(04-09-2012, 01:32 PM)Temperament Wrote: [ -> ]CPF LIFE is actually an "Annuity Scheme" if i am not wrong. As such under certain "extreme conditions", you may be paid less then the amount promised or in the worse case may missed some payments or even may stopped payments altogether, if the "Annuity Scheme" collapsed due to whatever reasons. Horrible isn't it? But do you have a choice?
All you need to do is to search google instead of making assumptions. Here's a link:
http://mycpf.cpf.gov.sg/NR/rdonlyres/F54...FE_FAQ.pdf
To summarise some pertinent points:
CPF LIFE is based on risk pooling. i.e. everyone contributes to a fund (pool), which earns interest and payouts are calculated based on expected life expectancy (which may be adjusted if the life expectancy increases). Generally speaking a person who dies younger "subsidises" someone who lives longer. The interest is based on the SMRA rate and is gauranteed by the government.
Take a 2 person risk pool as a simple example for illustration purpose. Both contribute 80K. The fund earns no interest for simplicity and no expenses. Based on an average life expectancy of 80 and a starting age of 65 with an annual payout, each gets an annual payment of $5333 (80K/(80-65)). However, the first person dies at age 70, leaving 133K still in the risk pool - which can last the second person for 25 years at current payout rate. In practice CPF Life will constantly add members to the pool so it is possible to gaurantee payouts for life (albeit with constant adjustments for life expectancy), but you should get the idea.
(04-09-2012, 08:30 PM)tanjm Wrote: [ -> ] (04-09-2012, 01:32 PM)Temperament Wrote: [ -> ]CPF LIFE is actually an "Annuity Scheme" if i am not wrong. As such under certain "extreme conditions", you may be paid less then the amount promised or in the worse case may missed some payments or even may stopped payments altogether, if the "Annuity Scheme" collapsed due to whatever reasons. Horrible isn't it? But do you have a choice?
All you need to do is to search google instead of making assumptions. Here's a link: http://mycpf.cpf.gov.sg/NR/rdonlyres/F54...FE_FAQ.pdf
To summarise some pertinent points:
CPF LIFE is based on risk pooling. i.e. everyone contributes to a fund (pool), which earns interest and payouts are calculated based on expected life expectancy (which may be adjusted if the life expectancy increases). Generally speaking a person who dies younger "subsidises" someone who lives longer. The interest is based on the SMRA rate and is gauranteed by the government.
Take a 2 person risk pool as a simple example for illustration purpose. Both contribute 80K. The fund earns no interest for simplicity and no expenses. Based on an average life expectancy of 80 and a starting age of 65 with an annual payout, each gets an annual payment of $5333 (80K/(80-65)). However, the first person dies at age 70, leaving 133K still in the risk pool - which can last the second person for 25 years at current payout rate. In practice CPF Life will constantly add members to the pool so it is possible to gaurantee payouts for life (albeit with constant adjustments for life expectancy), but you should get the idea.
My point is you don't have a choice even if you are a high wage earner with more than adequate retirement fund at the end when you stop working.
It is like an insurance company forcing you to buy an annuity, regardless what you think.
Anyway, if every worker is forced to buy an annuity, is CPF LIFE necessary?
Alas, annuity is not "popular" in Sinkapore due to ???
Fortunately, i had a choice because i was more than 55 years old when CPF LIFE was introduced.
Sorry mate, if you don't have a choice.
(05-09-2012, 08:38 AM)Temperament Wrote: [ -> ]My point is you don't have a choice even if you are a high wage earner with more than adequate retirement fund at the end when you stop working.
It is like an insurance company forcing you to buy an annuity, regardless what you think.
Anyway, if every worker is forced to buy an annuity, is CPF LIFE necessary?
Alas, annuity is not "popular" in Sinkapore due to ???
Fortunately, i had a choice because i was more than 55 years old when CPF LIFE was introduced.
Sorry mate, if you don't have a choice.
CPF is basically penalising smart investors and high income earners to force the rest of the non high earning CPF members to save a sum of money for their old age.
If an escape clause is provided only for the rich, it will give rise to dissent and unhappiness. The typical CPF member will be pissed when they see the rich ones can withdraw their CPF and spend while they have to lock up their money.
If CPF allows everyone this option, I am quite sure very few will leave their money in CPF.
And going by the lousy investment records of CPF members, the society will most likely have to provide full subsidy for many who have ran out their money before they bite the dust.
(05-09-2012, 08:48 AM)yeokiwi Wrote: [ -> ] (05-09-2012, 08:38 AM)Temperament Wrote: [ -> ]My point is you don't have a choice even if you are a high wage earner with more than adequate retirement fund at the end when you stop working.
It is like an insurance company forcing you to buy an annuity, regardless what you think.
Anyway, if every worker is forced to buy an annuity, is CPF LIFE necessary?
Alas, annuity is not "popular" in Sinkapore due to ???
Fortunately, i had a choice because i was more than 55 years old when CPF LIFE was introduced.
Sorry mate, if you don't have a choice.
CPF is basically penalising smart investors and high income earners to force the rest of the non high earning CPF members to save a sum of money for their old age.
If an escape clause is provided only for the rich, it will give rise to dissent and unhappiness. The typical CPF member will be pissed when they see the rich ones can withdraw their CPF and spend while they have to lock up their money.
If CPF allows everyone this option, I am quite sure very few will leave their money in CPF.
And going by the lousy investment records of CPF members, the society will most likely have to provide full subsidy for many who have ran out their money before they bite the dust.
How about everyone has a choice to join CPF LIFE or not?
Of course if it is like that it only looks very fair.
But at the end of the day who is going to answer to the poor to very poor and others?
The GOV. of the day, isn't it?
Hey, looks like i have switched side unintentionally
The current arrangement is a compromise. Minimum Sum protects you from yourself in case you make bad investment decisions. Anything above that means you are better off & can afford to take some risks. If your investment flops, you still have your minimum sum. For the middle class and rich, the Minimum Sum is "small beans".
The minimum sum scheme is like what you say but why forced people into CPF LIFE?
minimum sum scheme is to have a minimum when retired. but it alone is not enough to last a person for long. CPF life is an annuity plan help people last longer with the same amount of minimum sum.
though for middle class or the riches, minimum sum and cpf life is nothing. but it provides the worse-case protection for anyone who retired. fortune can be lost in all kinds of accidents though chance is low.
Imagine the following analogy:-
Your father ask you to save and invest 36 per cent of your income through him. He gets 12 per cent and gives you 2.5 per cent. The excess is kept by him, and if you have an emergency and need to use it, both your father and grandfather have to approve.
Will you save through your father?
read the rest here.
The Online Citizen
-- What I see here is very obvious vested interest to make this cheap source of funds available for as long as possible and "persuade" people to leave it there for as long as possible so please don't claim government doing this for our own good.
So what happens if one day this pot runs out of cheap funds? Are FT coming here contribute to taxes and CPF part of that equation?
(05-09-2012, 10:28 AM)sgd Wrote: [ -> ]Imagine the following analogy:-
Your father ask you to save and invest 36 per cent of your income through him. He gets 12 per cent and gives you 2.5 per cent. The excess is kept by him, and if you have an emergency and need to use it, both your father and grandfather have to approve.
Ｔｈｅ ＣＰＦ member ｃａｎ ａｌｗａｙｓ
ｉｎｖｅｓｔ ａｌｌ ｏｆ his ＯＡ ａｎｄ ＳＡ ｆｕｌｌｙ ｉｎ ｐｒｏｐｅｒｔｉｅｓ， ｓｔｏｃｋｓ， ＥＴＦ ａｎｄ ｕｎｉｔ ｔｒｕｓｔｓ．Ｔｈｅｒｅ ｉｓ ｎｏ ｎｅｅｄ ｔｏ ＂ｂｅｎｅｆｉｔ＂ｔｈｅ ｓｔａｔｅ ｉｎｖｅｓｔｍｅｎｔ ｖｅｈｉｃｌｅｓ ｉｆ ｔｈｅ member resents it and thinks lowly of the 2.5% return.
In that case, the member can get a higher return by his own capability.
In my fantasy as the govt of the day (or just assume I'm on medically-enhanced state of mind), I would have no problem letting people withdraw 100% of their CPF money when they reach 55.
PROVIDED they sign a document they won't come back to the state for bail-outs if they have spent all their CPF money on wine, women, and song; or if they have lost it all in some hair-brained schemes, or in a late life "entrepreneurship" adrenalin rush!
Be a man! Live by the sword; die by the sword.
Cannot be like Greece (spend first worry later) claiming to be a citizen and "entitled" to be taken care of by Germany (other Singapore citizens who worked hard, invest hard, think hard).
It's interesting reading the on-line Greek press that some Greeks are blaming Germany for the situation they are in!? Like that also can?
I agree with forum members here that CPF ideally should be a small part of our net-worth at 55 or 65.
Something is not quite right if we keep eyeing our own CPF all the time.
It simply means if a person is not savvy with money or wealth creation up till 55, what makes you think that person will "suddenly" had an epiphany and miraculously know how to manage a relatively big lump sum of money at 55?