CPF: Why the unhappiness?

[the lynx]

http://online.wsj.com/articles/concerns ... 1402319551

The CPF system came under heightened scrutiny in recent weeks after the government said it would raise a minimum retirement-savings threshold. The move unsettled many lower- and middle-income Singaporeans who fear that they can't save enough to meet the new requirement.

-WSJ

[sundaymorningstaple]

My wife and I don't have the minimum sum either as we drained our ordinary accounts when we bought our flat (we were 50 & 51 and the time). So, we've made up the balance with the flat and if & when we get around to selling it, the top up will be taken from the proceeds. No big deal. I didn't bother to withdraw any when I turned 55 and still haven't and will be 67 shortly. As long as I'm fit & healthy and still working I see no reason to withdraw funds drawing a higher interest rate, risk on risk, than I can get anywhere else. I see it as a good thing even though I used it to mortgage my flat as well.

The problem is that Singaporeans brought their woes unto themselves and are looking for a way to blame somebody else. They actually understand inflation but they don't want to accept the fact that had they bought from HDB what they needed instead of what they wanted with greed, they would all have plenty of CPF for the minimum sum and the ability to withdraw a fair amount at age 55, which doesn't make sense. They cried to be able to use it for gambling (stock & bonds & funds) for educations for the kids, for housing purchases, and now, that they have blow it all, they want/NEED for their own piece of mind, to be able to try to blame someone else, e.g., the government.

If they want, they can immigrate to Malaysia/Australia/Canada and take it all out. We don't want them in the US as we have too many crybabies there already!

[PNGMK]

I expect in a decade the idea of withdrawing a lump sum from CPF will disappear entirely.

[Mi Amigo]

Frankly speaking, I don't think Singaporeans realise quite how lucky they are to have a retirement system where all the money that they and their employer pays in is ring-fenced and preserved in their name, for their use only. The system in the UK (and many other countries) has been referred to as the world's biggest Ponzi scheme; i.e. all the money I paid in over various years was spent the moment it was received, paying pensions to people who had worked hard and had every right to a pension on retirement. When I reach state retirement age, I'm totally depending on there being enough poor sods still working and paying their contributions to fund my state pension. And by the time they retire, who knows? It's all on the never-never, borrowing from the future.

I guess there is a philosophical discussion that could be had as to whether or not people should be free to completely opt out of the state pension scheme. Libertarian, free-market advocates might be in favour of that, but the downside would be the risk of people either not saving at all, or making inappropriate investments and losing the lot. If that happened, would they then go cap in hand to the gahmen asking for help? Hence the argument in favour of enforcing some kind of planned, controlled (to some extent) retirement savings scheme.

[JR8]

I expect in a decade the idea of withdrawing a lump sum from CPF will disappear entirely.

Emigrating currently remains one sure way to achieve it. I wonder if that window will also close, you'd have thought emigrants ('quitters') would be an easy target.

[the lynx]

I expect in a decade the idea of withdrawing a lump sum from CPF will disappear entirely.

Emigrating currently remains one sure way to achieve it. I wonder if that window will also close, you'd have thought emigrants ('quitters') would be an easy target.

I can assure you that West Malaysians who are PRs are already experiencing this. Upon renunciation of PR, they cannot withdraw CPF in lump sum until they hit the retirement age.

[ecureilx]

I expect in a decade the idea of withdrawing a lump sum from CPF will disappear entirely.

Emigrating currently remains one sure way to achieve it. I wonder if that window will also close, you'd have thought emigrants ('quitters') would be an easy target.

I can assure you that West Malaysians who are PRs are already experiencing this. Upon renunciation of PR, they cannot withdraw CPF in lump sum until they hit the retirement age.

but, ... if the west Malaysian gives up his / her MY citizenship they get it paid in full in 21 days :p just like any SC giving up his / her citizenship ...

and there is a rule that allows them to withdraw earlier if they give an undertaking that they will not seek employment in Singapore ...'I think that kicks in at 50 or earlier ...

the west Malaysia rule has been there for ages .... it isn't new ... I never figured out the rationale for it other than some talk saying it was requested by MY to stop Malaysians going to Singapore and returning as millionaires ... and upsetting the bumis ...

[the lynx]

the west Malaysia rule has been there for ages .... it isn't new ... I never figured out the rationale for it other than some talk saying it was requested by MY to stop Malaysians going to Singapore and returning as millionaires ... and upsetting the bumis ...

I didn't say it is new.

I'm well aware of it and I'm just putting forth that fact for JR8 (and other regulars) to know, if they haven't.

[Beeroclock]

I expect in a decade the idea of withdrawing a lump sum from CPF will disappear entirely.

Emigrating currently remains one sure way to achieve it. I wonder if that window will also close, you'd have thought emigrants ('quitters') would be an easy target.

I can assure you that West Malaysians who are PRs are already experiencing this. Upon renunciation of PR, they cannot withdraw CPF in lump sum until they hit the retirement age.

Do they continue to accrue interest on the account in the meanwhile, after renunciation and until the eventual withdrawal ?

[ecureilx]

]
Do they continue to accrue interest on the account in the meanwhile, after renunciation and until the eventual withdrawal ?

withdrawal or more like return of CPF from giving up the PR is pretty fast, dispelling some sub continental gossip that SG Inc is short of money and is holding on to the CPF -.. and may limit refund / returning the money ...

yes, it accrues interest, as per. Malaysian friend who went back to work in Malaysia ... after 4 years here ...

[Beeroclock]

]
Do they continue to accrue interest on the account in the meanwhile, after renunciation and until the eventual withdrawal ?

withdrawal or more like return of CPF from giving up the PR is pretty fast, dispelling some sub continental gossip that SG Inc is short of money and is holding on to the CPF -.. and may limit refund / returning the money ...

yes, it accrues interest, as per. Malaysian friend who went back to work in Malaysia ... after 4 years here ...

In this case, it really depends how you view it. I mean, if the CPF is seen as a generous, subsidized interest rate (after adjusting for risk) intended to benefit citizens and PR's, it would be better actually to force those who renounce to withdraw all money immediately, so they can no long keep benefitting after having left. If you prohibit the lump sum withdrawal, it just means the Govt is continuing to subsidise/sponsor the retirement funding of these renouncers.[/b]

[JR8]

In this case, it really depends how you view it. I mean, if the CPF is seen as a generous, subsidized interest rate (after adjusting for risk) intended to benefit citizens and PR's, it would be better actually to force those who renounce to withdraw all money immediately, so they can no long keep benefitting after having left. If you prohibit the lump sum withdrawal, it just means the Govt is continuing to subsidise/sponsor the retirement funding of these renouncers.[/b]

It's the CPF-savers who are subsidising the government with cheap funding. Getting better returns than on CPF is not difficult, but as per previous point, it's '''not allowed''', unless you 'exit the entire programme', which of course most can't do.

A histrionic 'Give 100% or just leave!' policy.

p.s. A promise 20, 30, 40 years in the future is no more than that. 'Do you feel lucky'... ? I am content to have nothing '''invested''' here...

[Beeroclock]

In this case, it really depends how you view it. I mean, if the CPF is seen as a generous, subsidized interest rate (after adjusting for risk) intended to benefit citizens and PR's, it would be better actually to force those who renounce to withdraw all money immediately, so they can no long keep benefitting after having left. If you prohibit the lump sum withdrawal, it just means the Govt is continuing to subsidise/sponsor the retirement funding of these renouncers.[/b]

It's the CPF-savers who are subsidising the government with cheap funding. Getting better returns than on CPF is not difficult, but as per previous point, it's '''not allowed''', unless you 'exit the entire programme', which of course most can't do.

A histrionic 'Give 100% or just leave!' policy.

p.s. A promise 20, 30, 40 years in the future is no more than that. 'Do you feel lucky'... ? I am content to have nothing '''invested''' here...

Understand you have a different view, but 4% interest on savings which is Govt backed (and with SG's credit rating) is not available anywhere else. If are making comparisons they should be apples vs apples, not fixed interest vs equities without any risk adjustments.

Also, CPF ordinary account funds can be used to invest in property and shares. It is allowed. But for property doesn't seem sensible for most given the CPF deposit rate is much higher than the bank borrowing rates (even at longer-term average interest rates).

[ecureilx]

]
In this case, it really depends how you view it. I mean, if the CPF is seen as a generous, subsidized interest rate (after adjusting for risk) intended to benefit citizens and PR's, it would be better actually to force those who renounce to withdraw all money immediately, so they can no long keep benefitting after having left. If you prohibit the lump sum withdrawal, it just means the Govt is continuing to subsidise/sponsor the retirement funding of these renouncers.[/b]

you misread something ..

only WEST Malaysians get the privilege of letting it earn interest when they leave Singapore .. till they reach retirement age of 55

all others don't get the option to leave CPF here ... when they depart SG, their account gets closed and anybody leaving SG, non MY PR or SCs giving up their Citizenship ... would want that money pronto than leaving it here. ... that's how I understood ...

and if they come back they must replace all the money back to CPF before even getting an EP. it is strictly enforced ...

if it was so, that will be like adding more fuel to the locals fire of demanding PR have all privileges revoked ... like demanding no HDB for non SC ...

for some voices insisting PRs leaving shouldn't get the money, I have this thought .. if so, allow PRs to choose not to contribute to CPF (avoiding money in CPF is one of the reason given by a few sub continent EP holders for refusing to apply PR .. like let me manage my money type of attitude ... )

if PRs are not allowed to get CPF when they leave what next? additional tax on PRs?

as it is PRs lost few privileges .. lesser subsidy in Hospitals, last in line for school ...

[Beeroclock]

]
In this case, it really depends how you view it. I mean, if the CPF is seen as a generous, subsidized interest rate (after adjusting for risk) intended to benefit citizens and PR's, it would be better actually to force those who renounce to withdraw all money immediately, so they can no long keep benefitting after having left. If you prohibit the lump sum withdrawal, it just means the Govt is continuing to subsidise/sponsor the retirement funding of these renouncers.[/b]

you misread something ..

only WEST Malaysians get the privilege of letting it earn interest when they leave Singapore .. till they reach retirement age of 55

all others don't get the option to leave CPF here ... when they depart SG, their account gets closed and anybody leaving SG, non MY PR or SCs giving up their Citizenship ... would want that money pronto than leaving it here. ... that's how I understood ...

and if they come back they must replace all the money back to CPF before even getting an EP. it is strictly enforced ...

if it was so, that will be like adding more fuel to the locals fire of demanding PR have all privileges revoked ... like demanding no HDB for non SC ...

for some voices insisting PRs leaving shouldn't get the money, I have this thought .. if so, allow PRs to choose not to contribute to CPF (avoiding money in CPF is one of the reason given by a few sub continent EP holders for refusing to apply PR .. like let me manage my money type of attitude ... )

if PRs are not allowed to get CPF when they leave what next? additional tax on PRs?

as it is PRs lost few privileges .. lesser subsidy in Hospitals, last in line for school ...

No mis-read, I agree with your points. I'm also saying it's unlikely PR renouncer will be restricted from lumpsum withdrawal for all these reasons.