Is the CPF scheme turning into a scam?

It was a pillar of our social infrastructure. It gave the people a sense of assuredness, peace of mind, and a great feeling of security. That was our CPF.

Over the years the changes introduced to the CPF scheme have gradually transformed this institution of the people’s savings into an institution of grievances and frustration. It all started many years ago when some economic whiz kid discovered that there was too much money in the CPF waiting to be had. Anyone with a bright idea could lay his hands on this people’s treasure that have been laid aside to earn pittance from the interest rates.

Now you understand why HDB flats are affordable and why the CPF savings are no longer enough for retirement? The policy of pricing HDB flats according to affordability is like pricing HDB flats according to how much the people have in their CPF savings. Brilliant. And the rest is history.

This logic can be applied to the ever increasing medical costs. The CPF has been turned into a vehicle to enrich the medical profession. You have plenty of money in the Medisave or in medical insurance. Thus you can pay for the increasing medical fees. You can afford it, like it or not, your saving will be taken away from you in advance to fund the medical industry. And you may not need it at all. Medical fees and housing prices will keep going up as they are affordable, because there are money in the CPF savings.

Did anyone really scheme to use the CPF for his own gambling habit, to fund his big billion dollar bets? Did anyone think that in such big gambles he could reap millions in bonuses when luck is with him, and simply ignore the losses as the losses came from other people’s money, not his own pocket? No need to pay back. The CPF contributors would be made to patch up the holes somehow through the shifting of goal posts or more schemes. I really hope that no one really thinks that the CPF money is for them to play. It is theft of the people’s hard earned money in all disguises. The line differentiating gambling from investments is too fine to make a difference.

And I am very uncomfortable for anyone, or any economist, to lump the people’s hard earned money as the country’s reserves. It is the people’s money and not anyone else’s reserves. Once the reserves tag is glued on the people’s money, the one holding the key to the reserves may think that it is his for the taking or for his own schemes of things. I find it not only immoral but down right dangerous.

No one can argue about putting aside some of our income as savings. But there are other important things to consider about savings. For those who can afford to, by all means save as much as you can. There are many out there who cannot afford to save. Saving is like eating half a bowl of rice or keeping the stomach half empty, to put some money aside. Forcing people to go hungry is not helping the people but ensuring them a slow death. Help the poor is to make provisions from other sources of revenue to allow them to have their bowl of rice and not go half hungry and not go half hungry by taking away the rice.

And there is a time to say providing for the rainy day is enough. The insurance agents will tell you that there is never enough in the insurance that you bought. Hmmm, reminds me of the reserves in the NKF as well as the reserves in the country’s vault. How much savings will be considered enough? Never enough. But the pragmatic reasoning will say up to a point, one needs not keep stuffing into the tin can for the tomorrow that may never come. There must be a sense of proportion.

This brings to a point about savings by the oldies. At 60, 70, or 80, as long as one is self employed, one must continue to put money into the Medisave. What kind of stupidity or daylight robbery is that? At these ages, everyday is a bonus. If one is economically productive, one should be allowed to spend his keeps while he still can. Forcing grandpas to save! Economically active grandpas would have the comfort of his savings being left untouched. To add to more savings is the logic of an idiot, or robbing the oldies. Now why would people want to rob the oldies? Wicked isn’t it? No, they say they are helping the oldies so that they have more money to pay the hospitals when needed.

There are many things that make the CPF smells foul. When the noble objective of a scheme is twisted to serve less noble objectives, or warped objectives, all schemes will turn foul. There is no need for oldies to keep savings. There is no moral reason to deprive the oldies from their hard earned savings to enjoy their twilight years even if it is for the use of god.

Now what is the real reason to compel the old uncles and aunties to keep saving when they may hand in their identity cards anytime? Is it mercy or merciless?

We have a very regimented institutions forcing people to save and save and while making it very difficult for the people to get back their hard earned money. On the other hand we have institutions like the HDB and the hospitals who are trying to take your money because you have money in your CPF. They price their products and services according to affordability and market forces, or to take every cent from you. It is like a candle burning on both ends.

I have a better CPF scheme. Everyone must contribute 80% of his income to the CPF. Then he will have money to buy affordable flats, and money for all the medical bills, and for retirement. No more worries liao.


agongkia said...

hehe...Your scheme of 80% to be contributed to CPF is not a bad idea.But I think best if we can do away with it totally.Free our towkay from having to ensure proper contribution every now and then or risk being penalise.

Every citizen ,regardless of profession should draw a standard salary of S$888.88 monthly.Every married citizen should be entitle to a free standard flat,citizen free medical,free stay at senior homes , free from childbirth till burial.
Everyone will be equal.No citizen should have reason to kpkb and keep blaming garmen who is so kind to help you people on your financial planning but not being appreciated.

Chua Chin Leng aka redbean said...

I like your idea. It was meant to be that way. But Napoleon and his pigs have different ideas.

Anonymous said...

A very fiery piece on CPF and very well argued. I'm with you!

Gintai_昇泰 said...

"I like your idea. It was meant to be that way. But Napoleon and his pigs have different ideas."
Is your goodself refering to "Animal Farm" by George Orwell? I studied that novel in Sec 1 in 1976! I did not really understand its true meaning and implications then cuz I was just a simple school boy until recently then I realise to my horror the joke is on us. We are living out like those poor animals there! The retirement promised nvr came. We got to work until we drop dead! Two legs good but Four legs better! OMG! I wonder how to break from this yoke of vicious cycle and shackle free from this blood sucking greedy regime? Pls enlighten me!

Chua Chin Leng aka redbean said...

Hi Gintai, welcome to the blog.

The Animal Farm is a timeless classic. George Orwell's understanding of human behaviour is as perfect as it could be. The temptation of man comes in many forms and it is very difficult to escape this curse. The temptation of man will be his downfall.

Great at a time but fallen by greed.

No worry, all good things must come to an end. It could be sooner than you think. There will be turmoil when change arrives and we do not know where it will lead us.

Anonymous said...

The moment when CPF was allowed to withdraw for property purchasing (or HDB flat leasing in fact) the CPF scheme had been turned into scam. Look around other countries who have the similar provident fund (name may be different, e.g. superannuation, etc, which one is allowed for withdrawal to buy property? The answer tells all.

Anonymous said...

I read the book 'Animal Farm' and watched the movie as well. Although it is originally written on Russian Revolution, it seems to apply to Singapore situation as well. Great book. Wonder if Singapore schools or ministry of education has actually recommended this excellent book to our children. If yes, what objective of introducing such great book?

Anonymous said...

'Animal Farm' was one of the literature books in schools few decades ago. I do not know whether it was still recommended in recent years.

Since the story sounds much like what is happening in Singapore now, hehe, I doubt Napoleon and his gang will want it to be taught to our children and grandchildren.

You see, the book probably make much of the 40% see the real danger of their suffering the same fate as the animals eventually. That is why they are rooting for change.

Anonymous said...

CPF is turning into 'Confiscated Peasants Fund' that belongs to the Government.

Gintai_昇泰 said...

Thank you for your instant reply. I got it mixed up. Actually it started wif "Four legs good and Two legs bad" before the revolution in Animal Farm. After the revolution when the pigs adopted human decadence, the pigs' propaganda machinary changed the slogan to "Four legs good but Two legs better!" in order to justify themselves! Absolute power corrupts absolutely! In those days PAP had 100% control of parliament back then in the 70s. We argued with our teacher that it would nvr happen here in Singapore. We are an exception to the rule! It took all my life time to realise that there is no exception. We are being naive to believe in the otherwise! Sigh .... I share Ivy Singh's lament.

Anonymous said...

The original quotation (from Lord Acton) is even more damning:

"Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."

John Emerich Edward Dalberg Acton, first Baron Acton (1834–1902)
a.k.a. Lord Acton

Lord Acton was a historian and moralist.

Anonymous said...

I'm almost 55, jobless for several years and I wanted to pay off my remaining HDB loan. Yet when I approach CPF, they showed me a very complicated formula and tell me I can't make use of my CPF savings to pay off the remaining loan because of the current minimum sum restrictions imposed. I was advised that I may end up having to cough up more cash for the monthly instalments later.

It seems maintaining the minimum sum is of utmost importance to the CPF Board. How can they suka suka change the CPF rules without even asking for the CPF contributors' permission first ? Were we not told that we can withdraw at age 55 when we first joined the CPF scheme ? Can the CPF Board just simply change the conditions at their own will ?


Anonymous said...

Can you smell anything? Heard of kelong?

Anonymous said...

Hi redbean,

I fully agree with your sentiments about CPF scheme.

As the CPF monies and the reserves are inextricably linked, you forgot to mention that these could be "raided" by foreigners, again, via the government, GIC and TH.

These foreigners could be the superpowers extorting funds for their purposes/protection, hedge funds extracting ill-gotten gains, banks sucking capital for their wrong bets (see last GFC), neighbours taking advantage by being friendly (re Shin Corp), corporates/governments luring monies for their investment scams, temporary residents making huge speculative bets in Singapore, etc.....

All the above are actualities in the past, present and the future.

Not many are awake to such realities.


Anonymous said...

Too bad. We trusted them. We voted them in as the Government, time and again. They thought we agreed with their policies, because we continue to give them a good mandate all those 46 long years, fairly or unfairly notwithstanding.

As our friend Mati-lah always said, Singaporeans deserve the Government they voted for. No cause to complain.

Chua Chin Leng aka redbean said...

Not only we deserve everything, we are also ungrateful and causing a divide among the people. Now that is bad.

Anonymous said...

I posted before, I post again :

While the "goal post" in the CPF is pushed further and further, it is downright atrocious and despicable that certain groups in the establishment collects their pensions at 55 and continue to be employed.

Anonymous said...

Is the CPF thing causing a 'political' or 'national' divide?

The PA thing I know is political, but not politically motivated, yet sure is causing a national divide.

Now, what I am talking about? Age must be making me daft and talking nonsense again.

kelly said...

Sounds like a "better" CPF scheme of things (the 80%)! Well-written piece!