It is not difficult to solve the problem with housing depleting CPF balance. The government can always do reverse-mortgage for people with less than minimum sum in CPF balance. After all, why is it necessary to own a house if you are too poor to have minimum sum?
(27-06-2014, 10:52 AM)freedom Wrote: [ -> ]It is not difficult to solve the problem with housing depleting CPF balance. The government can always do reverse-mortgage for people with less than minimum sum in CPF balance. After all, why is it necessary to own a house if you are too poor to have minimum sum?
From CPF website
"If you are unable to set aside your full MS in cash, your property, bought with your CPF savings, will be automatically pledged for up to half of your MS."
http://mycpf.cpf.gov.sg/CPF/my-Cpf/reach...ch55-2.htm
(27-06-2014, 11:02 AM)CityFarmer Wrote: [ -> ] (27-06-2014, 10:52 AM)freedom Wrote: [ -> ]It is not difficult to solve the problem with housing depleting CPF balance. The government can always do reverse-mortgage for people with less than minimum sum in CPF balance. After all, why is it necessary to own a house if you are too poor to have minimum sum?
From CPF website
"If you are unable to set aside your full MS in cash, your property, bought with your CPF savings, will be automatically pledged for up to half of your MS."
http://mycpf.cpf.gov.sg/CPF/my-Cpf/reach...ch55-2.htm
Thanks for the link. I have my faith in the government being able to solve such small issue.
(27-06-2014, 10:26 AM)freedom Wrote: [ -> ]What makes you think Singapore government can control inflation within Singapore?
If the oil price jumps 100%, you think Singapore government can make similar return? Or food price jumps 50%? Or labor cost jumps? Yes, the government can control land price, COE or certain taxes. But that's only part of the inflation.
A huge part of inflation in Singapore is out of control of the government. The government can't guarantee inflation-adjusted return. It merely can offer return what it can possible earn by collecting tax and investment domestic and oversea.
Sometimes, Singapore is only a red dot.
Q: What makes you think Singapore government can control inflation within Singapore?
A: I don't, for a second, think that we have total control of inflation in Singapore; being fully aware that we are a little red dot and price taker.
Q: If the oil price jumps 100%, you think Singapore government can make similar return?
A: If oil price jumps 100% suddenly and stay there for 1 year, I think the whole world, except maybe OPEC, will go down. Much bigger problem than my CPF to worry about.
Q: Or food price jumps 50%?
A: Meaning all food from rice to corn to vegetables to fish to meat to EVERYTHING, all price jump 50% and stay high for 1 year? I have no clue? We adjust by cutting down on consumption? Likely I will worry more about the next meal than what is in my CPF. Do you mind me asking what events will lead to this scenario?
Q: Or labor cost jumps?
A: My income will jump as well.
Yes, maybe you are not worried about your CPF. But those who retired worry about it every day because that could be their only income.
If the CPF return is inflation + 1%, where is the money from? to pay those retired?
If CPF is busted, the one who worries the most are those who retired.
When we don't think about sustainability, why should we have it in the first place?
My point really is that instead of having the current formula, are we better served if SSGS is indexed to CPI - thereby causing GIC/MAS to invest in a manner/portfolio that hedges against inflation naturally and still get a decent return. I'm no fund manager so I would like to hear from all about the feasibility and of course sustainability of such a fund.
(27-06-2014, 11:40 AM)egghead Wrote: [ -> ]My point really is that instead of having the current formula, are we better served if SSGS is indexed to CPI - thereby causing GIC/MAS to invest in a manner/portfolio that hedges against inflation naturally and still get a decent return. I'm no fund manager so I would like to hear from all about the feasibility and of course sustainability of such a fund.
IMO, it is possible, but the key concern is "acceptable" volatility of shareholder i.e. the CPF members. I reckon the acceptable volatility is pretty low, with the importance of CPF on housing and retirement issues of its members.
Fund managers do have similar concern, trading the maximum profitability, over the lower volatility, just to ensure its investors a sound sleep at night. A handicap for managing OPM.
(27-06-2014, 11:58 AM)CityFarmer Wrote: [ -> ] (27-06-2014, 11:40 AM)egghead Wrote: [ -> ]My point really is that instead of having the current formula, are we better served if SSGS is indexed to CPI - thereby causing GIC/MAS to invest in a manner/portfolio that hedges against inflation naturally and still get a decent return. I'm no fund manager so I would like to hear from all about the feasibility and of course sustainability of such a fund.
IMO, it is possible, but the key concern is "acceptable" volatility of shareholder i.e. the CPF members. I reckon the acceptable volatility is pretty low, with the importance of CPF on housing and retirement issues of its members.
Fund managers do have similar concern, trading the maximum profitability, over the lower volatility, just to ensure its investors a sound sleep at night. A handicap for managing OPM.
Generally, I am more for biased allocation of investment return to lower income Singaporeans. It is easier to implement and more sustainable.
HitandRun san has advocated for total freedom of investment when the CPF sum hits above a defined limit which is also a good suggestion too.
The bugbear now is that the minimum sum seems to be an elusive goal for many low income singaporeans.So, same with rolling out affordable HDBs for low income Singaporeans, there must be also a reasonable plan for most low income Singaporeans to achieve minimum sum by 60-65.
What are the mindsets on those who want to withdraw the min. sum at 55.
Do note that we do start withdrawing the funds including those inside the min sum at 65, monthly, to supplement retirement needs.
The increase of min. sum is not the issue if we think deeper. What needs to be understood is whether G is locking more than needed to support monthly withdraw at 65 for retirement with reasonable returns. Question like what's the baseline to decide the min sum to support retirement. If we understand the mean to the end, most will accept.