CPF reforms carefully considered, govt can deliver: PM Lee
By S Ramesh, Channel NewsAsia | Posted: 23 September 2007 1818 hrs
SINGAPORE: The latest CPF reforms were finalised after carefully calculating that the government can deliver on what it has promised, said Prime Minister Lee Hsien Loong on Sunday.
Chairing a dialogue with five other ministers for some 500 grassroots leaders, Mr Lee said any scheme devised has to be fair to everyone.
The prime minister said a British pensions expert he met recently had said there were only three ways to solve the problem of living longer and providing for old age.
The first is to work longer and enjoy a shorter period of retirement, the second option is to save more while working, and the third is to choose to have less money when one grows old.
For Singapore, the CPF reform is the right thing to do as it will benefit many, especially the low-income ones.
He said: "It's not something that is going to make a difference overnight because we are talking about something when we grow old, and you are talking about 10, 15, 20 years from now.
"This is something if we didn't do, it will not disturb us now, it will not affect the next election, nobody will blame us until we are 35 years from now, when the problem is here, then people will say what kind of government did we have 35 years ago, (they) never took care of us. I think it is our responsibility to do that now."
Mr Lee said the CPF interest rate is better than that given by the banks, and he had a tip for wives.
"All the women should tell their husbands that the government's CPF interest rate is now very high, better than the POSBank anytime so better take your money from your POSB (account) and put into my CPF account," he quipped.
The extra one percentage point given by the CPF Board is something Singaporeans will find hard to get anywhere else.
Mr Lee said: "The government is taking care of it – 100-percent risk free. The money is there, it will never disappear. People say go with GIC, Temasek; GIC makes so much money, you should give me the same like GIC. But GIC invests long-term – they buy shares, the stock market goes up, the stock market goes down.
"(In the) last few months, the stock market has gone down. I am sure GIC's portfolio would have gone down. And not just your interest is less – that means your capital gets less. I was persuaded by MOM (Ministry of Manpower) and MOF (Ministry of Finance), against my preference, that it's better for the government to take on this responsibility for the first S$60,000 because it's a big burden."
Measures to ensure that Singaporeans have a secure retirement go beyond just improving the CPF system.
PM Lee explained that the various measures taken by the government to improve the housing programmes, education system and even Workfare all contribute to achieving that objective.
On the Longevity Insurance or annuities, Mr Lee said he is prepared to consider various options.
"You put the money, you buy the annuity, they pay you, you die, (but) they will continue paying your spouse until she dies. That is something we should consider and can be an option in the scheme which will address the needs of quite a number of old folks," he said.
Mr Lee said the CPF changes are major and hopes the dialogue will help community leaders better understand what the government is doing for the country's long-term good.
Note the highlighted statement.
I find it amusing that we are suppose to take out money from our POSB account to put it in the CPF account to earn the supposedly higher interest. And what's up with married female peasants telling married male peasants to put their money into the CPF accounts. I simply cannot understand the rationale behind the statement made.
Why would anyone put their money into an account that does not allow you to withdraw the money? And with the withdrawal age being push behind as and when the Govt thinks that the CPF savings of the peasants are not enough to sustain them for the rest of their life, what makes you think that you can see that sum of money again in your lifetime. We talk about the CPF savings staying in the family as it passes on to your next of kin upon your death, so when that happens, the CPF savings will be locked again and the story goes on.
The interest rate which is undergoing changes, will be pegged to the 10 year Singapore Government Bonds + 1%. If i am not wrong, i believe the Govt Bonds have triple AAA ratings and the interest rate would therefore be low. I would assume that the range would be between 1% to 4% and won't the long term interest rate be lower than the current 4%. If that happens, it would be a case of the Govt giving a raw deal to the peasants and saying, "This is what you wanted and this is what you are getting, so why are you still complaining?
With the CPF issue coming up again and again, i have started to change my perspective on it. To me, CPF monies is not cash but credit points, similar to the reward points that you receive when you use your credit card or pay your bills. To use it, you have to redeem it from the items that is available in the catalog. Due to my limited knowledge, i only know that i can use it for housing which i intend to do so.