Why do we need CPF?
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Think again, the government generates these returns from inflated prices it charges for basic necessities, if they use Temasek as an investment vehicle for CPF funds, then hefty electricity prices increases would make no sense
What prices do you consider not inflated prices? Price increases suck, but i do believe it's kept at a pretty stable pace rather than the sudden skyrocketing prices we see in our neighbouring countries because their government couldn't sustain the prices which are kept at an artificial low due to subsidies.
Remember that our powerplants run on natural gases, which are not available in our territories. And ultimately bought from foreign suppliers. THEY are hit hard by the rising oil prices and probably eager to regain those losses.
Remember that Temasek's 10%-20% profit has to be continously recycled to deal with inflation and to continue investing to sustain. Putting all the profits into the CPF only gives very short term satisfaction to the people but will prevent Temasek from getting the 10%-20% profit in the first place.
Politically it is also a very unpopular choice. Because foreign banks would not like a country that's basically running a capitalist/communist hybrid system where the people are also the shareholders. It sets a very dangerous precedent that put us too much under the spotlight.
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Remeber that they lost massive amounts, billions up to a hundred billion (maybe more but there is the official secrets act... ) bailing out foreign banks.
Remeber we are talking about losing public money.
Remeber they couldn't care any less since it is public money and they themselves are talking massive amounts of public money for their own pockets.
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Originally posted by huzane89:
Why do we need CPF?
Can't we just save some earnings in the bank every month? People can also devide them into the same percentage as CPF. By this, the govt. can't 'invest' in our hard earned CPF.
For e.g. My family. When govt. 'borrow' a % of their CPF $ to bail something out etc. They complain. However, they kept emphasizing that w/o CPF, is sure fail. ???
Any comments?
cos singaporean are too stupid to manage their own money lor... said by government one.. -
Remember they sold Tuas Power to the Chinese and Senoko to the Japanese, gems of the nation to make their results look good.
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Originally posted by AndrewPKYap:
Remeber that they lost massive amounts, billions up to a hundred billion (maybe more but there is the official secrets act... ) bailing out foreign banks.
Remeber we are talking about losing public money.
Remeber they couldn't care any less since it is public money and they themselves are talking massive amounts of public money for their own pockets.
yaya... they lose money, they make money....
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According to researches made, during the late 1950s when both LKY and his DPM Goh Keng Swee came into power, they modified their early views on social welfarism - and made several attempts at introducing social insurance but abandoned it in favor of the Colonial Provident Fund Scheme.
Now in 2008 - almost 58 years later, cleverly designed social insurance schemes are now being introduced in various forms to deduct lump sums that are frozen in the CPF accounts to payoff for the Medisave, Medishield and ElderShield programs.
The following is a study of the Singapore CPF scheme for implementation in Hong Kong - with highlights to its strengths and weaknesses - and ended with a critical remark from LKY on the CPF Scheme.
Lessons of the Singapore Central Provident Fund
Richard Wong
The Legislative Council has voted in favor of the establishment of a Central Provident Fund (CPF) in Hong Kong as a means of providing old-age retirement support for residents. The administration is expected to address this issue shortly. The pros and cons of having an old-age retirement scheme has been debated for many years in Hong Kong. The debate has recently become more politicized. It is therefore useful to take another look at the evidence on CPFs from other countries which have operated such schemes. The most obvious choice is Singapore whose CPF was established in 1955.
In introducing the Singapore CPF scheme, we will emphasize its historical development, examine the consequences for Singapore, and discuss issues that are of great relevance to Hong Kong.
The Singapore CPF system was adopted in 1953 and became operative in 1955 under the British colonial government. Self-employed individuals and employers were not obliged to join the scheme. The original goal was to provide a simple savings-withdrawal plan for old-age security. The basic principle that an individual's total benefits are equal to his total contribution plus interests credited to his account was explicitly endorsed, and the idea of a pension scheme that would violate this principle was rejected. Initial contribution levels to the CPF were set at 5 percent each for employee and employer. This level was maintained until 1968, after which it began to rise significantly (see Table).
It was clear from the very outset that the CPF would make available to government a cheap source of credit for social and economic development. For many years, CPF funds were invested almost exclusively in Singapore government bonds. This provided the state with vast resources to pursue its developmental and social goals. The Singapore state was far more involved in social and economic affairs than the Hong Kong government ever was, and the CPF provided the means for it to be so.
The rapid rise of contribution rates after 1968 was partly due to government policy to increase homeownership among the population. The goal was to provide Singaporeans with a stake in their country and to foster social stability. The Homeownership Scheme was initiated in 1964 by the Housing and Development Board (HDB) and provided low-interest housing loans and long repayment periods for the purchase of low-cost HDB housing. The response was, however, poor, and the scheme did not produce the expected results.
To make the Homeownership Scheme more attractive, the CPF was amended to allow members to use their accumulated CPF savings to finance downpayments and to amortize housing loans on HDB housing. The scheme was subsequently expanded with some restrictions to include housing units constructed by the Jurong Town Corporation in 1970, the Housing and Urban Development Company in 1975, the Ministry of Defense in 1977, and private residential properties in 1981.
The Homeownership Scheme had many important consequences. First, the CPF started to withhold from individuals an increasingly large portion of their own financial wealth. The result was, according to the Report of the Central Provident Fund Study Group (1985) chaired by Professor Lim Chong-Yah: "to emasculate their sense of economic initiative and enterprise".
Second, the CPF ceased to be a simple old-age security savings-withdrawal scheme, but became the vehicle for massive state intervention into the housing and capital markets with profound effects. The principle that an individual's benefit would equal what he contributed was effectively abandoned since the gains and losses from home purchase decisions were heavily influenced by the terms and conditions of the financing schemes and housing allocation rules that have unavoidable distributional effects. The timing of the purchase was, for example, often an important determinant of capital gains. Since the terms and conditions have evolved over time, the redistribution may be very complex, but there can be little doubt that the allocative distortions must have been enormous.
Third, the public felt increasingly constrained in its savings and investment decisions as CPF contributions rose. There was a growing popular demand for allowing withdrawals from the CPF for specific purposes. Members were eventually permitted, with certain restrictions, to make withdrawals to purchase Singapore Bus Service shares in 1978, to invest in approved non-residential properties and in a variety of financial assets and funds in 1986, to finance tuition fees for themselves and their children in 1989, and to purchase protection insurance for dependents in 1989. The Medisave Account was established in 1986 to pay for medical expenses and the MediShield Scheme was implemented in 1992 to purchase a medical insurance plan. In another major policy shift, the Singapore government in 1993 changed the rules to allow CPF members more discretion in the management and investment of their funds. The over-subscription of shares in the recently privatized Singapore Telecom is one of the effects of this more liberalized policy.
This sequence of liberalization measures contradicted the original aims of the CPF as a compulsory savings scheme. Why compel in the first place if you were going to allow for so many types of withdrawals later on? What it does reveal is the enormous unpopularity of the mandatory savings scheme so that its most unappealing constraints on personal choice have to be mitigated.
The advisability of putting large sums of money in the hands of the government was questioned in the highly influential Report (1985) by Lim. It states: "[T]he large sums of money vested with the fund are in effect held `hostage' to governmental decision-making: ipso facto, this would be acceptable if there is a guarantee that future governments would be as honourable and as capable as the present one, but can such a guarantee ever be forthcoming?" (p. 23).
One of the critical issues in any evaluation of the long-term merits of the CPF scheme is an assessment of the extent to which the real value of the contributions is or can be protected against inflationary erosion. The figures in the Table show that with the exception of the two oil shocks in 1973-74 and 1980-81, the real interest rates paid on CPF Balances have been positive for the years 1961-92. The Singapore inflation rate has averaged 3.3 percent between 1961-92, and the resulting real interest rate paid on CPF accounts has averaged 2.0 percent. This is on the whole a reasonable but not spectacular achievement.
Maintaining domestic price stability is the foundation of this achievement. In Singapore the monetary system is based on the currency board arrangement that is in essence identical to the Hong Kong arrangement under the linked exchange rate system. As a consequence, monetary expansion and contraction is essentially accommodative and is not an independent cause of long-term inflation. Under the currency board arrangement, inflation occurs primarily from two sources: (1) imported inflation, and (2) the rise in the relative price of non-tradeables to tradeables as a result of the pressure of demand on the limited supply of domestic land and labor.
During the 1960s, worldwide inflation was quite low so that imported inflation was not an important problem for Singapore. The situation was drastically changed in the 1970s as the world entered a period of high inflation. In 1972, the Singapore Monetary Authority abandoned the policy of maintaining exchange-rate stability but retained the currency board arrangement. The nominal effective exchange rate was allowed to appreciate over time. This ensured that the rate of increase in the domestic prices of tradeables would be considerably lower than the corresponding rate of increase in their foreign prices.
Another factor that has been important in generating inflationary pressure is the rapid economic growth in Singapore. This has precipitated a gradual increase over time in the relative price of non-tradeables owing to the scarcity of land and labor in Singapore, which translates into an increase in absolute prices to the extent that the prices of tradeables are inflexible downwards. The Singapore government has sought to offset these pressures on scarce domestic resources by pursuing a relatively liberal scheme of importing workers. Foreign imported workers are reported to be as high as 20 percent of the labor force.
The exchange rate and imported labor policies in Singapore have important lessons for Hong Kong policy makers in deciding whether to adopt a CPF. Since the CPF is government-operated, it becomes a government responsibility to ensure that it earns a positive real rate of return on its investments. Given the current political commitment to maintaining the linked exchange rate and the hostility of organized labor to allowing imported workers, achieving a positive real rate of return on CPF contributions appears to be an unrealistic goal. It seems obvious that the establishment of the CPF in Hong Kong would set in motion powerful forces that would erode over time the political commitment to the linked exchange rate system. If this is indeed the case, Hong Kong will have to pay a very high price for the CPF.
What can Hong Kong learn from the Singapore experience? First, it is doubtful that the vast CPF machinery has resulted in a more efficient allocation of resources. Second, one can argue, at least in principle, that the Singapore CPF has probably resulted in a society where most people are more equal, except for the gap between the rulers and the ruled. But this has been achieved by forcing everyone to earn a 2 percent real rate of return on some 40 percent of their savings. Is this acceptable to a Hong Kong population that is accustomed to taking its chances in a more mobile, but perhaps less egalitarian society? Third, to achieve a 2 percent real rate of return, Hong Kong may have to risk abandoning the linked exchange rate.
Perhaps Singapore's Senior Minister Mr Lee Kuan Yew provided the best summary of the lessons of the Singapore model for Hong Kong in a recent interview he gave in Hong Kong (see South China Morning Post, 27 November 1993):
"I think Singapore has to learn from Hong Kong. What Hong Kong has is nimbleness, a willingness to drop the unsuccessful and change tack, while not making an issue of any differences between the bosses and the unions. If Hong Kong learns from Singapore, you'll lose your competitiveness.
"Singapore had no choice. We must have a defence capability. That means man must have something to fight for. He's not going to fight for somebody else's Rolls-Royce or Mercedes 600. He's got to fight for what he or his family owns.
"So we had to devise a system which gave everybody a home, which he owns. Everyone has something substantial in property. Everyone has a retirement account and medical-cost account. It's not as cosseted a society as say Britain. But it's a lot more cosseted than Hong Kong -- so you don't want to learn from Singapore."
Dr. Richard Wong is Director of the Hong Kong Centre for Economic Research.‘Lessons of the Singapore Central Provident Fund’
‘Central Provident Fund in Singapore’
‘Compulsory Savings in Singapore : An Alternative to the Welfare State’
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We need CPF for greedy LKY, Ho jinx, Pay and Pay to invest and lose lots of money, secondly we need it for housing loan, thirdly we need it for our "pension"
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And here comes the onslaught of the anti PAP camp...
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i can only think of 2 way out.
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Originally posted by likedatosocan:
i can only think of 2 way out.
ya.. migrate ... or DIE!!!! -
Shareholders can vote in or out board of directors anytime through an EGM...
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Politically it is also a very unpopular choice. Because foreign banks would not like a country that's basically running a capitalist/communist hybrid system where the people are also the shareholders. It sets a very dangerous precedent that put us too much under the spotlight.
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Shareholders can vote in or out board of directors anytime through an EGM...
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Politically it is also a very unpopular choice. Because foreign banks would not like a country that's basically running a capitalist/communist hybrid system where the people are also the shareholders. It sets a very dangerous precedent that put us too much under the spotlight.
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CPF (on the pretext) : savings for us during retirement age
CPF (actual fact) : $$ for Govt to make investments
If not, why would Govt set limit caps to how much we can withdraw upon retirement age?
Why would Govt restrict how much we can utilizied for our flats?
Reason being, they can't allow us to utilized too much of these $$..If not, where will they have the funds to invest?
On the pretext : is OUR $$
Actual fact : Their $$
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Originally posted by xiiaostarry:
CPF (on the pretext) : savings for us during retirement age
CPF (actual fact) : $$ for Govt to make investments
If not, why would Govt set limit caps to how much we can withdraw upon retirement age?
Why would Govt restrict how much we can utilizied for our flats?
Reason being, they can't allow us to utilized too much of these $$..If not, where will they have the funds to invest?
On the pretext : is OUR $$
Actual fact : Their $$
statistic has shown many old men cannot control their money and spend on gals, they go thailand, batam, etc etc to enjoy and lost all their money with a few months for a lifetime works, so are some women, who gamble away, go for expensive holidays and cosmetic surgeries,...all these are due to poor financial planning skill.
The Govt are just taking precaution, so that in case you are sick, at least got medical insurance, or at least if you die, still hv a nice coffin to lay you.
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Originally posted by angel7030:
statistic has shown many old men cannot control their money and spend on gals, they go thailand, batam, etc etc to enjoy and lost all their money with a few months for a lifetime works, so are some women, who gamble away, go for expensive holidays and cosmetic surgeries,...all these are due to poor financial planning skill.
The Govt are just taking precaution, so that in case you are sick, at least got medical insurance, or at least if you die, still hv a nice coffin to lay you.
or they can go collect cardboard and aluminium cans.
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Originally posted by angel7030:
statistic has shown many old men cannot control their money and spend on gals, they go thailand, batam, etc etc to enjoy and lost all their money with a few months for a lifetime works, so are some women, who gamble away, go for expensive holidays and cosmetic surgeries,...all these are due to poor financial planning skill.
The Govt are just taking precaution, so that in case you are sick, at least got medical insurance, or at least if you die, still hv a nice coffin to lay you.
That's only part of the nice reason that they lie out for S'poreans..What you mentioned might applied for some..But it doesnt relates that all S'poreans don't know how to control their $$..
Moreover, what if a family is really in desperate need for $$..They can't even utilized their savings in CPF to save themselves..Just because Govt need to keep a minimal amt for their own investment..
Imagine if they don't set a cap. limit to withdraw CPF $$..Most of the S'poreans will rushed to withdraw out their $$..Then where will the Govt get the $$ to invest?
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Originally posted by skythewood:
or they can go collect cardboard and aluminium cans.
sell tissue papers, 3 for a dollars, damn i got so much tissue in my car liao,...these peoples really know how to pester people, if they will put their skill into sales, guess they will be successful -
Originally posted by angel7030:
sell tissue papers, 3 for a dollars, damn i got so much tissue in my car liao,...these peoples really know how to pester people, if they will put their skill into sales, guess they will be successful
u dun play playu never know one day they will own tones of tree
then can make into tons of toilet rolls ok
start from small , now tissue later, then toliet roll
later baby pampers and also wat u wearing now and then
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Originally posted by xiiaostarry:
That's only part of the nice reason that they lie out for S'poreans..What you mentioned might applied for some..But it doesnt relates that all S'poreans don't know how to control their $$..
Moreover, what if a family is really in desperate need for $$..They can't even utilized their savings in CPF to save themselves..Just because Govt need to keep a minimal amt for their own investment..
Imagine if they don't set a cap. limit to withdraw CPF $$..Most of the S'poreans will rushed to withdraw out their $$..Then where will the Govt get the $$ to invest?
Fair enough,
I think u hv to agree with me that everything must hv a cap, just like my Daddy said 2259hrs must be back, and i must be back or else i will sleep in the bus stop and kenna rob or rape. If there is not cap and free withdrawer, i think if will defeat the purpose of a safety social net the CPF is mend for.
Of course there peoples like us who dun even care about CPF until the day we are going to die and realize that Oh!! there is still a CPF money to collect.
And as for those who needs money, CPF is not unreasonable, it inform you of the changes, and changes do not affect the current lots who are going to withdraw, unless they opt in. As adults, be it poor or moderately poor, you should plan your future and asset well, you already know what the CPF requirement is and yet you complain when you must leave the minimium sum behind.
There are other insitutions that you can request for hardship grant, the likes of Mendaki, Senda, Chinese Chamber..etc etc.
And if u want to know why CPF is not totally within your call, it is because 13% of it is contributed by the employers under compulsory laws set by the Republic of Singapore, so dun ever think that the CPF money is completely hor!
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Originally posted by Jason:
Not in my opinion. If there was no CPF or similar system, people who did not save for their retirement (and there will be many) will need to be supported by the state, and it will be the tax payers that pay for this.
Quite true. Thats why i said its a good thing for the financially irresponsible.
However, if you're one who is responsible for your own retirement nest, you'll find that there are many alternative investment which pay much better returns instead of the CPF.
Also, you can't get all your money back at once, the money is spread out just to ensure your basic survival, which isn't really good if you're the kind who wish to work young and enjoy old age.
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- Shareholders can vote in or out board of directors anytime through an EGM...
Eh..i don't quite get what you're trying to say.
If i understand it correctly you are trying to say at least the shareholders can vote in or out of the board of directors?
What you mentioned might applied for some..But it doesnt relates that all S'poreans don't know how to control their $$..
You can't exactly create a system that could filter out who could control their money and who can't.
I think you're not quite clear of the impact if even just 0.01% (Around 450?) Singaporeans above 60 were irresponsible with their money and blow it all. We can't exactly just let them rot on the streets so there must be a department set up to take care of them. And then the taxpayers money would have to be used to pay for their lack of control.
It's just like the wayward son in a rich family. You hate the fact that they exist, but you still have to be responsible for them.
What you feel is that people who lack control are none of your business and would never affect you but since they live in the same country it will still ultimately bounce back to us.
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Temasek's earnings ~18%
Electricity price rise = 21%
so coincidental
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Originally posted by Stevenson101:
Eh..i don't quite get what you're trying to say.
If i understand it correctly you are trying to say at least the shareholders can vote in or out of the board of directors?
You can't exactly create a system that could filter out who could control their money and who can't.
I think you're not quite clear of the impact if even just 0.01% (Around 450?) Singaporeans above 60 were irresponsible with their money and blow it all. We can't exactly just let them rot on the streets so there must be a department set up to take care of them. And then the taxpayers money would have to be used to pay for their lack of control.
It's just like the wayward son in a rich family. You hate the fact that they exist, but you still have to be responsible for them.
What you feel is that people who lack control are none of your business and would never affect you but since they live in the same country it will still ultimately bounce back to us.
CPF is a good scheme
but to bring the retirement age up from 55 to 60 to 62 to 65, 67....
and payout over a period of 20 yearshmmm.....
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but to bring the retirement age up from 55 to 60 to 62 to 65, 67....
and payout over a period of 20 yearsWell, increased lifespan is a major factor.
Not to mention if you have a increased lifespan, you're going to be hit by more dehabilating diseases and problems(kidney failure, diabetes, weak knees, high blood pressure, poor eye sight..etc). Which naturally leads to higher medical bills.
So i would think it's a reasonable measure.
Unless you have a different take on it?
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Originally posted by eagle:
CPF is a good scheme
but to bring the retirement age up from 55 to 60 to 62 to 65, 67....
and payout over a period of 20 yearshmmm.....
I believe the payout part is reasonable as it is used to provide the ctizens with a protection net rather than an investment.
However, the retirement age is unneccessary. Instead, i think they would be better off introducing better pro-baby schemes to increase birthrates. You have to understand that the productivity of an edlerly is much lower than of a youth, and that holding them back into the workforce is just a temporary measure.