CPF – All the right reasons to keep your money safe and sound

The withdrawal age needs to be raised and more money needs to be kept in the minimum sums of RA and Medisave Accounts. Without raising the withdrawal age, without raising the minimum sums, the lives of the CPF members will be adversely affected, maybe cannot retire, no money for medical bills.
 
Let’s revisit the right reasonings for these good policy changes.
 
1. People are going to live longer. Many people will live till 80, 90 or older. So they must have more money in their retirement savings. Any statistic to show how many will live to 80 and above and how many will not live to 60 or 65?
2. Inflation will destroy the value of their savings. So the amount to be saved must be regularly adjusted and pegged to inflation rate. This reasoning very good. If inflation every year goes up by 10%, the amount to be kept in the minimum sum must go up accordingly. Nevermind if the salary is inflation adjusted.
3. The people need $120k in their retirement account, excluding their Medisave Account, can’t remember which year this $120k was based on, to be able to live a comfortable retirement life. I dunno how they got this amount, I only eat porridge and pickled vegetables. And I don’t go holidays, I don’t go to theatres, I don’t go to foodcourts or restaurants, I just stay at home and do nothing by the time I hit 70, if I am that lucky. I think I don’t need so much money to live on.
4. This one very important, some will squander their retirement money away on women, wine and songs, and the casinos. I think this one not applicable to me. I am vegetarian and living like a monk.
5. People after 55 years are incapable of looking after their own money, irresponsible and will either spend and spend, or will be cheated of their money. Really?
6. If these people squandered their savings, no one will be there to help them. Don’t expect the Govt to be there, don’t expect their children or family to provide the financial support. I believe my children and grandchildren will abandon me on the streets. And I can depend on my blogger friends to buy me kopi.
7. Putting the money in the CPF is the safest place on earth. Money will not run away. I got no money to live now, where got money to put in the CPF?
8. Interest rate also very high. Higher than inflation?
9. And it is all done for your own good. What good can it be if cannot touch the money?

What do you think? I have added some comments based on my own situation and needs. Not sure how applicable are these right reasonings to you people.

Kopi Level - Green

The desperate cries of a pathetic 76 year old aunty

Hri Kumar did not bargain for it. He did not invite non constituent residents to his honest conversation on the CPF. But his resident, a 76 year old aunty, was there with a plate of genuine misgivings. At 76 year old, she belongs to the generation that should have withdrawn all her CPF savings when she reached 55 and has nothing more to do with the CPF. I think she chose to leave some savings in the CPF for safe keeping. She did not know that once left inside the CPF, her savings would be subject to the changes in CPF rulings, and now her money is treated just like other younger CPF members, locked up and cannot be withdrawn unlike the old terms. She did not bargain for it. CPF is the safest place on earth to keep her money. She trusted the govt with her money. And CPF did not fail her. Her money is very safe with the CPF but can only be withdrawn subject to CPF’s rules and regulations.

Hri Kumar did not bargain for her presence and her untold story of pain and struggle to get her money back from the CPF. She even revealed that her money in a local bank was withdrawn without her consent, to pay her property tax to the Inland Revenue. People are now questioning whether a bank has the right to take money from the depositors without the depositor’s consent and hand it to another govt agency.

The plight of this aunty is unusual and should not happen at all. Why must she be subject to the new CPF regulations? When she opted to leave her savings in the CPF, did the CPF explain to her that the money will be affected by new regulations? Or when new regulations came into force, did the CPF give her a chance to withdraw her money before it comes into effect, or it was too troublesome to do so? This is the same as the arbitrary transfer of money from the OA to the RA when a CPF member reaches 55. And the CPF did not bother to inform the members that once the money is transferred to the RA it cannot be used to pay for HDB mortgages. Should not the CPF inform the members as this is a major policy change and affects the finances of its members? Many members were caught by this unpleasant surprise and ended up having to fork out cash when they had more than enough money in the CPF to service their mortgages.

Why did the CPF think it not necessary to inform the members of such policy change? And why were there no CPF officers present in the conversation to answer any technical or specific question concerning CPF policies and regulations? This is a public conversation conducted by the govt or MP to answer the questions of the people. And the aunty rightly asked and expected CPF officers to be there to give her answers to her queries.

A public conversation is unlike a private conversation among friends. Many people have had many frank and honest conversations with their friends and did not need the presence of some authoritative figures around. They knew that their conversations were just talking cock sessions with no requirements to solve any issues or problems. Yes they were talk cock and sing song sessions. But the public and honest conversation on the CPF, organised by an MP, cannot just be a talk cock sessions, oops, my apologies, cannot be just a mere conversation. It was a serious conversation and if there were problems that needed to be ironed out, they must be done. And if there were questions to be answered, it would be best for CPF officers to be present to answer them. It is unfair to expect a MP to know the details of CPF policies even if he is a super talent that is supposed to know everything.

Would this 76 year old aunty get her CPF money back when the money should have been returned to her when she hit 55? It is so sad to see a dignified ex school teacher begging the Govt to return her life savings in the CPF. Can you believe that?

Kopi Level - Green

Good policies and bad politics

I could not believe my eyes when I read what Chua Mui Hoong wrote in the Sunday Times this morning. The title of her article was ‘Good policies hampered by bad politics’. I am not going to dwell on how bad the politics were or even bother to figure out what were the good policies. Anyone who is aware of the population squeeze, influx of foreigners, housing shortages, transportation and high property prices, healthcare facilities and cost, CPF protest etc etc would know what is good policy and what is bad policy.

What is remarkable in the article is the rehashing of some issues that I thought would be forgotten, best left unsaid and not to be spoken again. Or at least that was the impression I had when I saw the deflection towards the wilderness and a refusal in a meeting of the minds.

What were the pertinent points raised by Low Thia Khiang in his opening address in the last Parliament session? Other than the phrase constructive politics, I don’t thing anyone remembers. Whatever he had raised were drown by the pompous outbursts of what is good politics and all that remained was a statement and reinforcement of power politics. I am constructive and you are destructive. Period.

Chua Mui Hoong remembered some of the things I wanted to write about but got caught in the latest round of CPF angst and thought it best to leave them aside while the CPF issues take the centre stage. Here are the very strong points raised by Low Thia Khiang that provoked so much unrestrained hostility in Parliament. It was like stirring the hornet’s nest.

1. If the people continue to support a govt party that uses high handed tactics against its political opponents, we are endorsing a bullying political culture.

2. If the people support a govt party that uses governmental resources, including civil servants, to serve its partisan goals, we are condoning the abuse of political power as an acceptable culture.

3. Using differentiating measures in policies to punish people who voted for the opposition breads a culture of divisive politics.

4. It also used to be said that the political incumbent has no obligation to level the playing field, that might is right, and that the political incumbent has the right to use all legal means to remain in poser because everyone will do it they are the incumbent. This is building a self serving political culture.

The above points clearly described the political culture of the day and how constructive can the political culture be if these cultures continue to dominate the politics of this wanna be democracy? What went on in Parliament after what Low said was all about the above, the kind of ‘constructive politics’ that are uniquely Singapore.

And what is amazing in Chua Mui Hoong’s article is a dressing down of the govt for its brand of constructive politics. Unbelieveable, and I do not wish to elaborate further and anyone who wants a better feel of what she said should discover the truth by reading the article itself. 

Though there was a vain attempt to blame the WP for not playing constructive politics, it did not hold much water. The opposition parties cannot engage in constructive politics when the tone and culture of politics are set by the dominant power of the day. The total absence of a follow up discussion on the above 4 points raised by Low is the best testimony of not wanting to talk about them. The subsequent robust attacks were more a diversion from the subject matter and to ignore the elephant in the room. And Chua Mui Hoong summed it up by asking ‘whether good policies can make up for bad politics – or the absence of any meaningful discussion of it’.  She presumed that all policies were good, so let it be. Can there be constructive politics when the conditions and culture mentioned by Low Thia Khiang continue to drive the politics here?

Why was there no discussion on the 4 main points raised by Low? Were they utterance of political myths, high falutins, or were they idealistic aspirations that don’t mean anything?

Kopi Level - Red

The CPF issue took down a minister in 1984

In 1984, Howe Yoon Choong, then Minister of Health, produced a paper, Report of the Committee on the Problems of the Aged, with the main objective of delaying withdrawal of CPF savings from age 55 to 60. This created an up roar with the workers telling the trade unions they were strongly against it. The feedback was so negative that it led to his stepping down from politics.

Though the report was stating a demographic problem that was waiting to happen, it was wrong news at the wrong time. It is always never pleasant to be a messenger of bad news. Often the messenger got fried. Howe’s recommendation was a simple delay from age 55 to 60, but it was bad enough to bring down a serving minister for suggesting it.

Since then, several changes had taken place in the CPF scheme. Withdrawal age was pushed back to 60, 62, now 65 and may go higher. The withdrawal sum is no longer a lump sum but in the forms of drips and drapes, an annuity payable monthly. Then there are now two minimum sum schemes that are holding back a huge sum of the people’s savings, at current rate, about $198k with the Medisave included. In addition, the CPF members are compulsorily required to purchase CPF Life annuity insurance and an akan datang Medishield Life medical insurance.

Compare these changes to what Howe Yoon Choong had proposed the delay from 55 to 60 was nothing. How did the Govt managed to get so far without an uprising or an up roar like the time of Howe? Maybe the people did not protest. Maybe the trade unions did not protest. Maybe the protests were not fed back to the Govt. Maybe the Govt simply ignored the protests. Whatever, things seemed to have gone down well superficiality, or quietly. No protest meant the people agreed to the changes.

7 Jun told a different story. It was like all the problems and anger were bottled up and just exploded. The can of worms was ripped apart and no one can close it anymore. The issues and unhappiness are in the open. No complaints, no protest, no demonstration? What is real?

Is the anger is real? If the misgivings and unhappiness are real, would this CPF thing bring down another minister? Or would it bring down instead a Prime Minister? I think not. I think it could be worse. Everything that is wrong with the CPF has come together as one big problem and is blowing up at one go.

Please feel free to disagree. I know, many would think this assessment is an over exaggeration of a small problem or no problem. Don’t make a molehill out of a mountain. Oops, don’t make a mountain out of a molehill. It will fizzle off and nothing more would be heard of it. Life will return to normal. And the minimum sums will just keep piling up as planned.

Kopi Level - Green

When no one is protesting outside Parliament

I could not remember which minister said this. When no one is protesting outside the Parliament House, it means the people are happy or have accepted the new policy. Or if no one is complaining, then the people are supporting the govt policy. Did anyone complain when the minimum sum schemes were introduced? I think no one did. So the Govt must have read the ground saying it was ok, the people supported the policy change.
 
Now some noises were made against the minimum sum schemes and no one can blame Chuan Jin for saying that this was implemented many years ago and what is happening to day, to raise the minimum sum to $155k, is just a continuation of a policy decision made many years back. And the minimum sums would continue to rise as part of the plan to keep up with inflation to ensure that the people’s savings in their CPF will stay at the value of $120k when it was first decided. Sounds very logical and very correct and very right.
 
7 Jun in Hong Lim Park has changed something. About 5000 people turned up to support the protest against the minimum sum schemes and several other conditions tied to the CPF scheme. Would this make any difference? Would the Govt accept this as a protest by the people and their unhappiness with the CPF scheme? Oh, the protestors did not march to Parliament House. So got count or no count? Or would 5000 be seen as a drop in the ocean, nothing to worry about? Or would it be a case of too little too late. The decision was made many years back, cannot change anymore.
 
How would the Govt make of the Return My CPF protest? If it is seen as a small incident, a small anomaly, and all systems go, what would it take to make sure the Govt get the message that the people are unhappy and disagree with the govt policy on the CPF? Would more people turning up at Hong Lim make any difference?
 
There will be another protest on the same subject on 12 Jul. Could this be the opportune time to reconfirm, double confirm the message so that the Govt understood and do some changes to the CPF scheme? Should the protestors march to Parliament House after the rally in Hong Lim? How many people would be needed to make a difference, 12,000 or 20,000? The Govt will be reading the attendance to decide if the people are with or against the policy.
 
Or would it need to take a GE to change?
 
By the look of things, the schemes within the CPF are as good as cast in stone. The minimum sums would be there and would keep on increasing. The withdrawal age will keep on increasing, the premiums for Medishield Life will likely to increase after the initial years, and so would be the premiums for CPF Life to keep up with inflation. And the interest rates of 2.5% and 4% will be the norm with the occasional extra 1%.

Kopi Level - Green