schemes like annuities will fall in their purchasing power. It is no coincidence the US dollar is worth less than one-twentieth of what it was worth in 1933, post-gold-standard. Inflation diminishes the value of payouts in fixed denominations like the government’s annuity scheme, benefiting the debtor at the expense of the creditor. The Government is taking “expensive” Singapore Dollars from Singaporeans, and repaying them “cheap” Singapore Dollars. If Singaporeans die before collecting their (inflation-diminished) principal, the Government keeps the money. And the Government sets the payout bar so high, a healthy majority of us would have kicked the bucket before we even smell 85.
What puts it all in context, is the list of private annuity schemes currently available under the CPF scheme, put on the official CPF website.
http://mycpf.cpf.gov.sg/NR/rdonlyres/883DD6D3-D1EC-48DD-8B09-811C0D24ECE8/0/AnnuityComparison.pdf
One notices that with the investment of a minimum sum of $99,600, annuity payouts start at 62. Even at the lowest payout rates (GE Life, Female - $440.73/month), by age 85 the investor has received $121,000. The investor has recouped the principal, and is earning a much higher rate than government annuities. Mind you, this is the lowest. In addition, all private firms listed there repay the original principal in full upon death.
In PM Lee’s speech3, he mentions that few Singaporeans take up annuities due to their unattractive returns, but that Singaporeans still need them. It is hard to take such ex cathedra statements seriously. If Singaporeans won’t take up private annuities schemes due to their low rates of return, what makes PM Lee say that Singaporeans need compulsory annuity schemes due to their even lower rates of return? This is supposed to be the brilliant retirement scheme from Mr Lee and his gang? There is a very good reason the whole thing is compulsory – no Singaporean in his right mind would opt for this punitive scheme.
With big government schemes like the Biopolis and a fourth university, the Government has to get the money from somewhere. With this compulsory annuities scheme and the various CPF re-jigs, it looks as if the Singapore Government has discovered that the taxpayer has more than one pocket.
Footnotes
1“Singapore”, CIA World Factbook - https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html
2 “MAS ready to inject cash into market if needed”, Channelnewsasia.com - http://www.channelnewsasia.com/stories/singaporebusinessnews/view/293230/1/.html
3 http://app.sprinter.gov.sg/data/pr/20070819990.htm
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If you have any comments, spotted any mistakes, or disagree with my take on the issue, please leave a message on my blog here (all intelligent comments welcome!):
http://freedom-for-man.blogspot.com/2007/09/letter-to-today.html -
Thank you mitzzkai for spending the time and effort to write such a letter.
There is no chance whatsoever that your letter will be printed in TODAY.
Singapore mainstream propaganda media will not propagate dissenting opinions. -
and this is called democraticOriginally posted by Poh Ah Pak:Thank you mitzzkai for spending the time and effort to write such a letter.
There is no chance whatsoever that your letter will be printed in TODAY.
Singapore mainstream propaganda media will not propagate dissenting opinions.
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Hi fellow Singaporeans, I am angry at the recent compulsory annuities scheme that was proposed. To me, it is nothing more than sheer robbery. This was a letter that I have sent to the major newspaper TODAY, but it is understandable why they would not want to publish it. I present it as an open letter to all of you, so that we may question what the Government is really trying to do here
I am not please with this compulsory annuities scheme too. But would hold my judgment till the final scheme/plan is out for the public to see. What info we have now is still more or less in the planning stage.... will it be 85 years old
80 75 70 90 all is still unknown..... I will keep my own judgment till then. 
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To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical. -Thomas Jefferson
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Originally posted by hloc:
i will have to agree with you that until the final outcome, it is difficult to place judgement. however i can never agree to the force complusion in any scheme that takes away the freedom of one to judge and decide for themselves.
I am not please with this compulsory annuities scheme too. [b]But would hold my judgment till the final scheme/plan is out for the public to see. What info we have now is still more or less in the planning stage.... will it be 85 years old 80 75 70 90 all is still unknown..... I will keep my own judgment till then. [/b] -
Hi, mitzzkai: http://www.petitiononline.com/annuity/petition.html
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I sort of agree with you on the red part. I don't like anything force onto me too.Originally posted by Lin Yu:i will have to agree with you that until the final outcome, it is difficult to place judgement. however i can never agree to the force complusion in any scheme that takes away the freedom of one to judge and decide for themselves.
But I think that when the CPF scheme 1st came out..... Many of those in the 60s, 70s will complaint the same thing we are doing now. But the CPF scheme DID enable me to get my own 4 Room HDB flat.
So... Pros & Cons for all things....... -
Erm, guys..do not get carried away..most annuities payout during retirement ages..meaning 55-62 etc so that you can get some income until your death at 80+ or so...they DO NOT pay out in your 80s..
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Yeah lah.... thats why say keep my Judgment till the B/W is outOriginally posted by kramnave:Erm, guys..do not get carried away..most annuities payout during retirement ages..meaning 55-62 etc so that you can get some income until your death at 80+ or so...they DO NOT pay out in your 80s..
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However, i would prefer if the government used incentives to persuade citizens to purchase income stream products rather than by force. I'm surprised that the opposition did not really go into this. Life annuities rates can be rather conservative as life offices do not generally want to lose money. Unless of course we can get better rates than that, perhaps a term certain annuity would be better than a life one when it comes down to coercion.
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IMHO..... perhars the Opps is also waiting for the B/W to come out..... no real point to 'find fault' until the Opps can see the final ''product''.Originally posted by kramnave:However, i would prefer if the government used incentives to persuade citizens to purchase income stream products rather than by force. I'm surprised that the opposition did not really go into this. Life annuities rates can be rather conservative as life offices do not generally want to lose money. Unless of course we can get better rates than that, perhaps a term certain annuity would be better than a life one when it comes down to coercion. -
perhaps. I really hope the opposition do some homework and come out with something constructive in future when its B/W.
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Dear forummers, fellow citizens, and friends,
LEND ME YOUR EARS!!
I am a concerned citizen, concerned about my life here and how schemes introduced will impact my retirement. I have some fundamental questions to ask:
1. Is it LEGAL to disagree with policies , any policies proposed?
Must all policies be accepted?
Do I have the RIGHT to agree to DISAGREE?
2. Do I have the RIGHT to not accept a proposed policy?
Would it be ILLEGAL to not accept such?
Would I be breaking the law if I prefer to buy annuity via the private path?
3. Is it LEGAL to reject a proposed policy?
Is it LEGAL to reject a proposed policy and DEMAND for a better policy?
4. What RIGHTS do I have when it comes to managing my own Money?
What RIGHTS do I have when it comes to managing my own Retirement?
What RIGHTS do I have when it comes to managing my own LIFESTYLE?
As phrased above, I am a singaporean who is not sure what can I LEGALLY do and what are my RIGHTS. I am naive and kiasi, kiasu, kiasai. I live in a democracy but I do not fully understand its meaning.
Please enlighten. -
You basically do not have any rights. You'll only get your rights when the opposition is strong enough to challenge. Whilst your rights with your CPF is limited, you are at liberty to save another sum of money and invest it yourself, as a separate retirement fund. Treat it as the bare minimum for retirement. You'll probably need more money than that.
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Originally posted by reddressman:
Ask yourself when your enemy set a ridiculous rules in the battlefield, do you have to play with his rule?
Dear forummers, fellow citizens, and friends,
LEND ME YOUR EARS!!
I am a concerned citizen, concerned about my life here and how schemes introduced will impact my retirement. I have some fundamental questions to ask:
1. Is it [b]LEGAL to disagree with policies , any policies proposed?
Must all policies be accepted?
Do I have the RIGHT to agree to DISAGREE?
2. Do I have the RIGHT to not accept a proposed policy?
Would it be ILLEGAL to not accept such?
Would I be breaking the law if I prefer to buy annuity via the private path?
3. Is it LEGAL to reject a proposed policy?
Is it LEGAL to reject a proposed policy and DEMAND for a better policy?
4. What RIGHTS do I have when it comes to managing my own Money?
What RIGHTS do I have when it comes to managing my own Retirement?
What RIGHTS do I have when it comes to managing my own LIFESTYLE?
As phrased above, I am a singaporean who is not sure what can I LEGALLY do and what are my RIGHTS. I am naive and kiasi, kiasu, kiasai. I live in a democracy but I do not fully understand its meaning.
Please enlighten.
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mitzzkai, your article is filled with loads of baseless accusation and it sound like you are a person who is mentally unstable when your wrote this article.
no offense, but thats my view after reading what you wrote. -
You always disagree with people who have something against Government policies and concerned citizens who questioned them , I think you're the one who's mentally unstable ...Originally posted by Gazelle:mitzzkai, your article is filled with loads of baseless accusation and it sound like you are a person who is mentally unstable when your wrote this article.
no offense, but thats my view after reading what you wrote. -
Please forgive Gazelle, he has not recovered from his illnesses.Originally posted by Trump_Card:You always disagree with people who have something against Government policies and concerned citizens who questioned them , I think you're the one who's mentally unstable ... -
In your words, please back up your arguments with valid and relevant ( my edit ) sources.Originally posted by Gazelle:mitzzkai, your article is filled with loads of baseless accusation and it sound like you are a person who is mentally unstable when your wrote this article.
no offense, but thats my view after reading what you wrote. -
Gazelle, why are you so biased in favour of PAP regime? I'm curious.
Is there some personal benefit or gain for you?
Very few singaporeans outside of the PAP clique would defend PAP as you do. -
I think he is being delusional or something ... Even PAP supporters i know doesn't even defend every government policies like he do .Originally posted by Poh Ah Pak:Gazelle, why are you so biased in favour of PAP regime? I'm curious.
Is there some personal benefit or gain for you? -
he has backed them up with figures which are factual..
where's yours?
Originally posted by Gazelle:mitzzkai, your article is filled with loads of baseless accusation and it sound like you are a person who is mentally unstable when your wrote this article.
no offense, but thats my view after reading what you wrote. -
a sad case, you cannot even be honest with yourselfOriginally posted by Gazelle:mitzzkai, your article is filled with loads of baseless accusation and it sound like you are a person who is mentally unstable when your wrote this article.
no offense, but thats my view after reading what you wrote.
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Many have said, "Why be honest if you may be paid a lot of money to lie?Originally posted by Lin Yu:a sad case, you cannot even be honest with yourself "
Trust me, there are many Singaporeans out there like that, and they will be the ones holding us back from growing.
Blame it on extreme pragmatism and a lack of a guiding ideology, if you find that there's too many people who would speak both ways for a pay cheque.