Home News New CPF proposals are 'elegant, simple and far-sighted' only for fools

New CPF proposals are ‘elegant, simple and far-sighted’ only for fools




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The following is a letter from one of TISG’s readers, Frank.

Chairman of the CPF Advisory Panel, Tan Chorh Chuan, said: “If I had to encapsulate what we’re trying to do in one line : We are providing more choices to give you more control over your retirement plan”. And MOM Minister, Lim Swee Say, said the panel’s recommendations are”both elegant in their simplicity and far-sighted”.

What a freaking load of bulls!

Watch this YouTube video on CPF by the famed “cheaperer, betterer & fasterest” minister.
[fvplayer src=”http://youtube.com/watch?v=ElKCso_muLs”]
He said….”Every month when I see my CPF Statement, I feel so rich you know and the best part is I know my CPF money won’t run away. CPF will still be around, hopefully, for a long, long time to come.”

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Why “hopefully”? A Freudian slip, an unconscious revelation of something that we don’t know?

You simply cannot bank on hopes with people’s hard-earned money.

Why are we not feeling rich now in retirement that prompted this review and the tweaks in CPF?

Already, in it’s current form, the CPF Investment Scheme (CPFIS), close to 75% who participated in it lost their hard-earned mandatory savings.

Now a fresh proposal, Lifetime Retirement Investment Scheme (LRIS) to offer people more options?

This LRIS is seen to be an obfuscation to sidetrack a more sinister plan in delaying and downsizing the withdrawal quantum in the Retirement Account (RA) from age 65 onwards with a 20% reduction in initial withdrawal increasing at 2% per annum.

Presently set at $720 a month for those with $80,500 in their RA at 55 years of age it will drop down to $560 a month increasing at 2% per annum.

I constructed a back of the envelope calculation in Excel yesterday, similar to the one featured in the Yahoo news link here: https://sg.finance.yahoo.com/news/cpf-escalating-life-payout-plan-235834817.html.

At the proposed $560 a month from age 65 increasing at 2% per annum, it will only match the current $720 a month payout when one reach 78 years of age.

With life expectancy of 80 for males and 85 for females, this will translate to a deficient withdrawal of $12,984 for each male and $8,176 for each female when they depart for their happy hunting grounds. More if they kick the buckets earlier than 80 and 85 respectively.

This does not take into consideration those forced out of work earlier than 65 by the mindless flood of foreign workforce and are in desperate need of funds to stay alive.

This scheme can only have buy-ins from fools – the 70%.

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