CPF minimum sum increases again. Ignore the increases at your own peril. But let me be impeccably clear what the implications are, so that you know what is happening to your money.
CPF is intentionally made liquid so that you draw out less than what you saved for an average Singapore.
By switching your policies to an annuity, Gov ensures that you will not be able to draw everything out at a retirement age.
Additionally, they increase your retirement age and increase your minimum sum, delaying again, when you draw money.
The CPF pays less than 3%. In the investment world, if you have a long horizon (more than 30 years), you can achieve more than 6% returns investing in a simple diversified index. I am trying to say that CPF doesn't need to offer us the 3%, we would rather invest in other simpler instruments out there.
The next problem with annuity is how the pool of money is shared. Our citizens build up this pool but new locals can be added into this pool anytime.
Enough said about Temasek and GIC, it's clear that bulk of state fund comes from CPF contributions by way of bonds.
We, as owners of our own CPF money, should be able to decide who to loan the money to - that's if we concede that we can't decide individually.
Our retirement system is screwed up.
1. We are forced to choose an annuity for retirement among the many other ways to invest.
2. We are forced to accept a rate way below the potential rate for the same long horizon.
3. We have no say as they increase our min sum and retirement age in the future.
I would prefer to delink our CPF from Sovereign Wealth Funds. I prefer our CPF to be simply an agent that gives us options to invest in, not decide for us where the money should flow to.
If you do agree with me, help share the message. Help be a voice. Don't wait till it's too late.
Leong Sze Hian