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[h=2]10 reasons why Singaporeans are angry with CPF[/h]
May 24th, 2014 |
Author: Contributions
Ten reasons why Singaporeans are pissed off with the CPF contribution
system
1. The goalpost keeps shifting especially for the
minimum sum scheme which will be adjusted to $155,000 from July this year
onwards. Every year, the minimum sum increases by an average of 7% in which the
authorities justify by saying that the adjustment is for inflation. How can
inflation be 7 percent?
2. The CPF system is initially set up for Singaporeans to
use for their retirement purposes in which the employers will contribute 25% and
the workers another 25% from their salary. However, nowadays, it can be used for
investment-linked insurance products, tertiary educational fees for their
children, home mortgage repayment among others and become diluted in its usage
as a result. Our low wages here also do not allow our account holders to
effectively use their CPF for more than two main purposes.
3. The government tends to adjust the employer part of the
CPF contribution during any recession but leaving the employee part untouched,
sending the signal that the CPF system is elastic and pro-employer. During any
of such downward adjustment, mortgage payors have to fork out cash to pay for
the difference.
4. Though the authorities allow parents to pay for the
tertiary fees of their children, they have to return the money with interest,
angering many Singaporeans in the process. It’s their own money – many argued
but the CPF board still insists that the money be returned to the CPF account
holders with adjusted interest when they finish their tertiary education.
5. During the stock bull run of the 1990s, the government
allowed Singaporeans to use their CPF money to invest in stocks and other risky
financial instruments. Less than 20% of them made money and the scheme was
subsequently amended so that less of the risky instruments can be invested.
Right now, only investment-linked insurance products and some gold/stocks can be
invested using CPF money. Hundreds of millions of dollars of hard-earned CPF
were lost during that treacherous period.
6. Half of the CPF money in the ordinary account can be
withdrawn in cash, after deducting the minimum sum amount, at age 55 but as the
minimum sum keeps shifting upwards, it is believed that not many Singaporeans
will have enough in their minimum sum scheme let alone excess money to withdraw.
Less than half of the current CPF holders can meet the current minimum sum
scheme right now.
7. Almost a decade ago during the then-PM Goh Chok Tong era,
when the people asked for their money to be released in one lump sum when they
retired instead of being given annuity-based installments, they were insulted
with stories of withdrawn CPF money lost to women in Batam, used as propaganda
to substantiate the government’s stand that it was safer for Singaporeans to
withdraw their minimum sum in annuity installments than in one lump sum.
8. Prior to that, then-PM Lee Kuan Yew had also revealed
that our CPF money was used for investments in Temasek Holdings and GIC,
angering many Singaporeans in the process. When the giant sovereign funds lost
almost $40 billion during the financial crisis in 2008/9 period, people were
afraid that their CPF money would not be able to be withdrawn as the money was
all gone. Moreover, many people are unhappy that the Prime Minister’s wife Ho
Ching is the overall in-charge of Temasek Holdings, which can lead to suspicions
of a conflict of interest.
9. There is also a drastic lack of transparency on how our
CPF money is used for investment – how much of this money is actually used for
the two sovereign funds, how much was lost during the financial crisis and why
nobody wants to talk about it in Parliament. Singaporeans by and large have
already accepted the fact that our CPF money is used for investment but the lack
of transparency is annoying and frustrating to many.
10.The ordinary account still carries 2.5% in interest and
the special account 4% and many Singaporeans are unhappy that despite risking it
in the sovereign investment funds which historically earn close to 8-9% per
annum, our interest rate remains unchanged for the past few
decades.
Gilbert
Goh
* Gilbert is President of Transitioning – unemployment support
services.
Ten reasons why Singaporeans are pissed off with the CPF contribution
system
1. The goalpost keeps shifting especially for the
minimum sum scheme which will be adjusted to $155,000 from July this year
onwards. Every year, the minimum sum increases by an average of 7% in which the
authorities justify by saying that the adjustment is for inflation. How can
inflation be 7 percent?
2. The CPF system is initially set up for Singaporeans to
use for their retirement purposes in which the employers will contribute 25% and
the workers another 25% from their salary. However, nowadays, it can be used for
investment-linked insurance products, tertiary educational fees for their
children, home mortgage repayment among others and become diluted in its usage
as a result. Our low wages here also do not allow our account holders to
effectively use their CPF for more than two main purposes.
3. The government tends to adjust the employer part of the
CPF contribution during any recession but leaving the employee part untouched,
sending the signal that the CPF system is elastic and pro-employer. During any
of such downward adjustment, mortgage payors have to fork out cash to pay for
the difference.
4. Though the authorities allow parents to pay for the
tertiary fees of their children, they have to return the money with interest,
angering many Singaporeans in the process. It’s their own money – many argued
but the CPF board still insists that the money be returned to the CPF account
holders with adjusted interest when they finish their tertiary education.
5. During the stock bull run of the 1990s, the government
allowed Singaporeans to use their CPF money to invest in stocks and other risky
financial instruments. Less than 20% of them made money and the scheme was
subsequently amended so that less of the risky instruments can be invested.
Right now, only investment-linked insurance products and some gold/stocks can be
invested using CPF money. Hundreds of millions of dollars of hard-earned CPF
were lost during that treacherous period.
6. Half of the CPF money in the ordinary account can be
withdrawn in cash, after deducting the minimum sum amount, at age 55 but as the
minimum sum keeps shifting upwards, it is believed that not many Singaporeans
will have enough in their minimum sum scheme let alone excess money to withdraw.
Less than half of the current CPF holders can meet the current minimum sum
scheme right now.
7. Almost a decade ago during the then-PM Goh Chok Tong era,
when the people asked for their money to be released in one lump sum when they
retired instead of being given annuity-based installments, they were insulted
with stories of withdrawn CPF money lost to women in Batam, used as propaganda
to substantiate the government’s stand that it was safer for Singaporeans to
withdraw their minimum sum in annuity installments than in one lump sum.
8. Prior to that, then-PM Lee Kuan Yew had also revealed
that our CPF money was used for investments in Temasek Holdings and GIC,
angering many Singaporeans in the process. When the giant sovereign funds lost
almost $40 billion during the financial crisis in 2008/9 period, people were
afraid that their CPF money would not be able to be withdrawn as the money was
all gone. Moreover, many people are unhappy that the Prime Minister’s wife Ho
Ching is the overall in-charge of Temasek Holdings, which can lead to suspicions
of a conflict of interest.
9. There is also a drastic lack of transparency on how our
CPF money is used for investment – how much of this money is actually used for
the two sovereign funds, how much was lost during the financial crisis and why
nobody wants to talk about it in Parliament. Singaporeans by and large have
already accepted the fact that our CPF money is used for investment but the lack
of transparency is annoying and frustrating to many.
10.The ordinary account still carries 2.5% in interest and
the special account 4% and many Singaporeans are unhappy that despite risking it
in the sovereign investment funds which historically earn close to 8-9% per
annum, our interest rate remains unchanged for the past few
decades.
Gilbert
Goh
* Gilbert is President of Transitioning – unemployment support
services.
