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CPF Board refuses to answer the question of minimum payouts for CPF Life

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  • CPF Board refuses to answer the question of minimum payouts for CPF Life

    A Straits Times reader, Mr Manuel Nathan, recently wrote in to ask what are the lowest possible payouts for the CPF Life plans.

    He was concerned that the Guide to CPF Life published by the CPF Board had stated in fine print that the payout range based on CPF interest rates of between 3.75per cent and 4.25per cent does not represent the lower and upper limits of the payout.

    In its response, Mr Lo Tak Wah, Director (Retirement and Investment) of the CPF Board avoided answering the question altogether, preferring instead to stick to the propaganda that CPF Life is designed to have less volatile payouts and that inflation-indexed payouts are not feasible. (See: CPF Life designed to have less volatile payouts.)

    The real reason why the CPF Board avoided answering Mr Nathan’s question is because the lowest possible payout is zero dollars.

    As recent as July last year, it was revealed in Parliament that there was a provision allowing the CPF Board to stop payments in the event that the Lifelong Income Fund becomes insolvent.

    Even Madam Halimah, chairman of the Government Parliamentary Committee for Manpower, had earlier noted that she found this clause “quite disturbing“.

    In the article “STOP THE WAYANG, just return us our CPF!“, I said:

    Mdm Halimah has a curious sense of humour and a vocabulary to match. This clause is not merely disturbing. It is monstrous because it allows the Government to completely shirk its responsibility and accountability to Singaporeans in the event that the Lifelong Income Fund becomes insolvent due to its mismanagement and incompetence.

    Let me clarify my views of CPF Life again.

    Without any transparency from the Government or from CPF Board, Singaporeans will never know the criteria by which payouts are decided. The CPF Board has the authority to modify payouts based on changes in life expectancy or changes in prevailing interest rates, but any decision can ultimately be made without any accountability to the public because the exact details are never disclosed.

    There is no way to hold the Government accountable should the Lifelong Income Fund become insolvent due to mismanagement, nor is there any way of being assured of a fair and decent CPF Life payout since the CPF Board can arbitrarily change the payouts at its own discretion without any need to justify its decision to the electorate.

    There is no evidence to suggest that the Government has designed CPF payouts to be less volatile. In fact, by their own admission, CPF payouts are expected to be low because the CPF funds are being invested in Government securities that currently yield a very low rate of return.

    The refusal to index CPF Life payouts to inflation is also daylight robbery. If inflation persists at 3% per annum for the next 20 years, the value of CPF Life payouts would be halved. This means that the standard of living enjoyed by elderly Singaporeans would fall by half.

    Compulsory annuity is nothing but asset confiscation disguised as retirement planning.
    *****************************
    A bad day of fishing is still better than a good day at the office.


    Just me and my NT...

  • #2
    from the article, doesnt sound tooo good leh...let's wait and see what CPF has to say before concluding bah..
    I dont need another watch, I dont need another watch, I dont need another watch, I dont need another watch.........

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    • #3
      Seems we are being "screwed"....

      Read somewhere in ST next year the 4% interest in Retirement, Medisave and Special is no longer guranteed. It is pegged at some bond rate which is <4%

      Inconsistent here again... one hand u want our nest to grow, on the other you reduce the interest rates .....

      where are we heading now, I dun know...

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      • #4
        CPF = Coffin payout funds. Our MPs also need salaries. If CPF not use for investments how are they going to pay the ministers high annual salaries & bounses?

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        • #5
          One of the reason may be because of the way the fund is being managed.

          If Government signed a contract with a Fund Manager (FM) to run the fund, regardless of win or lose money, they have to pay the FM. Then, what's left as the balance (if any) is used to pay out to the policyholders.

          It is exactly what is happening to the US banks. Even though they lose money and using taxpayers' money to bail them out, the banks still get paid ridiculous bonuses.

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          • #6
            Originally posted by Frogmen View Post
            CPF = Coffin payout funds. Our MPs also need salaries. If CPF not use for investments how are they going to pay the ministers high annual salaries & bounses?
            Frogman.u r absolutely right.. If the garmen nothing to hide, y didnt they say anything to back their ass brain up to appease the ppl? Commonsense tells us tat something is wrong. Anyway, i dun wan to accuse o point fingers anyhow. Hope nothing went wrong in this hooha..Its still our $$$..Time will tell when the right moment arrives.. So guys,coming GE, wisen up more to cast the right vote!

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