(01-02-2013, 11:58 AM)d.o.g. Wrote: [ -> ]It is about CPF.
The government has been insisting for many years that the CPF system ensures we have enough for retirement. If this is the case, why does it keep saying that there will be fewer workers to "support" each elderly person and therefore we need more people? The fundamental concept of CPF is that each of us funds our own retirement and is not dependent on our children (or the rest of society) to support us. So the number of workers in future is totally irrelevant to our retirement lifestyle.
This concept of "needing young people to support old people" holds true if you operate a pay-as-you-go pension system like Social Security in the US, where today's workers fund today's retirees, and when today's workers retire in future they are supported by future workers.
But in Singapore there is no pension for the vast majority of people - they only have CPF which comes from their own salary throughout their working life. So if CPF is adequate there is no need for an increasing population. Even a declining population is fine because the old are living off their savings, they are not living off the tax payments of the young.
You cannot have it both ways. Either the CPF is inadequate and therefore Singapore requires Ponzi demographics (more and more young people needed to pay for the old) or the CPF is enough and the size of Singapore's future population is irrelevant.
So which part of the government is correct - the one that says we need more population, or the one that says CPF is enough? They cannot both be right.
Just my $0.02. As usual, YMMV.
1. Yes, I agree that elderly CPF and savings, they care for their own.
Dont expect the young to fund the elderly, the young already so burdened with resources.
2. What they are doing so, the effect is get the young to be anchored to the old.
3. The right approach, is make the old have disciplined finance, exercise everyday, instead of being handed out $10 clinic visits. Medisave should also be allowed to buy supplements every year.
Don't think that is accurate. I doubt Gahmen has ever said that CPF system by itself is adequate for retirement. True that Gahmen want Singaporeans to rely as little as possible on the state for retirement, but don't rely on our children??
(30-01-2013, 09:24 AM)yeokiwi Wrote: [ -> ]This paper alone will easily cause them to lose another 10-20 seats in 2016.
D.O.G. is indeed correct. See report below. There was a paper done on CPF last year, to respond to the lecturer points. The study concluded CPF was sufficient provided the choice of the flats are appropriate.
http://www.asiaone.com/News/Latest%2BNew...83640.html
SINGAPORE - Young Singaporeans who join the workforce today will have enough savings in their Central Provident Fund (CPF) to finance their retirement, say two university professors.
But there are three caveats:
They must be prudent in their choice of homes and buy HDB flats within their means;
Any CPF savings above the Minimum Sum they withdraw must be invested to generate a steady stream of retirement income; and
They must continue to remain in the workforce.
National University of Singapore (NUS) economic professors Chia Ngee Choon and Albert Tsui drew these conclusions in their 27-page study on the adequacy of CPF payouts. The study was commissioned by the Ministry of Manpower and released on Wednesday.
It comes on the heels of questions raised recently on whether CPF funds can meet retirement needs.
During the Budget debate in March, several MPs urged the ministry to relook this issue.
Nominated MP Mary Liew cited a report by Professor Hui Weng Tat of the Lee Kuan Yew School of Public Policy, who had published a study warning that young Singaporean graduates may not have enough CPF savings for their retirement.
In April, the ministry approached the NUS professors to do the study. Some details of it were released in September by Deputy Prime Minister Tharman Shanmugaratnam.
Professors Chia and Tsui created a simulation model using ministry wage growth data in the past 10 years previously unavailable to the public or researchers.
They picked young workers entering the workforce this year so as to build a "baseline model" where variables like initial wage, wage growth and employment history can be calculated.
They worked out that a 25- year-old male who starts work today and draws a starting median monthly pay of $2,500 will be able to build up enough CPF savings over 40 years. After he retires at 65, he will be able to get an income that is 70 per cent of his pre-retirement income, pegged at his monthly pay at age 55.
The ratio of retirement income to pre-retirement earnings is known as the income replacement rate (IRR), and is used by economists to measure whether retirement funds are adequate. The higher the number, the better.
The IRR for a 23-year-old female Singaporean who starts work today would be 64 per cent when she retires at 65.
The professors said these IRRs are comparable to that of Organisation for Economic Cooperation and Development countries, which stands at 66 per cent.
Prof Chia said three groups who were representative of the labour force were studied - those earning incomes at the 30th percentile, 50th percentile and 70th percentile of their cohort.
The authors assumed these Singaporeans will marry, buy a new HDB Build-To-Order flat in 2017, and live in it till past retirement.
They stressed that to have enough retirement funds, Singaporeans must choose homes based on their income bands. Those at the 30th percentile should buy a three-room flat, those at the 50th a four-room and those at the 70th band a five-room. The IRR would drop if they choose larger flat types, they said.
The study also said the Workfare safety net provides a "significant boost" to help low-wage workers meet retirement needs. For example, the IRR of the 20th income percentile for men would rise from 80 per cent to 92 per cent with Workfare.
