Minister Tan Chuan Jin appears not to have understood Singaporeans’ concerns about the CPF system in “The truth about our CPF and the Minimum Sum”.
As can be seen, the government is not interested to engage stakeholders. Whether a policy has caused tremendous suffering to citizens matters little to ministers as CPF is loose change to them. Tan has only attempted to convince CPF members to continue allowing the government to use OUR CPF retirement savings for investments until we are 6 feet under.
Two issues which most members take with the government. The first is the government does not have the right to decide for us on an issue as important as using our retirement savings till we are dead. Second, if the government wants to regain citizens’ trust, it must be transparent and not insist that we take the government’s word at face value. The longer the PAP government procrastinate in showing us where the money is, the more trust will be lost.
I will rebut Tan point by point:
Tan: “Let me state that the CPF is put in place to help Singaporeans have peace of mind when it comes to their retirement years”.
It appears that an increasing number of Singaporeans are not having any peace of mind with our money taken away.
The people did not beg the PAP to take our money and put in place to help us gain peace of mind. An issue as important as this requires a referendum. It is strange that where money is concerned, the PAP suddenly has all the initiative to ‘help’ us. Or is it helping themselves to OUR money. When the needy went on their knees for help, the PAP asked if they wanted “3 meals in a hawker centre, food court or restaurant”. Question: How does one have peace of mind when a big chunk of retirement savings have been taken away, untouchable for 10 years and then paid in miserable installments?
CPF helps us retire
The obvious question is how is CPF helping us to retire when only 1 in 8 meet the Minimum Sum? For those who cannot meet the MS, the CPF will release a token sum of $5,000. Tan should explain how this amount helps. I think with such an amount, members really have to eat grass.
Tan: “We make sure that this CPF account grows at a reasonable interest rate without risk”.
CPF members have been paid between 2.5% to 4% for a decade. Our MS was $84,500 in 2004 and will be $155,000 in July. This works out to an annual rate increase of 6%.
This simply means that since a decade ago, our CPF has been increasing at a much slower rate than the MS increase; we are able to draw lesser amounts every year. Tan should try to explain how CPF is helping us to retire by allowing us to draw less money every year.
Tan seems to think that “a reasonable interest rate” is one that’s below the inflation rate.
Money in your CPF account is your money
Considering all the conditions and arbitrary policy tweaks, the above statement cannot be true. If CPF is MY money, why am I paying interest for the use of MY money? It’s like A goes to a bank and withdraws $X for expenses. Does A think about putting back interest for the use of his money after using itl? The concept of “accrued interest” and paying ourselves interest for the use of our money is beyond logic.
Can someone/institution impose a thousand and one rules on the usage and tells you the money is yours?
We are also frequently told the reason for paying ourselves accrued interests is because we need the money for retirement. Then why has the maximum amount of CPF been allowed to be used for housing, shares, insurance, education…? Why does the government allow all CPF OA to be used up in the first 18 years to pay a 25 year mortgage if CPF is really for our retirement? The government has to decide if CPF is really for retirement or something else. It cannot keep changing the objective to suit the occasion.
Tan: “The MS is increasing because we are living longer so we need to spread out our payouts”.
A 20 year old today already needs to have a MS of $198,500. At 55, the MS will balloon to $783,500 at 4% inflation rate and $1094,929 if the inflation rate is 5%. Compound interest calculator.
An ordinary citizen will unlikely to have even close to these amounts. What if the inflation rate goes through the roof? $2 million in the MS? Tan should know this is an insane policy and CPF members are right to suspect the government has a hidden agenda; it wants to trap all our CPF for the sole purpose of using them for investments.
If OUR CPF returns are then used to take care of citizens, aren’t we effectively taking care of ourselves with OUR money? The government should not abdicate its duty to take care of retirees.
Tan then gives us short history lesson on the CPF and asks “would we be able to manage our monies for two decades or more?”. I say yes to that but will CPF return me the money?
Tan also uses the typical PAP fear mongering tactic and he opines that most savers are unable to achieve good returns with low risks. The PAP can have its opinion but ultimately it is OUR money to do as we wish. It cannot lock up an increasingly ridiculous amount without any referendum.
As we retire, we will need more money, because:
“We are living longer”
This is a fact which we already know so don’t keep making motherhood statements and treat citizens as if only the PAP has brains. This fact has never been disputed so Tan does not even need to mention this. While most would agree that the only solution is for every responsible citizen to work longer, OUR retirement savings must still be returned to us. The PAP government should not implement the CPF policy retroactively. It should consider the detrimental effects and citizens’ welfare. If the CPF system is to be changed, it should affect new entrants into the workforce as they can prepare for their retirement adequately.
“Prices will increase over time”
Our inflation has largely been PAP induced due to an upside-down kind of planning. PAP controls practically all resources of which land has the highest impact on inflation. The same plate of food in a neighbouring country, same quality, can cost double or more in Singapore. High rental is the biggest culprit. The demand for higher salaries can also be traced to high cost of land/rental.
PAP does not only control the supply but also the demand. It does so through policy changes. An example would be raising the population to 6.9 million. Real estate prices increase, salaries increase and ultimately prices of everything.
The PAP appears to be hell bent on causing high inflation so Tan should not be giving Singaporeans a lecture on inflation; instead, he should lecture the PAP on good planning which will result in minimal inflation.
Tan: “Many have forgotten that this is what we decided to do many years ago and are surprised each year when the Minimum Sum is raised”.
The problem lies in the “we” which refers to PAP which did not consult stakeholders. This has led to the present screw up and now WE, the people are demanding that a policy which has been screwing up our lives be reversed.
Tan: “..we pushed back the target by another two years to 2015 so as to make the increases more gradual because of higher inflation in recent years”.
Tan has confirmed the government has all the while been aware of “higher inflation in recent years” but yet continue to pay CPF interest rates of between 2.5% to 4% which is way below the inflation rate.
The PAP government has never been concerned about our retirement. Can any caring and responsible government see our CPF retirement savings ravaged by inflation while screaming to the world our GIC and Temasek have been making superior returns which they then quietly keep for themselves?
Many retirees do need their savings urgently and it is not right for the government to withhold them.
Tan claims the MS is achievable. He says: “Even as the Minimum Sum has increased in recent years, more and more Singaporeans have been able to attain the Minimum Sum”. Firstly, this is not published data and one cannot simply accept Tan’s words at face value.
A person at age 20 working today will require the following MS, calculated for different inflation rates, in 2049.
|MS in 2049||$783,500||$1,094,929||$1,525,688|
|MTHLY (SINGLE INCOME)||$5,739||$8,021||$11,177|
|**AVERAGE MONTHLY INCOME INCLUDES 13TH MONTH WAGE|
Even if the MS is increased at 4%, an employee will require an average salary of nearly $6,000 from age 20 to 55. We have seen wages stagnate for more than a decade. The government has also implemented pro-foreigner policies to depress wages for the benefit of businesses. When Tan says “more and more Singaporeans have been able to attain the MS”, he is misleading readers into thinking the MS will be easily attainable.
From the table above, the answer should be obvious when inflation rate hits 5% or 6%.
Tan also says that “About half of active CPF members are able to now, compared to one third just five years earlier”. (According to latest 2012 CPF report, “half” is actually 43.9%)
Tan appears trying to further mislead with ‘convenient’ statistics instead of painting the full picture. The key word is “active” and this makes a world of difference. Let me explain.
According to the CPF board, there are 1.88 million active members but the total number of members is 3.53 million. Half the number of active members means there are 940,000 who have the required MS amount. As a percentage of the total members of 3.53 million members, this works out to about only 27%.
What matters most to citizens is not even this figure but the number of Singaporean CPF members who are not able to meet the MS requirement. Tan has therefore quoted an irrelevant figure in an attempt to support the MS policy and hoping not to be questioned.
Tan is not serious about any meaningful debate. If he did, he should provide citizen figures which I believe is much lower than the irrelevant official figure.
Since 1994, the MS has been increasing at the rate of 6% annually from $35,400 to $155,000 in 2014. This translates into a rate of increase of 7.8%. Compound interest calculator Is this long term planning or simply suka suka anyhow adjust? Can we then trust CPF with such kind of haphazard planning?
If the retirement age has been delayed, the solution should have been to delay funds withdrawal. No need for MS at all.
Tan appears to be in the dark as to what our concerns really are because he did not even mentioned transparency! He feels that the policy is good for us and no matter how much noise has been made, the government is not going to listen. The government only wants to shove their reasons down our throats and maintain the status quo. Seriously, this is not engagement.
By skirting the issue of transparency as if it didn’t exist, the government has lost even more trust. The urgency in which tens of billions of dollars of CPF funds have been channeled into our reserves through insane increases in the MS as well as through the PGP, WIS and other schemes appears more likely to cover up huge investment losses.
If our CPF funds are really safe, why is Tan so afraid to address the issue of transparency?