Bargain Hen pecks again (At the strawman)

Many keen to put more money in CPF, says Dr Ng

Singaporeans are asking how to make top-ups, a development the minister views as positive feedback

By Lynn Lee

ACROSS Singapore, many people want to put more money into their Central Provident Fund (CPF) accounts to get the higher interest rates to be given from January.

They have been asking the CPF Board how they or their family members can make such top-ups, said Manpower Minister Ng Eng Hen in an interview with The Straits Times.

Dr Ng sees their query as positive feedback from the ground on last month's announcement in Parliament of changes to the CPF system.

'They would not ask this, if they could get better interest elsewhere,' he said.

The CPF Board will follow up on their query and give them customised advice and help, added the minister.

A major change in the CPF system is the one percentage point rise in interest rate for the first $60,000 in all accounts.

But only $20,000, at most, can be from the Ordinary Account, which now pays 2.5 per cent in interest a year.

For the Special, Medisave and Retirement accounts, the current interest is a fixed 4 per cent. This too will change.

It will be replaced with the return on 10-year Singapore Government Securities plus one percentage point.

However, for the next two years, the Government has assured CPF members that these accounts will get at least 4 per cent.

The other changes are: CPF members will, over time, get the monthly Minimum Sum payouts only at age 65, not the current 62; and they must buy a longevity insurance that will give them a monthly sum at age 85 until they die.

The changes are to bolster Singaporeans' retirement savings and ensure they have enough for their old age.

But the last two measures - the delay in the Minimum Sum payout and the compulsory longevity insurance - have caused concern.

Dr Ng acknowledged that most people are not sure if they would live that long.

They also worry about the cost of the longevity insurance or annuity, despite Government assurance it will be a small part of their Retirement Account.

To allay their fears, he has asked the committee looking at how best to introduce annuities to 'seriously consider' giving people the option to decide whether to get their insurance payout earlier or later.

It is almost three weeks since Dr Ng announced the CPF changes on Sept 19.

While he feels there is 'general acceptance' of them among Singaporeans - whom he says are 'very sensible people' - there is one thing he would have done differently.

He would put in 'bold print' the link between the extra one percentage point interest and annuities, and that the extra CPF people get will be more than enough to pay for the longevity insurance.

This approach would have satisfied nine out of 10 Singaporeans, who 'trust the Government to take care of them, and prefer more reassurance than explanation'.

This message was in Dr Ng's speech, but it came after he had painstakingly laid out the rationale, details and consequences of the changes.

Said Dr Ng: 'We were trying to be pure and we were trying to explain to them that we were changing the interest rate system and how it was being done.'

This explanatory approach is preferred by the other 10 per cent who want to be 'involved in the process'.

Both approaches are necessary, he said, adding that the exercise was a learning experience. 'Government must be patient and take the time and effort to explain to different groups with varying needs and circumstances.'
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Singapore's Bargain Hen sure likes to peck at strawmen. I thought he should have at least tired to peck at a mannequin. At least a mannequin looks more like a real person.

According to the above report

"They have been asking the CPF Board how they or their family members can make such top-ups, said Manpower Minister Ng Eng Hen in an interview with The Straits Times.

Dr Ng sees their query as positive feedback from the ground on last month's announcement in Parliament of changes to the CPF system.

'They would not ask this, if they could get better interest elsewhere,' he said. "

I would have reckoned that this former multimillion dollar surgeon would have at least half a functional cerebral cortex. You can't even use the phrase "bird brain" to describe him. Bargain Hen can't even figure out why the peasants were asking those question. Instead he interpreted them as "positive feedback". Classic case of confirmation bias.

Here's why those peasants gave "positive feedback" to him.

THOSE PEASANTS SIMPLY HAVE GOT NO IDEA HOW MONEY WORKS.

And not because the interest given is so wonderful as bargain hen has suggested. As previously mentioned here, investing in a fund tracking a stock index gives vastly superior returns compared to CPF. Besides, those peasants who actually bothered to give bargain hen "positive feedback" and listen to his bullshit were probably already inclined to fully embrace CPF. It is in no way representative of the general public's view.

Think of it this way. If the CPF interest rates were really so wonderful, that would be akin to the government giving us a "free lunch". Doesn't sound very consistent with their anti clutch mentality stand does it? There is no such thing as a free lunch (sounds really familiar but i can't remember where i heard it from).

Next, the report says

"While he (bargain hen) feels there is 'general acceptance' of them among Singaporeans - whom he says are 'very sensible people' "

Geez, i wonder how did he get this feel of general acceptance. I seem to be getting the opposite feel. And so is the rest of the blogosphere.

And finally bargain hen says

'We were trying to be pure and we were trying to explain to them that we were changing the interest rate system and how it was being done.'

HUH?! Trying to be pure? Does it make one any purer to explain something? Doesn't make you much purer trying to explain to some poor old peasants before robbing them right?

Anyway, fixing the interest rate of CPF can only guarantee insufficiency at retirement. Explaining how a lousy retirement policy works is of absolutely no use if it cannot serve it's purpose in the first place.