Home News Is the CPF scheme as good as the Chile pension scheme?

Is the CPF scheme as good as the Chile pension scheme?

Author

Date

Category

- Advertisement -

By: Leong Sze Hian

I refer to the article “‘Singaporeans don’t realise what a good deal the CPF is’” (Sunday Times, Aug 29). It states: “The Central Provident Fund (CPF) system has its share of detractors among Singaporeans but, overseas, it attracts a lot of positive attention. CPF savings currently accumulate interest of between 2.5 and 6 per cent, including additional interest on lower balances as well as for older members. There is a legislated minimum interest of 2.5 per cent per year on Ordinary Account savings”.

On the day before (Aug 27) – according to the article “Chile’s pensions – The perils of not saving – A pioneering system, now in need of reform” (The Economist) – “PALLBEARERS bearing coffins scrawled with the legend “No+AFP” joined tens of thousands of Chileans in Santiago on August 21st to protest against the country’s privatised pension system. Organisers—a mix of unions, pensioners’ associations and consumer-advocacy groups—say that a million demonstrated nationwide (perhaps an exaggeration).

The scheme they revile, launched by the dictatorship of Augusto Pinochet 35 years ago, was a model for other developing countries such as Peru and Colombia. Rather than saddle the government with an unaffordable pay-as-you-go system, in which today’s taxpayers support today’s pensioners even as the population ages, Chile created one in which workers save for their own retirement by paying 10% of their earnings into individual accounts. These are managed by private administrators (AFPs).

- Advertisement -

The system has generated high returns for pensioners, averaging 8.6% a year between 1981 and 2013. But the AFPs’ high fees have bitten a huge chunk out of those returns, reducing them to 3-5.4%.

A new state-owned AFP will provide more competition to private ones. Hidden charges will be eliminated.”

In the Singapore context – what is the difference between the CPF’s historical interest rates and the returns derived from CPF funds?Follow us on Social Media

Send in your scoops to news@theindependent.sg 

No tags for this post.
- Advertisement -

Upper Serangoon condo residents losing sleep over 4 fridge-related fires in 2 months 

Singapore—There have been seven fridge-related fires at Riversails Condominium in the past three years, causing much alarm to its residents. Four of the incidents occurred just in the last two months -- the latest in a sixth-floor unit where a fridge caught...

Post goes viral of man who wants to extend hospital stay as nobody cares for him at home

Singapore — A netizen has urged readers on Facebook to take care of their parents while they are still alive, after overhearing an elderly man in a hospital ask to stay longer since, he said, no one took care of him...

Praise for student who eats lunch discreetly out of respect for Muslim friends fasting

Singapore - A student has garnered praise for his sensitivity towards his Muslim friends fasting for Ramadan by eating his lunch discreetly. Syafiq Izwan Kassim, a teacher in Malaysia, took to Facebook on Wednesday (Apr 14) to share an experience with one...
Follow us on Social Media

Send in your scoops to news@theindependent.sg 

No tags for this post.
Theindependent