The PAP has refused to address the issue of our failed CPF system causing our retirement shortfall. Instead of acting responsibly, it continues to pass the buck to citizens.
Below are a few suggestions by Roy but it is not in PAP’s interest to ensure citizens retire comfortably.
1 – Implement minimum wage of $1500 per month
2 – Reduce rate of increase of CPF Minimum Sum to inflation level
3 – Increase CPF interest rates to 6%
4 – Remove land costs from HDB flat prices
It is not that the PAP government is unaware of the underlying causes of our retirement shortfall but rather its hands are tied. PAP has all the while been using shortcuts to ramp up our GDP, take credit and pay themselves exorbitant salaries. Below are the reasons why these suggestions will not be implemented:
1- Foreigners are more than willing to accept wages below $1000. Without a minimum wage, the PAP can profit from businesses in the form of levy collection amounting to hundreds of millions every year. By next year, the levy could go up to as high as $800 per worker per month. The implementation of a minimum wage will be resisted at all costs by the PAP because this set off a chain reaction of salary increases in all sectors of the economy ie if a cleaner’s salary is $1500, security guards or service staff would demand higher salaries followed by admin staff, supervisors, etc. This is PAP’s real fear so Singapore Inc must continue to depress low wages.
A minimum wage will add to business costs in the form of higher CPF contributions. After the government had cut the employer’s contribution by 10% last century, it has yet to restore the balance 3% after 14 years. Whenever there is talk of this restoration, the PAP would paint an economic doomsday scenario. It is impossible for a Singaporean workers earning ‘slave’ wages to have a minimum wage of $1500 when the government is unable to even restore the 3% CPF cut.
During the same period, our GDP has also tripled to $370 billion. It appears our GDP is only meaningful to politicians and civil servants to justify their ever-increasing bonuses and salary increments.
Minimum Sum, yes. But chances of implementing Minimum Wage – ZERO
2 – The CPF MS has been increasing at a compounded 6% interest from $80,000 in 2003 to $155,000 in 2014. calculator The urgency with which PAP has been increasing the CPF MS has raised questions on GIC’s solvency. In his NDR speech, PM Lee said the CPF MS will increase to $161,000 next July which is equivalent to $120,000 in 2003 dollars. However, the future inflation rate is still an unknown so how did PM Lee arrive at ‘$161,000’?
PM Lee also hinted that worse may yet to come when he said CPF MS “will still need to be adjusted from time to time, to keep pace with rising incomes and spending needs,..”. PM Lee substituted ‘inflation’ with ‘rising incomes and spending needs’. This will allow the PAP to unilaterally increase the CPF MS higher than the inflation rate.
Chances of reducing CPF MS increase to inflation level: ZERO
3 – GIC does not manage all CPF funds. HDB uses about $50 billion of CPF members’ excess balance as “HDB concessionary loans”. HDB does not have any funds nor is the fund provided by the government. It’s a misnomer to call it a “HDB” concessionary loan. It should be renamed “CPF member’s friendly loan” because the money comes from other CPF members.
With $50 billion locked in to 2.5% returns paid by HDB flat buyers using ‘CPF member’s friendly loan’, GIC has only about $210 billion to invest. GIC also invests 31% of its portfolio in bonds and cash which yield low interest returns.
Taking away the loans for public housing, investment in bonds and cash holdings, GIC would probably have only about $150 billion of CPF monies to invest. It is not possible to increase CPF interest rates to 6% unless GIC takes excessive risks in investment.
Chances of increasing CPF interest rate to 6%: ZERO
4 – Despite including land costs when selling HDB flats, HDB still claims it loses “hundred of millions” of dollars every year. PAP must include land cost in pricing HDB to create the illusion of wealth through high property prices. If HDB were to remove land prices from HDB, our GDP will collapse and HDB will not be losing only millions but billions of dollars every year!
Chances of removing land costs from HDB flat prices: ZERO
The PAP government is unique in the world – it is the only government which seeks to profit from its own citizens. The 90% PAP majority in Parliament allows PAP to continue screwing up citizens’ retirement.
Ensuring the well being of citizens during retirement is viewed as a cost to PAP. It has never been in PAP’s interest to ensure Singaporeans retire comfortably.