CPF - A Crucial Question
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have to make it clear that i dont really understand fully abt the CPF, coz I am still a student.
Recently my aunt bought a HDB 4A apartment for abt 220k, she was quite pleased with the price and the financial assis. from the HDB board(basicall refers the low interest loan).
However, isn't that everybody had to contribute to their CPF acc. as long as you are working? And the amount of money that we SAVE in the CPF acc. is interest free. Which means we are providing the Gov. a free source of capital, if they are using it for investments or for any other purposes.
Come back to the HDB purchasing, are we actually getting back our own money and we need to pay for doing. Strangely
anybody can justify this?
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Originally posted by xtreyier:
This is not meant as a reply to you, for you are mentally challenged.
This is for those who think like you.
Pray tell me what investment is not speculation? And what investment has no risks, if even pedigree'd 100 year old institutions can collapse? And how CPF can generate returns?
Fixed Deposits are guaranteed and are considered as an investment tool (Albeit a super-safe and super-low returns type of investment). Maybe the bank might collapse and you lose your principal sum.
1+1 = 2... Maybe someday someone might dis-prove this and this would change what we all think it to be 100% true. Science is ever-evolving. Many moons back, Science said drinking lots of water is good for health. Recently, there are new experiments that demonstrate that drinking too much water might not be good for health.
The thing is, like you said, we can't worry so much, otherwise, there is no movement for fear of that 1%.
Thus, if I state my assumptions clearly, Fixed Deposits is NOT speculative, because we know for sure our cash + returns will be returned to us after x no. of years, PROVIDED the bank is structuredly sound and does not collapse, and assuming that the govt will never let the banking system fall.
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Originally posted by airman08:
have to make it clear that i dont really understand fully abt the CPF, coz I am still a student.
Recently my aunt bought a HDB 4A apartment for abt 220k, she was quite pleased with the price and the financial assis. from the HDB board(basicall refers the low interest loan).
However, isn't that everybody had to contribute to their CPF acc. as long as you are working? And the amount of money that we SAVE in the CPF acc. is interest free. Which means we are providing the Gov. a free source of capital, if they are using it for investments or for any other purposes.
Come back to the HDB purchasing, are we actually getting back our own money and we need to pay for doing. Strangely
anybody can justify this?
Who told you the amt of money we save is interest free in CPF?
CPF rates is 2.5% in Ordinary Acct, 2.5% in Medisave, and 4% in Special Account, with an additional 1% interest for the first $60,000.00 in ur account.
Go to cpf.gov.sg, and you will know more. You need to do more research.
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Originally posted by Spearo:
Damnit, the word 'speculation' in this case means the expected result one wishes to see in the future from a certain item or situation. It's not some damn example you just gave, xtreyier. And no, I'm not attacking you personally.
xtreyier didn't give any example
He was asking questions on whether what he ad done was speculation or investing.
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xtreyier just wan to argue 4 the sake of arguing, his life is just too speculative to understand between speculation and investment
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Originally posted by seyKai:
i dun get it either, planting tomato and hope to get oranges later?
he/she is full of hot airs, saying alot but the points are unclear.
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Originally posted by reyes:
i am a strong believer that CPF money of ours are pass on to temasek of use by GIC for further their investment pruchases.
that is how we earn our CPF interest. i do agree that and believe tat the very reason why we extending our withdrawal age has to do with the vast amount of money stuck in super long term investment and maybe lost forever.
Somebody once commented that our CPF scheme could be something like the Ponzi scheme. -
Originally posted by pearlie27:
Somebody once commented that our CPF scheme could be something like the Ponzi scheme.
The CPF system was started by the British Colonial Government as a small scale retirement funds for those in the Civil Service willing to participate in such a scheme - on top of their pension.It was during the Self-rule period of LKY's government that expanded this scheme into a compulsory national scheme to create funding for the government programmes.
With the CPF monies largely used in the creation of FIXED ASSETS that are non-liquid (with no ERP schemes during the 50's through 80's to recover the investment into infrastructures) - the interests paid on CPF savings will have to come from an ever increasing number of CPF savers.
The number of NEW CPF savers will have to exceed the number of OLDER CPF savers that are retiring and intending to withdraw their ballooning account with compounded interests earned annually.
This scheme works fine as long as the population continued to grow.
Unfortunately, the population growth came to a sudden stop with the successful implementation of the Family Planning Scheme that LKY forcefully pushed ahead despite the warnings of social planners to the future pitfalls - (LKY had admitted as much in retrospect almost 40 years later).
The CPF need a large base of every increasing number of new participants to support those leaving the scheme - and the structure is like a pyramid with a large base at the bottom and a small apex at the top representing the older CPF holders leaving.
With a shrinking population, the baby-boomers of the 1950's through 1960's will be retiring during the years 2001 onwards - and the pyramid is now in an inverted position, with its large pyramid base at the top, and its narrow apex pointing downwards and represent the shrinking population entering the workforce to make CPF contribution.
This precarious situation was already noted when Howe Yoon Chong was tasked to study this problem but disguised it as a study on the "ability of the CPF accounts sustaining the retirees into old age".
This resulted in the first delay payout age of 55 years to 60 years, then pushed further to 65 years, and then with a frozen sum to last till 85 years.
Other plans were introduced to cut off sums from our CPF accounts into Medisave, and Medishield; and further programmes for old-age support insurance schemes.
If this is not a legitimized PONZI scheme - what can it be ?
It has all the structure of a pyramid.
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Thanks for the insight Atobe. Is it known how the CPF has been invested or utilised?
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Originally posted by webben:
Thanks for the insight Atobe. Is it known how the CPF has been invested or utilised?
In the early days of the late 1950s when LKY took over the self-rule Government, the treasury was reported to be empty with the funds all used up by the previous governments of Lim Yew Hock and Ong Eng Guan.
CPF was seen as an effective tool to raise money to fund the government expenses, and was made mandatory with a poorest interest paid to account holders.
During the late 1960s the CPF money was used to fund the Housing Program, and the cheap CPF funds were available to build an expanded and accelerated HDB building program.
The CPF funds were borrowed cheap from Singaporeans to build HDB houses that were supposed to be cheap - and this was so during the first phase of the building program.
When opportunity to make more money from HDB homes that were eagerly awaited and snapped up, the prices of the various HDB homes were raised.
While paying 2 percent interest for using our CPF money, the HDB homes were sold to CPF account holders at a profit of more then 20 percent.
At such profit margins, the CPF money was used at no cost to the Government, and at the end of it all - was there any subsidy in the HDB units sold to Singaporeans, or were Singaporeans taken for a ride ?
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that the gahmen plot to slave all so u can never get back your CPF with high HDB prices
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Atobe
Assuming what you say is already happening, what could be done now to prevent a nuclear explosion later?
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wonder will they propose cutting of CPF or AWC be discussed in Jan budget? haiz...
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Originally posted by Whitedragon168:
wonder will they propose cutting of CPF or AWC be discussed in Jan budget? haiz...
Don't think they will cut CPF considering they have been trying to get more people to put more money into CPF.
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For the uninitated, CPF is nothing more than a subtle tax of ~36% i.e 20% (Employer) + 16% (Employee). I am not sure what the rates were but those were the rates 4-5 years ago. Though you can use the CPF to finance homes, it's mainly used by 95% of the population to lease properties from the govt for 99 years. That means the money returns to the govt in the long run. So if you think Western developed countries have high taxes to justify socialism, do consider that the hidden taxes in Singapore is comparable to Western countries except you do not have a comprehensive welfare scheme net to fall back on except perhaps owning of a home for 99 years i.e in Ireland, one gets 1200 euros per month from the govt if you are retrenched but you get nothing in Singapore. Would one think that justifies a tax rate of 40% ? I would think so especially when one loses a job due to poor economic climate and not due to laziness or incompetence at one's job.
However, I personally feel that the CPF is essential for the SG govt to encourage high savings rate amongst the population, control national wages (i.e by cutting employers' contribution to control wages) and to build up national coffers. I also think the likelihood of cutting CPF rates is highly probably if the recession continues to bite, and the govt have no choice but to cut national wages to sustain FDI and employment levels. For those that are depending on CPF to pay for their homes. A CPF cut would diminish disposable income and affect one's quality of life. So everybody should be prepared for a CPF cut, though hopefully it doesn't happen in the short term.
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CPF is seen as a tax only because one is never able to realize it as hard cash, unless one turns 85 or thereabouts. In countries like India, where the rate of contribution is 12% each for both employee and employer, people are allowed to close their CPF account whenever they leave a job, and start a new one with a new employer.
All the accrued money (contribution plus annual interest of 8.5%) is credited to your account within a few months. So, though employees have to compulsorily contribute to CPF, they don't complain as they see it as a nestegg, savings they can make good use of when they quit a job, or retire.
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im always puzzle what happens if I do not reach 85. Who gets the CPF $$$. My kids or the govt?