CPF Minimum Sum Increased: How Many Ways To Milk You Dry

Today, the government announced that the CPF Minimum Sum will be increased to $155,000, from $148,000 last year.

According to the CPF Board and the Ministry of Manpower (MOM), the CPF Minimum Sum has been increased because, “In order to maintain its real value over time, the Minimum Sum increases to account for inflation.

Some would say, the PAP damn buay paiseh. Singaporeans already so poor liao still increase CPF Minimum Sum.

To maintain the real value of the CPF Minimum Sum, to account for inflation, the CPF and MOM say?

Increase CPF Minimum Sum Because Need To Maintain Real Value?

You know how much the CPF Minimum Sum has been increasing? It has been increasing way and above inflation. Just look at the chart below. The green line shows how much the CPF Minimum Sum has been increasing and the orange line shows how much inflation has been increasing. You can see that the CPF Minimum Sum has been increasing several times faster than inflation.

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So, what “real value”? In fact, the CPF Minimum Sum has been increased way more than necessary! But why would the government keep doing that?

Now, Singaporeans, think logically about this – if the government truly cares about wanting us to be able to meet the real value of our retirement funds, these are the two things that a responsible government would do – (1) increase our wages to make sure we can set aside more for retirement and (2) increase the payouts from our retirement funds.

CPF Minimum Sum Need To Maintain Real Value But Wages Don’t Need?

Now, take a look at how much the CPF Minimum Sum has been growing every year. It has been consistently growing by more than 5% every year. In fact, in some years, it was growing by more than 10%.

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Now, take a look at how much our wages have been growing. For many years, it never grew above even 5%. In fact, in one year, there was 0% growth, or no growth at all. And in some years, there was close to zero growth.

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So, the government would claim that they want the CPF Minimum Sum to grow to “maintain the real value”, but then our wages no need to “maintain their real value”, is it?

Somehow, the CPF Minimum Sum should maintain its real value but for Singaporeans, the livelihoods that we depend on our wages for don’t need to be maintained? Is that what the government is saying?

And how are Singaporeans expected to maintain the “value” of the CPF Minimum Sum if the value of our wages are not maintained?

Do you know what this means? This means that because the CPF Minimum Sum is increased by much faster than our wages, we are forced to sacrifice more into the CPF Minimum Sum than we earn.

So, the government is able to maintain the “real value” of their CPF Minimum Sum, but for Singaporeans, we are not able to maintain the real value of our wages and because we have to give up more into the CPF Minimum Sum, the value of our wages and CPF gets further eroded.

So, that’s for wages.

But what about the CPF payout?

CPF Minimum Sum Need To Maintain Real Value But CPF Payout Don’t Need?

According to the CPF Board, ” Payouts will range from about $350 per month at the entry level to $1,100 per month for those with the full Minimum Sum.”

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Now, according to Mr Leong Sze Hian, nearly 90% of Singaporeans are not able to meet the CPF Minimum Sum. What this means is that for nearly 90% of Singaporeans, we will not be able to withdraw even $1,100.

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In fact, it was revealed in 2011 that, “the highest payout is $1,280, and the median is $260.

In 2011, the highest payout was $1,280 but in 2014, the payout is $1,100. Does this mean that the real value of the CPF payout has severely eroded?

Also, if the median payout in 2011 is already at a low of only $260, does this mean that for most Singaporeans today, most of us will only be able to get a very low payout of $350?

Mr Leong had also calculated that, “If you have only have $25,000 in your CPF OA and SA accounts, your estimated CPF Life monthly annuity payout is $259 to $287.

This would be even lower than the stated $350!

So, hold on a minute! The government wants to increase the CPF Minimum Sum to keep more of our retirement savings inside because they say that they want to “maintain its real value”, but so what if all that money is kept inside and has some “real value” (whatever that means).

So what, if we are able to only withdraw $250 to $350 every month to use? Is this real value? Clearly, this isn’t real value. Which person in Singapore is able to sustain him or herself on just $250 to $350 every month?

As I’ve said, the government claims that it wants to “maintain” the “real value” of our retirement funds, so they make the CPF Minimum Sum increase by leaps and bounds, even way over inflation, just to maintain the “real value”. Sounds like such a magnanimous government, right?

But as I’ve explained, the measure of whether our retirement funds have truly increased in value is by looking at whether our wages and the CPF payouts have increased in “real value” over time. Clearly, both our wages and the CPF payout have not.

So, when the government talks about “maintaining the real value”, whose real value are they talking about?

In fact, if the government is really interested in increasing the real value of our retirement funds, what the government should do is pay us interest rates on our CPF which will allow retirement funds to grow in real value.

Lowest CPF Interest Rates In The World To Erode The “Real Value” Of Our CPF

But as it stands, we have been receiving as low an interest rate of 2.5% since 1999. According to Mr Leong, the CPF interest rate (actual and real) that Singaporeans earn is the lowest in the world!

In fact, you can see that over the past few years, inflation has been growing tremendously but the CPF interest rate has remained at a low of 2.5%. This means that the real value of our CPF is actually being eroded!

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So, wait a minute – I thought the government said that they wanted to maintain the real value of our CPF? Not really – read carefully. The government only wants to maintain the real value of the CPF Minimum Sum.

So, let me recap – if the real value of our wages are being eroded, and if the real value of our CPF is also being eroded, then if the government only wants to maintain the real value of the CPF Minimum Sum, do you know what that means? Right on – that means that the government wants to trap more of your CPF into the Minimum Sum, while more and more of your wages have to be siphoned off inside, and while the government gives you low returns on your CPF, you earn even lesser on your CPF (yet have to set aside more??).

Do you see all the contradictions? I hope you can see them.

Now, let me give you the big picture, before we round off.

Do you know why the government wants to maintain the “real value” of the CPF Minimum Sum. Well, here you go – do you know that Singapore has the 8th largest pension funds in the world?

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Huh? Really? Doesn’t seen so, leh, you say? You are right. That’s because Singaporeans also have the least adequate retirement funds among the developed countries and one of the lowest in the world.

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Then why do we have such a massive CPF balance of $254 billion? If this money is not going to us, where is it going? In fact, last year, Singaporeans only withdrew 5.9% of the CPF balance. Where did all the rest of our CPF go?

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The other question you have to ask is this – if the government wants to set such a high CPF Minimum Sum to keep our money away, where are they siphoning it off to?

Today, the CPF is ranked the 8th largest pension fund in the world, because the government has taken the $254 billion to earn $1 trillion, or 4 times more of what we have given them for their sovereign wealth funds. Today, GIC and Temasek Holdings are ranked the 8th and 9th largest sovereign wealth funds in the world.

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Now, do you know why the government gives you a low 2.5% interest on your CPF? The rest of the interest is being earned by them and not given back to you – Temasek Holdings and GIC earns 16% and 6.5% respectively.

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Finally, let me give you the whole picture. By right, if you have a responsible government which will take care of you, this is what a government will do:

(1) Give you high interest rates on your CPF to “maintain the value of your CPF”.
(2) Ensure your wages increase to “maintain the value of your wages”, so that you can set aside more in your CPF.
(3) Ensure that your CPF payout increases so as to “maintain the value of what you are able to retire on” and have adequate to retire on.

How, has the government done any of this? None. Nothing. The government did none of this. In fact, the PAP has depressed the CPF interest rates, depress your wages and reduce the CPF payout to as low a level as they can give you.

Is this a responsible government? Is the PAP a responsible government? Does the PAP care for you? Think about it.

Meanwhile, what did the PAP do? The PAP increased the “real value” of the CPF Minimum Sum so that they can take away more of your CPF to set aside for themselves, so much so that they have earned the 8th largest pension funds in the world, which they have used to earn the 8th and 9th largest sovereign wealth funds in the world.

Doesn’t take a genius to understand what is going on in Singapore and what the PAP has done, isn’t it?

What would a responsible government do? What would a selfish government do? It’s all clear and laid out for you here.

So, the question is – if the PAP doesn’t care for your retirement, or your livelihood for that matter, what does the PAP really care about? Well, many people have come to their own similar conclusions, and we are not too far off. The PAP doesn’t care. They have hijacked government for their own purposes and their own wealth. Your wealth is inconsequential to them. In fact, your wealth is an irritant to them.

Let me make this very clear – for the government to claim that they want to “maintain the real value” of your CPF but yet would depress the CPF interest rates and not return us what our CPF has helped to earn, would depress our wages and would pay us as little as a $250 CPF payout which is clearly adequate, and yet the only thing that they would do is to increase the CPF Minimum Sum, isn’t just a case of misplaced priorities.

The Real Reason Why The PAP Wants To Increase The CPF Minimum Sum

If you understand it completely, what the PAP is trying to do is this:
(1) Give you a low interest rate on your CPF and erode the value of your CPF so that they can earn from the rest of your CPF.
(2) Give you low wages so that they can save the rest of your wage for their own profit.
(3) Give you low CPF payouts so that they can save the rest of your CPF for their own investment and their own wealth.
(4) Increase the CPF Minimum Sum so that they can trap your money in for their own investment and their own wealth.

In short, the PAP doesn’t care. Whether you retire or not is none of their business. Whether you are able to live adequately or have a proper livelihood is none of their business. You exist only to make money for them. And if you cannot, you jolly well try harder or die trying. Don’t even try milking money off me, that’s what they are telling you by the low CPF payout.

In short, the PAP wants to increase the real value of the CPF Minimum Sum because you are of no real value to them. Your worth is only in how much they are able to milk you dry.

You know, the graffiti that was splashed across a Toa Poyah flat rooftop yesterday? This is what it means.

Are Singaporeans frustrated enough to throng the streets to protest against this blatant treachery? Will this finally break us? For too long we’ve pretended or denied, believing that one day, the PAP will turn around and find it within themselves to actually protect the people. Time and again, the PAP has proven us wrong. Time and again, the PAP has gone against us, not once, not twice but too many times. And yet, in the face of rising costs and the harder and harder lives people live, the PAP went full steam ahead to increase the CPF Minimum Sum once again, with no shame and guilt. Time and again, the PAP keeps taking more and more of our money, all the time giving us lesser and lesser. But Singaporeans have been patient and Singaporeans have been kind, for we are respectful people. But perhaps the time has come for it to let rip. Perhaps the time has come for us to finally give it to them and show them who we truly are. Rogues they are dividing our land and stealing our lives. Are we going to continue to let them?

The signs are there. Things are breaking. Are we facing up to them? Are we standing up to unite? Perhaps it’s time.

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In view of the unreasonable increase in the CPF Minimum Sum, we will be organising an event on 7 June at 5pm to call for Singaporeans’ CPF to be returned to us.

You can join the Facebook event page here.

Return Our CPF Poster 1

 

We have also started a petition to the Singapore government to honour our contributions to our CPF and return our CPF to Singaporeans. You can sign the petition here.

Return Our CPF Colour Demands 3

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20 comments

  1. kokwee

    I find it funny how the SPH media tries to censor the message. Striesand effect. The patriot should just paint FUCK PAP and nothing more so that the media cannot censor off without showing a clean wall. That would be epic!

  2. K

    Roy,

    I’m not sure I understood your point about the real value of our CPF being eroded. It is true that the rate of inflation has outstripped the CPF ordinary account interest rate, particularly over the past few years when inflation was sky high. However, it would be silly to judge the performance of a RETIREMENT account based on short-term data. If you were to look at the long term data, you will find that CPF interest rates are higher than inflation. Based on the data in your graph, if I had made $100 worth of investments in 2000 that gave me a return equal to inflation, that would give me $130.94 in 2013. On the other hand, if I had kept the $100 in my CPF OA in 2000, that would be worth $137.85 in 2013.

    Of course, it is possible to make investments that would allow you to beat inflation, but then not everyone is a savvy investor like your friend Leong Sze Hian, “Past President of the Society of Financial Service Professionals, alumnus of Harvard University with 3 Masters, 2 Bachelors degrees and 13 professional qualifications” (his words, not mine). For an average Singaporean like myself who knows nothing about investing, I will only get a measly 0.2% if I were to keep the money in my bank account.

    In addition, the CPF interest rates for the special, medisave and retirement accounts are 4%, plus an additional 1% for the first $60k.

    • Roy Ngerng

      Hello,

      Thanks for the question and the opportunity for clarification:

      (1) Wages have not grown with inflation.

      (2) CPF interest rates have not grown with inflation.

      (3) Net result – our CPF individual balances have not grown with inflation.

      (4) Real value of CPF has dropped.

      • K

        Roy,

        Thanks for your response.

        1) True for some years, but not true for most years according to http://stats.mom.gov.sg/Pages/Income-Summary-Table.aspx. However, this problem is worse for low income groups, so it needs to be addressed.

        2) True in short term, not true in long term as I have shown above. Also, if you want CPF interest rates to align with inflation, then you must also be prepared for lower CPF interest rates when inflation is low. For example, we would have received negative CPF interest rates in 2002 if CPF interest rates followed inflation.

        3 & 4) Not true, as I have shown above. $100 in CPF OA in 2000 = $137.85 in 2013, which represents a real growth of about 5.3% overall after accounting for inflation ($130.94).

      • microsoft

        tell your pm lee and his lawyer report mon wed tue 2 3 5 am morning cpf singtel m1 starhub building ask the manager cleaner owner bank manager sign and fax their bank account balance and topup 1million indonesia cpf and singtel gst erp dollar daily if not you cant leave your country. to return back your country if your in indonesia china india united kingdom you need to study 14yrs 2yrs army reservist if not we cannot let you return back to singapore and you need queen kate sophia lawyer sign. your pm lee and his lawyer have to write a sorry letter and report to cia building tue by 2am. if not we can sue you for money fraud laundry counterfeit embassy and corruption misappropriatie used of microsoft queen funds you have to take all of queen gold bar circle around egypt
        and return back to sentosa level b2 and roll 7 pass goal and collect 200sgd. why your bank collect interest from microsoft queen company? all the private company is microsoft queen company. starting from today your lawyer and lee have to pay bank interest from their bank account 200000sgd pay monthly interest and debt and once you owe 900billion we sack you for money embassy without parole. why your car so nice and your 2gurkah have to stand outside? they inside the car your lee stand outside corruption where you get money for that car? nfk right? only the state bank of india prime minister can sign if you want to print or loan money.
        your 1person lee independent form malaysia is unconstitutional you cannot raise your own flag on top of a british court room under chapter b line 2 page 10 you need to wear short pants bow tie and a motobike helmet and raise a british flag or you cant enter the court room. not happy go my microsoft singtel office cpf building report kate desutche bank queen sophia ntuc building. your pm lee lawyer ok with it ? then why you ask me go army you stupid lawyer ask him go army report by 2am need parents sign say sorry letter. army optional tell your defend minister if they dont have Ngerng Yi Ling president of army you cant print money and your country owe your lee and lawyer political motivated corruption want the country to owe money sue people cause lawyer firm owe money sue for money and sue japan company so their country owe money. tell your defend minister we can print 900billion 1note set money changer 1pound exchange 1billion sgd. what worng with your court room why you sue us our country doesnt owe sons of singapore is not is british flag your lawyer dont have rights to jail us under british court room united nation chapter 2 page 10 line 5. we no need reply your letter tell your police dont come near 200m restraint order from president Ngerng Yi Ling high commission of the republic of singapore serving microsoft queen funds. for enquiry you can email microsoft or report to kate middleton facebook.
        microsoft cia obama head admin. facebook head fbi sercret police isd. why your pm lee isd jail my microsoft sdp secret department police from malaysia. political motivated corruption sack microsoft president nathan from amk hub dbs and microsoft finance minister general george yeo from aljunied british town council. microsoft cia.

  3. K

    I also don’t understand your point about the CPF minimum sum. First, you complain that the government is increasing the CPF minimum sum too much. Then, you proceed to show us that Singapore has inadequate minimum pensions compared to the rest of the world (refer to graphs “Adequacy of Minimum Pension” and “Figure 12: Replacement Rate – Ratio of Retirement income to Preretirement income 2007”). So are you saying that the government was actually right to increase the CPF minimum sum?

    • Peter Lim

      Here is the Hard Truth:
      The PAP Government has short-changed Singaporeans in order that Auntie HC has enough chips to punt in the casino of which her business acumen is questionable based on her past dismal records.

      • K

        Questionable business acumen also can get 16% returns (according to Roy’s figure above)? 16% considered dismal record?

      • Roy Ngerng

        Hello,

        Temasek earns 16% using Singaporeans’ CPF but Singaporeans only earn 2.5% to 4% on our CPF.

        The interest that is not returned is an implicit tax that Singaporeans are made to pay.

      • Sgcynic

        16%? So they claim. Read Uncle Leong’s articles. Nobody can make sense of the info Temasek released.

    • Roy Ngerng

      Hello,

      (1) CPF Minimum Sum has been increased way above inflation.

      (2) Net result: CPF pension fund becomes 8th largest in the world.

      (3) Singaporeans only withdrew less than 6% last year from the overall CPF balance.

      (4) Net result: High CPF balance but low withdrawals.

      (5) Singaporeans thus are ranked with the least adequate pension funds in the world.

      (6) Where does the rest of the money go? – GIC and Temasek Holdings have used our CPF to earn the 8th and 9th largest sovereign wealth funds in the world.

      (7) Should government increase CPF Minimum Sum? First and foremost, if government want Singaporeans” individual retirement funds to grow, the government should:

      (a) Increase wages so that CPF contributions will increase to increase individual CPF contributions

      (b) Increase CPF interest rates so that individual CPF balance will increase

      (c) With increased interest rates, CPF payouts will increase

      • K

        Peter,

        The 16% figure was from Roy’s article above. I trust his data.

        If you have any problems with the figure, perhaps you should direct your enquiry to Roy instead.

      • K

        Roy,

        1-2) True.

        3-4) That’s to be expected. Every year, there will be a group of Singaporeans who reach 55 and can withdraw their CPF money. But that is a small proportion compared to the number of Singaporeans who are still actively contributing to CPF. So what’s wrong with only withdrawing 6% last year?

        5) Wrong. according to your figure, Singaporeans have inadequate MINIMUM pensions. In other words, the CPF minimum sum is low compared to other countries.

        6) I’m not sure what’s the link between CPF and GIC/Temasek. They don’t share the same pool of money. CPF monies are invested in Singapore Government bonds, denominated in Singapore dollars. GIC/Temasek funds are invested in foreign assets, denominated in foreign currencies. In addition, returns from GIC/Temasek are still being used to benefit Singaporeans, even if they don’t go directly into your CPF account. 50% of the returns go towards the Budget to fund things like building schools and roads, while the other 50% is saved as part of the foreign reserves.

        7a & c) True.

        7b) True, but only if it’s sustainable to do so. CPF interest rates are still 10 times higher than bank interest rates.

  4. Pingback: Daily SG: 9 May 2014 | The Singapore Daily
  5. Return us our CPF

    Just return me my CPF. I need no one to manage my estate for me. I won’t believe in this craps. It has been so sickening obvious things don’t work this way. There are so much flaws in it. Minimum sum and the drawn down age and the monthly pay outs are nothing short of calling them craps. PAP supporters. Please see it for yourselves. Stop behaving like dafts. You and your children future. You look at it clearly and objectively. When you hit 65 or if it still can stays at 65, I won’t believe you can have your retirement and your children will see you as burdens because they will also find it harder than you and me are going to survive here.

  6. Simon Lee

    Just pay me the interests that I am entitled for (higher than 4.5%) and let me have the liberty to withdraw whenever I want after 55, I do not mind who manage my CPF (as I will place my retirement funds with those fund manager anyway) as long as I can have the monies I need for retirement.
    By the way, Roy, thank you so much for your effort and I am truly enjoying reading your posts.

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