From the opening post, it is simply disingenuous for the MPs – (let alone a Minister rank too) - from the Ruling Party to simply write to the CPF Board, and then shrug the shoulders and say: “I tried, but the Board will not change their rules”.
Those rules were set by the Government a.k.a. the Ruling Party, and those Civil Servants in the CPF Board merely follow guidelines set by the Government.
One can understand the frustrations of the 51 year old Engineer – retrenched at this age and unable to find new employment, having to compete in a tight job market and facing competition with younger and as well-educated (but inexperienced) new entrants into the Workforce.
The 51 year old Engineer could have utilized A PORTION (50% ?) of his $200,000 CPF savings to set up a new business, and would have created job opportunities for others.
Yet the short sighted and tight fisted Government will on the one hand encourage entrepreneurship, while on the other hand refused to allow such an environment to succeed.
This reluctance to allow CPF holders the full access to the individualÂ’s CPF Account had been growing stronger with each review of CPF Policies.
When CPF was first introduced, it was ruled that any Singapore Citizen with CPF Account will be able to withdraw the full amount on reaching the age of 55 years.
Following the Howe Commission in early-1980s, it was recommended that the withdrawal age should be delayed till age 60 .
Following public outcry, and murmurings that the Government could not return all that is due to CPF Account Holders, this proposal was put into cold storage; but the idea was modified and new ideas came up to withhold portions of the CPF from being paid out on demand.
Brilliant ideas came about that will permanently hold portions of the CPF – such as Medisave, MediShield, and the Minimum Sum, all of which require minimum sums to be held that can result in a SUM TOTAL of $80,000 being retained per account.
With a CPF contributing population of more then 2,000,000 Singaporeans, this will result in an immediate freezing of $160 Billion into CPF, giving more time for the Government to ‘use’ our funds at an interest rate lower than that charged by banks.
That part of the post that claimed CPF payment of 2.5% interest per annum is higher than that paid by Banks is a BIG JOKE.
CPF has NEVER paid higher interest to CPF Savings than that paid by Commercial Banks, which was stated to be paying 0.59% by the three big local banks – but FAILED to confirm if the 0.59% is paid MONTHLY on Fixed Deposits (depending on the Fixed Deposit amount and the period of saving).
The 0.59% paid monthly will amount to 7.08% PER ANNUM, compared to 2.5% p.a. paid by CPF.
With the shrinking birth rate that is experienced since the success of the ‘STOP-AT-2’ Family Planning Program, so aggressively promoted during the early 1960s, the situation has reach a point of crisis – TODAY - for Singapore; and more so for CPF.
The current CPF status of account holders is shaped like an inverted PYRAMID – with the widest part of the Pyramid being place NOT sitting on its wide bottom, but placed UP-SIDE DOWN.
In the present year 2004, the WIDEST of the Pyramid will represent the larger numbers of Singaporeans, now aged 55 to 65 and are or soon will be drawing on the CPF - as they were born between 1939 to 1949.
Those born in the years between 1950 to 1960, will soon also be drawing on their CPF Accounts as each year pass through 2004, 2005, 2006, 2007 till 2010.
Where will the incoming funds be coming from - so as to support the CPF withdrawals of this large number of 'baby boomers between 1939 to 1960s, who will now begin to be retiring CPF Account Holders ?
From 1961 to 1971, the Family Planning Program began to kick in, and the birth rate began to shrink; with the kids born during this period entering the workforce between 1981 and 1991.
With the passing of each year, there are fewer kids entering the labor pool to contribute their CPF to provide more funds to generate CASH RETURNS to pay back to those large numbers retiring.
What has happened to the money of those large numbers of workers – born between 1939 and 1949 - AND contributing to the CPF; and also those large number of workers born between 1950 to 1960 ?
The CPF is a cheap source of funding to the Government for all the Government Expenditures in infrastructure developments in Singapore – the roads, highways, land reclamation, HDB, Paya Lebar Airport, Changi Airport, and other Fixed Assets.
Can the CPF Board sell these Fixed Assets and convert to Cash for the CPF Account Holders ?
Can the CPF earn enough from the loans that it dispenses to the Government, by buying long term Government Bonds ?
It is OBVIOUS that the Government has to generate revenue or PROFIT, so as to be able to pay back to the CPF Board.
The revenue generated by the Government will come from Taxes - direct and indirect; and will need to have these Revenue to be managed in Growth Funds, so as to generate more profit to be returned to the CPF Board for the Principal Sum borrowed and the Interest Rate payable.
Although it has been constantly denied, it is hard to believe that the GIC do not manage funds held by the CPF, so as to allow it to achieve a higher rate of return - AND COMPENSATE for the SMALLER NUMBER of CPF Contributors from a SHRINKING WORKING POPULATION, as a result of the declining Birth Rate.
The only alternative available to the Government is to:
1. Delay the pay back date – extend the withdrawal date from 55 years to 60 years
2. Create more sub-accounts – so as to freeze more CPF funds from being paid out; hence the brilliant schemes of MediSave, MediShield, Minimum Retention Sum.
3. Create self-management of the funds allowing investments in approved but High Risks Speculative Investments that SUPPORT the Financial Institutions.
4. Freeze a portion of the CPF Account to be disbursed monthly till death.
The THIRD Approach is ingenious, as it
Firstly - provides incentives for Foreign Fund Managers to set up base in Singapore, and help to increase Singapore's profile in the Financial World;
Secondly, if there are any losses suffered at the hands of the inexperienced CPF Account Holders, the CPF Board will need not pay out the amount loss, but the Account Holder will have to make good the amount loss at any later date when profits are made;
Thirdly, should the Account Holder be successful in his investment decisions, the CPF will stand to gain with additional funds being returned to the Account.
It is a No-Lose Situation for the CPF Board, as the CPF Account Holder carry the full risks for his own money.
It would have been more believable of the Government good intention, if it had allowed the CPF Account Holder to take a portion of his CPF Savings to start a business venture – at least he is speculating in a business that he understand, instead of speculating on the stocks of other companies listed in the Stock Exchange.
It would have been more helpful if this approach was available to experience managers, who are retrenched, and they would have been able to start small businesses that would have helped to create jobs in a high jobless environment.
It would have been more sincere of the Government in their statements of looking after Singaporeans – and not the Government’s own interests – if they had allowed the Account Holder to use a portion of the funds to improve the education level of the Account Holder, or the Account Holder's children.
Does the CPF serve us as much as it serves the Government ?
Cause if 1 gets to withdraw the CPF $, there will be tons of others wanting the same treatment
