PAP’s population increase shortcut is also to prevent CPF collapse

The PAP government has taken too many shortcuts and is in …. deep shit.

With an ageing population, ie impending massive CPF withdrawals, CPF was certain to face a collapse between 2001 and 2019 when hundreds of thousands of baby boomers turned 55.

To prevent the inevitable, PAP legislated the Minimum Sum scheme in 1987 and forced additional billions into CPF annually. As this was still insufficient to offset the impending CPF withdrawals, PAP subsequently resorted to postponing the withdrawal age to 65.

This itself created another set of issues which required legislations to be further tweaked: it resulted in the government paying CPF members – in arbitrarily computed monthly installments – until we are 6 feet under.

The CPF scheme is inherently very unstable and members should expect more CPF changes akan datang, or face certain collapse.

One easy way to delay the inevitable is to increase the population. And that was precisely what easy-ways-to-economic-growth Lee Hsien Loong did immediately after he became PM in 2004 (chart below).

From 2004 to 2016, Singapore’s foreigner population has increased by almost 1.1 million, no thanks to PM Lee.

(Foreigners include PRs)

Every year, more than 10,000 PRs leave permanently; the Singapore PR has been treated as a piece of tissue paper. But this works perfectly fine for PAP because many former PRs do not withdraw their CPF balances which pay higher interest rates. As a result, it helps to delay the impending CPF implosion.

Whenever the economy experienced a severe downturn, CPF net contributions (excluding interest from GIC) dwindled and had even turned negative (see image below).
cpf net increase1
But during the GFC, net CPF contributions actually increased. This was partly due to the huge influx of foreigners which has helped to increase CPF net contributions by more than 300% since PM Lee took over from Lau Goh.

PAP’s population policy has nothing to do with mitigating our low TFR because it is now lower than it was 31 years ago.  In fact, I have queried the NPTD and it does not have any supporting evidence to prove its population policy has worked.

Clearly, PAP has been increasing the foreigner population not only to generate economic growth but also to prevent a total collapse of CPF.

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One Response to PAP’s population increase shortcut is also to prevent CPF collapse

  1. Sinkie says:

    Frankly if I’m PAPpy I won’t lose sleep over whether CPF collapse or not.

    Becoz in addition to the fact that I already have wealth stashed overseas that can last 10 of my generations, plus a 1-way VVIP 1st-class ticket always on stand-by, I can always prolong CPF collapse by changing the rules:

    1. Increase substantially the Minimum Sum for both RA and MA. Currently for RA, PAPies have reduced the rate of growth for the Full Retirement Sum to 3% per annum. I can always increase it to 5%-6% per annum like during 2007-2009. E.g. If I declare BRS to be $600K and MMS to be $250K, how many sinkies will be able to withdraw anything from CPF???

    2. I can extend the Minimum Drawdown Age. Currently it’s 65. Last time it was 55, then 60, then 63. I can always change it to 70 or 75 before I start giving you a few hundred dollars per month.

    3. I can always reduce or even stop paying you monthly allowances. The CPF Act allows PAPies to stop paying if CPF Life has not enough money. How much is not enough???? CPF Act never say and MPs in parliament never ask. Operationally it can be $50 million. If CPF Life drops to this amount, I can stop all payments until CPF collects enough money to build it up to $70M. Or I can just give you $1 a month. Also can. CPF Act says so maah…

    4. Lastly I can always print SGD like toilet paper to pay the masses. But first let me convert all my SGD into gold and USD, and sell off all my Good Class Bungalows and Orchard Rd penthouses. You may need to carry gunny sack of SGD1M to but NTUC bread, and your monthly CPF allowance may not be enough to buy 1 kopi-O.

    Laws are laws. Justice is justice. They are often not the same.

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