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CPF: A simple case of so near and yet so far?

Thursday, January 22, 2015

My reply to a comment by a reader: here.




Hi politicalwritings,

When something is significant enough, such as retirement planning, I think for the government to have an active hand is a good thing and, for some of us, it is a necessity so that the risk of growing old and destitute is reduced, if not eliminated. 

Of course, not everyone agrees.


Unfortunately, it is difficult to pinpoint who are the financially responsible ones and who are not amongst CPF members. 

So, a minimum safety net that covers everyone works. It helps to ensure basic retirement funding for everyone.





What we eat and how much we eat is not of the same level of significance as whether we would be able to achieve retirement adequacy. 

So, I don't think the example you used is appropriate.

When should we have government intervention?

When we cannot reasonably rely on everyone to act responsibly on a matter that has tremendous importance in everyone's lives, especially if irresponsible behaviour would result in the burden being shifted from such individuals to the rest of society.

Best wishes,
AK



This is something I feel strongly about. So, I decided to blog about it instead of just replying in the comments section.

Talking ever so loudly to myself here. Tsk, tsk.


AK, you are so boorish (and psychotic)!


Related post:
CPF Life.

18 comments:

Ray said...

it's like if you are the father and you know that if you let your irresponsible child splurge, he'll surely go into debts and homeless. yet u cannot simply just be a control freak and give him no autonomy whatsoever. but if he should go bust, you as the father cannot just stand by and say "haa haa, i told you so. serve you right". so how? control or not to control? that's the tightrope the govt is walking here.

Ana said...

AK,
I think I opine with you on this subject matter... Financial literacy among Singappreans unfortunately is rather low. And even more unfortunate is that Singaporeans (from an observation from social media) tend to let emotions lead them, rather than logical rationale. So, they are easily led by emotional campaigns led by certain individuals (politically motivated or otherwise), without doing a proper and detail financial study themselves.

So, I support bloggers like you who write to educate the public on basic and fundamental knowledge on financial & retirement planning.

Cheers!!

Recruit Ong said...

AK71: "When should we have government intervention?

When we cannot reasonably rely on everyone to act responsibly on a matter that has tremendous importance in everyone's lives, especially if irresponsible behaviour would result in the burden being shifted from such individuals to the rest of society."



Ak71, your logic is flawed liao.
do u remember what the PAP garment says about targeted help? Can remember right? Basically it means when it comes to helping the poor, must have targeted help, thats why cannot set poverty line blah blah. :)

so applying the garment's logic (not my logic hor) which u so happily agrees with, when it comes to the CPF the garment should also intervene in a targeted manner only on those individuals who cannot (in your words) act responsibly. Correct?

So why all a sudden when it comes to the people's CPF instead of targeted intervention, the garment now intervenes in a blanket manner on everyone?

so do u see the double standards and failed logic that the garment and u hold? :D

AK71 said...

Hi Recruit Ong,

The CPF is about helping us in saving for retirement. The CPF Life is, in essence, an annuity but better. We are not asking for financial aid here. It is different from the poor requesting for help.

However, more importantly, how can we determine if someone is able to act in a financially responsible manner? This is a difficult thing to determine which is why a minimum universal safety net that covers everyone works.

(Ironically, it is probably the people who are financially more responsible who might not need this safety net but they want it whereas people who need a safety net the most might clamor for earlier release of their CPF money.)

We must bear in mind that in helping the poor and the needy, we are talking about providing aid using public resources. There is very little or almost no emphasis on self-reliance.

When using public resources to help individuals, I appreciate the targeted efforts the government make to ensure the best use of taxpayers' money.

You might think that there are double standards here. However, I think you have misused the phrase "double standards".

If there are two sets of standards applied to the matter of the CPF, one set for the rich and one set for the poor, then, I would say that double standards existed.

However, helping us to save money to ensure retirement adequacy is a different matter compared to helping the poor and the needy using public resources. The approaches have to be different because these are two separate and very different issues.

E H said...

A lot of assistance:
http://app.msf.gov.sg/Assistance/Multiple-Lines-of-Assistance

http://app.msf.gov.sg/Portals/0/Table%20of%20Government%20schemes%20and%20eligbility%20criteria%20FINAL.pdf

http://app.msf.gov.sg/dfcs/sso/default.aspx

MrPhysiotherapist Guy said...

Hi Recruit Ong,

I think you are assuming that only those who cannot meet the Minimum Sum (MS) are wanting the 20% lump sum withdrawal as a form of "help". However, NTUC is calling for the withdrawal based on what Singaporeans want, including those who can meet the MS. They are pushing the G to not exclude those who cannot meet the MS, even if it means that there is a risk that the G has to provide aid to the said group if they were to be unable to live on the eventual smaller CPF Life payout.

What kind of targeted interventions are you hoping to see?

iwimsasl said...

I believe those who can meet the MS need not have to make lump sum withdrawal at draw down age unless they've already pledge their ppty to it.
Normally, those people will still have excess funds in their various CPF accounts when they retire.

Recruit Ong said...

@ MrPhysiotherapist Guy

My post to Ak71 is this specific comment he made.

he asks "When should we have government intervention?"
and his answer "When we cannot reasonably rely on EVERYONE to act responsibly" blah blah.
now ask yourself do u think it is EVERYONE acting irresponsibly? or is it just some people acting irresponsibly?

so why is it when it comes to CPF, just becos of some people, end up the garment say EVERYONE must therefore kena? why cannot target only those acting irresponsibly?
but when it comes to helping the poor, all a sudden need to do targeting.
therein lies the double stds and hypocrisy.

when it comes to MY money, die die must try to stop me from accessing it. As if my money has become theirs.
but when it comes to helping the poor, all a sudden die die become so targeted, cannot spend this cannot spend that, as if using public money is taking from their own personal pockets.


Btw if u see Ak71's reply to me, he completely dodged it heehe. :D

nah said...

Let me help you out there AK.

Recruit Ong:
he asks "When should we have government intervention?"
and his answer "When we cannot reasonably rely on EVERYONE to act responsibly" blah blah.
now ask yourself do u think it is EVERYONE acting irresponsibly? or is it just some people acting irresponsibly?

What AK said is correct in an English sense. It is because "some people act irresponsibly" that the government cannot rely on everyone. Its English.
------------
so why is it when it comes to CPF, just becos of some people, end up the garment say EVERYONE must therefore kena? why cannot target only those acting irresponsibly?
but when it comes to helping the poor, all a sudden need to do targeting.
therein lies the double stds and hypocrisy.

You're mixing subjects together unfairly. Being financially irresponsible, thereby causing burden to the rest of the responsible population is an act on purpose. Being poor isn't.
Are you saying the govt should be targeted and help those who act irresponsibly? That would be laughable.
--------------
when it comes to MY money, die die must try to stop me from accessing it. As if my money has become theirs.
but when it comes to helping the poor, all a sudden die die become so targeted, cannot spend this cannot spend that, as if using public money is taking from their own personal pockets.

Guess what. If we scrap CPF and go to the pension system, you TAX will be higher to form the pension pool. And your tax contributions would be used to fund "other people's retirement", not yours (CPF is for your OWN retirement).
So say you act irresponsibly financially, do you then blame the government when they do not help you for your foolishness? If they help you, they'll be taking funds from good citizens to help your mistakes. Wow, sounds like a great plan?

AK71 said...

Hi nah,

Thanks for weighing in on the matter. Indeed, helping us to save money to ensure retirement adequacy is a different matter compared to helping the poor and the needy by using public resources. The levels of self-reliance are worlds apart. :)

Ana said...

This CPF changes will have unintended consequences. Due to the great unhappiness and growing threat of the '40pc', the government has little choice but to recalibrate CPF.... Only for those who need CPF most to suffer (because they probably have withdrawn all the money).

But is there a place where people are happy with their pension scheme? HK's Pension system started about 15 years ago & provided much flexibility, as holders can choose where to invest with. However, recent studies showed that HK people are not happy with their pension system ..... & I'm hardly surprised....


Look at the property system. The people blamed the government for high property prices.... I think the cooling measures implemented would have unintended consequences, likely on the same group who complained.

So before we complain, & ask for more payouts, it's probably wiser to step back and think first the impact on a larger scale.

For me, I'm only interested in stability & continued prosperity...

AK71 said...

Hi Ana,

I have friends in Hong Kong who told me that they much prefer our CPF system after I told them about the risk free rates of 2.5% to 5% per annum that CPF pays.

They have to look for fund managers to manage their pension funds on their own and most of them have not done very well. :(

Ana said...

Dear nah,

When my spouse &Yi look at the profile of those 'give me back my money'-folks at Hong Lim.... we thought these are exactly the folks who need CPF and the disciplines.

What they didn't realise is CPF offers a risk-free return of 2.5-5pc, which is very good returns given its guaranteed & triple A ratings. Not to mention one could use the Magic of compounding to take money from government....

AK71 said...

David Ng says...
My take if it is the people money they should be given a choice to decide what they want to do with their cpf. They can invest or spend it meaningfully to live a fruitful life , it is still their choice .

AK says...
Read this blog. :)

AK71 said...

Kelvin Tan:
They can do that (withdraw all their CPF savings) if they renounce their citizenship, because that frees the rest of us from any externalities. ๐Ÿคฃ

Raymond Ng:
that is extreme ...

Daryl Lee:
Extreme would be if prudent Singaporean have to pay more taxes in order to finance welfare and necessities of people who squandered their CPF $ away. ๐Ÿ˜Ž

AK71 said...

Oliver Tan:
... People who squander their cpf will end up trying to get welfare and will also go running to clowns in online citizen, mothership of what have you. These clowns will start to wayang and all the haters will start foaming in the mouth!

AK71 said...

Daryl Lee:
For people that are good with their $, they should have their own retirement funds apart from CPF. CPF should just be a backup.

For those that isn't, all the more they should be restrained in lump sum access to their CPF.
๐Ÿค‘

There was a survey/news report that ask what people want to do when they got their cpf $ previously , travelling for holiday, buying an expensive gift for themselves/family, funding kids wedding/business, etc was some of the answers ๐Ÿ˜ฑ

AK71 said...

Daryl Lee:
Although not CPF funds, this is one real life example of what happens when one comes into access of a significant amount of $ with no experience or control on how to manage it.

http://www.straitstimes.com/singapore/1m-gone-in-one-year-widow-of-killed-changi-airport-worker-is-now-broke

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