Wednesday, September 19, 2007


CPF changes will not draw on past reserves: Tharman

SINGAPORE: The proposed changes to the Central Provident Fund (CPF) to help Singaporeans meet their retirement needs are sustainable and will not draw on past reserves, said Second Finance Minister Tharman Shanmugaratnam.

Speaking in Parliament on Tuesday, Mr Tharman also explained the rationale of pegging the interest rate for the Special, Medisave and Retirement Accounts (SMRA) to long-term bond rates.

Tweaking the CPF scheme is aimed at helping Singaporeans save for old age.

One way is to pay 1 percentage point more in interest on the first S$60,000 of their CPF balances – a move that will cost the government S$700 million a year.

This has prompted many Members of Parliament to ask how this scheme would be funded and whether the government could give more or even co-share the cost of providing for retirement and old age.

Josephine Teo, MP of Bishan-Toa Payoh GRC, said: "With this generous interest rate hike, and considering all the other major investments in education and medical infrastructure, are we possibly setting ourselves up for higher GST or other taxes in the future?

"I would like the minister to please give the assurance that we have done the sums and are confident that the new interests in its current proposal are affordable before we consider the suggestions to do even more."

Replying, Mr Tharman said the CPF board would pay for this through the interest it receives on government bonds.

This will raise the government's debt-servicing cost, which will be financed by returns on investing CPF monies.

He said: "This is why we must avoid paying above market rates for CPF interest. Paying market rates will be the only way in which we ensure that the CPF is sustainable, not just for the next few years but for the very long term. It should never become a draw on past reserves."

Mr Tharman also noted MP Heng Chee How's suggestion to credit the earnings from the increase in the interest rate into a separate CPF account.

Mr Heng said the government could create a separate sub-account in the CPF and put this additional interest earning into that account.

The CPF member can use that money at age 55 to help pay the premium for his Long Life Annuity, fully or partially, and excess amounts can flow back into the Ordinary Account.

Mr Tharman said the CPF reform is reasonable and justified, including the pegging of the SMRA to the yield of 10-year Singapore Government Securities, plus one percentage point.

This, he said, should offer better returns, taking into account future market uncertainties.

The SMRA rate will be kept at 4 percent for the first two years when it is implemented next January.

Some MPs have asked for this to be extended, but Mr Tharman said this may be unsustainable in the long run and that the CPF should not be an interest rate subsidy scheme.

Mr Tharman said: "What is absolutely critical in all of this is the culture that underpins this economic strategy. A culture that comprises an ethic of self-reliance, where every Singaporean knows and understands that he has to save for his future needs. This is why the approach that we have taken through all our subsidies, is to use subsidies to give Singaporeans the incentive to work and save on their own. If you work and save, we will help you by topping up your savings."

Other measures to help Singaporeans include HDB housing grants and Workfare Income Supplements.

Day Two of the debate saw many MPs raising concerns about the CPF changes.

Michael Palmer, MP of Pasir Ris-Punggol GRC, said: "I would be interested to know what measures the minister has in mind which would educate and hopefully convince all Singaporeans that the changes to the CPF scheme and other changes to legislation are indeed necessary to provide for our fast ageing population."

Lily Neo, MP of Jalan Besar GRC, said: "How viable is it for CPF investments to be hedged with other vehicles which yield higher returns, and 100 percent capital preservation? Could the CPF board consider working with GIC and perhaps peg the interest rates at 2 percentage points below GIC's returns?"

Apart from CPF reforms, MPs also debated on issues such as helping Singaporeans work longer.

I would like to lead this to my simplest doubt - Is there still really any reserve left to be used for rescuing the CPF?

The reserve itself is Singapore's most opaque BLACKHOLE, which is most easily a complete falsehood or covered up fraud, the transparency regarding reserve is even worst than CPF fund which is another opaque BLACKHOLE.

After the NKF scandal people had only began to visualize what can be hidden behind the famiLEE LEEgime's non-Transparency. The naive assumptions of the past had been proven to be wrong by TT Durai. The fact that Durai can still travel and Richard Yong can move his wealth abroad show how ineffective is Accountability even when famiLEE LEEgime is putting maximum effort to bleach and launder their very own NKF scandal.

I hereby point out that the CPF rescue efforts via Annuity by famiLEE LEEgime currently underway, is obviously a lame attempt to rescue the CPF board itself at the expense & suffering of Singaporean (& Foreign Talent's) CPF members. In simpler words: famiLEE LEEgime is only doubling the suffering of CPF account members to rescue the hole they made in the CPF fund. They are not using the fund to rescue the members in plight, but rather they are further exploiting the member to rescue the plight of the fund!

If the famiLEE LEEgime still had their made-believe ultra huge reserve at this desperate juncture, and they won't utilize that to rescue CPF fund members' plight, and instead they went to rescue the fund's plight at the expense of it's members, then homelessness; divorce; suicide (400 over cases per year) and mental illness for Singaporeans must be part of their vision of NEW SINGAPORE.

Are Singaporeans not learning from their findings from NKF to apply further naive assumptions on true status of our highly opaque CPF & Reserve? Are we such slow learners?

Finally, I would like to point out clearly that Tharman definitely have no idea weather the reserve is still there or not and he is just talking about it blindly. Tharman is not the ELECTED PRESIDENT, but Ong Teng Cheong was. With Constitutional Duty and Power to stand guard for the reserve, Ong tried in vain to find out about the true status of Reserve. Tharman is not even a DPM, Ong had been DPM before his presidency. So Singaporeans please not be misled by Tharman!

Sammyboymod Thread

There are several types of holes not entirely the same but closely related.

#1 there is an income gap which is enlarging. Therefore there is almost no way to fix any CPF / annuity system that will fit all. The rich gets richer and they don't actually need any CPF nor annuity. The poor find CPF & annuity way out of reach. When the those poor have no job that pay enough to get ends met where do they even get CPF? How can a tissue paper seller top up CPF A/C as a self-employed person? And again how would someone like Lee Hsien Yang need CPF for retirement?

#2 there is a household income / expense gap among increasingly more low and medium level working family. This is related to the drop of birth rate. Instead of being able to cover this hole to solve the birth rate issue, the PAp threw some baby bonus to claim that they solved birth rate issue. They had obviously failed to see these as one single problem.

#3 there is a retiree financial security issue big time, this problem existed for almost 10 years and had been discovered by non-PAP, which the PAp initially avoided to admit. But the PAp had only started now to do some bad and lame attempts to fix it.

#4 there is a tearing hole which is being stretched larger and larger by the PAp, which admittedly found found themselves helpless. Which is the retirement age at which a citizen can afford to retire after working for entire life. This is currently torn after being stretched beyond the average life expectancy of Singaporeans to 85 already. More Singaporeans are actually not only dying younger but also falling ill critically or becoming dependent on costly medicals at very young age. Such as becoming NKF patients or the NKF's rejected patients.

#5 there is an invisible hole caused by incompetence and reckless greedy (if not corrupted) investments which is being made in terms of losses of CPF funds. The invisibility is due to the severe lack of transparency, however exposed scandals leaks out glimpses of the ugly reality behind the opaque governance. Scandals such as Termasek Shin Corp and the NKF.

#6 there are lots of big holes in the First World Brains of million dollar ministers. There are millions of tiny holes also in the brains of peasants who still are so naive and ignorant about Singapore's full picture. :-)


Post a Comment

<< Home