After reading this piece of news on the possible upcoming changes on CPF, here's something to chew on. For those clueless on what is CPF, CPF stand for Central Provident Fund, a form of social security for Singaporeans to accumulate a retirement fund by depositing a portion of their monthly salary into an account with the government. For more details, you can read up on it at the CPF website
1) The CPF is actually a loan from the citizens to the gov at 2.5% pa; no bank in Singapore lends money at such a low rate.
2) Is the situation of insufficient retirement fund related to the influx of foreign low wage workers, which serves to depress the already low wages of the low income earner
3) If a large majority of Singaporeans are unable to have enough savings to retire and own a fully paid for flat after 40 year career (22 -62 yrs old) despite a total CPF contribution rate of 34.5% (14.5% employer rate + 20% employee rate), something is wrong
4) Can the elderly workers find employment?
5) The present $80,000 minimum sum would pay a monthly sum of $333.33 for 20 years ( 62-82) . Can one survive on that sum in Singapore? If not then what's the purpose of CPF? To lure Singaporeans in to a false sense of security?
6) To be able to reach the new minimum sum of $120,000 after working for 40 years, one would need to earn more than $725 a month. Given that some of the people working as cleaners earn less than that figure, how will they be able to reach the new $120,000 minimum sum? Here's a look at the income distribution in Singapore
7) $100 compounded at 2.5% pa over 40 years = $269
$100 compounded at 5% pa over 40 years = $704
5% investment return is easily achieved. Take a look at the S&P 500 index.
Is this why Singaporeans do not have enough money to retire?
8) So is CPF the problem or the cure?