As the government gets ready to announce 'improvements' to the CPF scheme I like to share my own thoughts on the issue:
1) guarantee - is it only monetary or does it extend to the preservation of the social compact that can impact on our access to our money
2) new citizens come from many countries. They more likely than not have ingrained values and outlook that are different from ours. Since they are mainly 'talents' they outnumber the 'long domiciled' citizen talents (said to be <500, can all be accommodated in a jumbo plane). In time they will more than likely form and even dominate the government. Is it possible for us, the local non talents, to feel assured that they will accept the status quo?
3) CPF withdrawal and HDB lease sell back. The indicated changes so far are no more than a changing of the costume on the clown. Forget the idea of a limited lump withdrawal at age 65. Instead allow full withdrawal of retirement account balance from age 65 to 75, monthly basis. At age 74, all HDB owners must sell back to HDB a portion of the lease. There are 3 advantages
a) easier to determine the portion of lease to retain because of age. In fact it might even be possible to standardize the number of years at between 15 to 18 years. All proceeds from the sale must go back to CPF and can be fully withdrawn over 15 years by monthly installments as now
b) the seller will get more money from the sell back because of discounting over a shorter period. So he will get more from age 65 to 75 (from a shorter withdrawal period of his retirement balance) and then from 75 to 90 (from the sale of part of lease)
c) the question of how to the deal with any remaining years in the lease after the death of the owner becomes a much smaller issue
4) the issue of life expectancy. Very briefly govt says LE at birth are:
Born in 2013. 82.5 years
2000. 78.0
1980. 72.1
So those born <1980 LE is <72. Yet about 200k PG are over 85, meaning this group were born before 1930 and should have died before 1990-1995. That they have not cannot be due to better medical advances because the extended life is too long to be so for an unhealthy person. On the other hand, it appears many are dying before 75. So this LE theory may just be the mumble jumble of modern the medicine man. Thus, withdrawing all CPF retirement balances by age 75 and replenishing it with money from selling part of HDB lease is a reasonable arrangement
5) interest rate on balances must include a risk premium for balances that are to be left with CPF for mire than 30 years. The quantum of premium increases the farther away from the LE that is used in bands of 10years.
Eugene
TRS Contributor