Monday, 16 June 2014

Where's the consensus on the CPF?

I don't think PM Lee intended for so much heated debate about the CPF when he decided to send warning letters about libel to Roy Ngerng for his posts about the CPF. Since the letters were issued by PM, there has been a successful crowd-funding donation to support Roy that has raised more than SGD100,000 to date and a protest attended by at least a few thousand people at Speakers' Corner Hong Lim Park. There was even a case of an unprecedented CPF-specific vandalism - a 71-year-old man allegedly wrote on the screens of some bus-stops in Singapore that the government should "Return our CPF money". More recently, there was also a small-scale forum discussion facilitated by the ruling party's MP, Hri Kumar.

During the very interesting forum, a 76-year-old former teacher spoke up about her problems with the CPF. The gist of her appeal to the CPF was that as a retiree born in 1938, she had had the option to withdraw her CPF before the more restrictive new rules kicked in. However, as she was not in need of cash at the time of her retirement, she opted for what seemed like a great financial plan - leave the bulk of her retirement funds in the CPF to earn the interest provided by the CPF Board's investment of the funds in AAA-certified bonds. (In fact, the Board is suggesting the same plan to new retirees.) She was then counting on withdrawing the funds at a later date when she was in need of cash.

Sounds like a good financial plan, right? It reflects the great trust that she had in the government. When she could have taken her money and run (to paraphrase Woody Allen), she chose to place her funds in an institution that she trusted. Unfortunately, it backfired on her when the government changed the rules, apparently without offering her an alternative option. Her savings in the CPF were transferred to the newly created Retirement Account, which aims to help retirees born after 1958 to manage their funds so that - pardon my bluntness - they will not go broke before they die and have to rely on government welfare.

The funds in the Retirement Account are disbursed to the retirees in installments calculated based on average life expectancy rates in Singapore. The Singapore government's not unreasonable rationale is that doing so will be more "sustainable" in the long run, as the retirees will continue to be at least partially self-reliant, and the government will not have to increase welfare hand-outs for those who have spent all their retirement funds unwisely.

The government's intentions for setting up the Retirement Account, however, have been questioned by the opposition, such as Reform Party's Kenneth Jeyaretnam. There is also a video being circulated titled "Kenneth Jeyaretnam's question dodged by Hri Kumar Nair" - it was taken at the same CPF forum. (Jeyaretnam has written his account of the forum discussion here.)

Whether there is indeed anything unaccounted for in the CPF is not for me to say. I do not feel that I should give opinions on financial and investment matters that are not my expertise. While I am interested to hear the government's answers to Jeyaretnam's questions, I do not have high hopes that this will happen until a time when we have sufficient non-PAP members in parliament. Our current opposition MPs are out-numbered in parliament. It is difficult for them to press for an answer in such an environment.

Nevertheless, I think that the current positions being held by both sides about the CPF are too extreme. We should find a consensus if we are to move forward to resolve an issue that has been the bugbear of many old folks in Singapore.

Regardless of the opposition camp's opinion of the scheme, credit must be given to Hri Kumar for facilitating the forum and then compiling this detailed list of problems and suggested solutions. To implement them, I think what we need from the government, first of all, is an official acknowledgement that the new CPF rules, implementing a mandatory Minimum Sum of SGD155,000 and the aforementioned Retirement Account, have not been beneficial to some old folks.

It seems to me that, unless one is loaded with cash from other sources, the benefit of the MS and the RA to the elderly is marginal because the new rules deprive them of the chance to enjoy the fruits of their labour (i.e. their CPF savings, which is an accumulation of deductions from their previous salaries and contributions from their employers). No doubt it is wise for retirees to lead frugal lives with limited monthly payouts from their CPF savings, but these are people who have worked for more than 50 years. Surely we can be more lenient with them and not expect them to live like the Spartans? Some elderly folks may have wishes to fulfill - the ones that they never got around to when they were too busy working and, in the case of the old former teacher, educating children.

Here's an example of what could be on the post-retirement to-do list of an old person: An elderly lady in her 70s in Singapore may want to fulfill a lifelong wish to visit family members who have migrated to another continent. She will not be able to do so using her CPF, unless she has SGD155,000 in her Retirement Account to reassure the Singapore government that she will not go broke before she passes on. It is thus not unexpected that some people here would have the perception that the government is "heartless" to deprive old people who have toiled for most of their lives of a chance to accomplish the items on their bucket list.

However, in the long run, such measures may benefit Singapore, as they may help the government to manage the aging population better. While there's no concrete evidence to suggest that old folks are more likely to be spendthrifts when they receive a large amount of money, it cannot be denied that a lot of elderly folks in Singapore - perhaps for want of healthy recreational activities for senior citizens - enjoy gambling in their free time. Their frequent haunts are RWS and MBS, Genting, and sometimes this unholy ship anchored outside Singapore waters. Thus, the possibility of them using up their savings is definitely there and the government is not entirely wrong to restrict CPF withdrawal.

Since Hri Kumar has already done such a good summary of the suggested changes on his Facebook page, there's no need for me to go through them again. I only hope that the CPF Board can become more flexible in its case-by-case considerations. Or, if they really need to convince the public to park their money with them after retirement, maybe they can show some clear evidence for once instead of resorting to that familiar paternalistic high-handedness. It has often been argued that the elderly in Singapore tend to fritter away large sums of money and the government may eventually be forced to support them with taxpayers' money. Well, I don't think the government is necessarily wrong, but how about showing us some concrete proof? Where are the statistics? Did the government keep track of how many elderly had applied for financial help as a result of losing their CPF?

Finally, just as the government has said again today, there is always a "trade-off" and "hard choices" to be made when making policies that concern a nation's economic well-being. In my (layman) opinion, the trade-offs are as follows:

If we want to release the CPF funds, according to the government, we will have to be prepared to spend more, or even pay higher taxes for welfare handouts should a large number of the elderly lose their savings.

But let it also not be forgotten that there is another trade-off that the government has not mentioned.

If we want to give the government the mandate to control the retirement funds of the elderly, we have to recognise that what we are doing is at the expense of the well-being of people who might have started working when they were only 16 years old (it was common for teens back then to start working after their "O" or "A" levels), meaning that they would have contributed at least 50 years of their life to the Singaporean workforce. The frustration at being kept from their lifetime savings was palpable in the voices of those who spoke at the CPF forum. (Wouldn't you be, if you started working as a teenager, retired at the senior age of 62, only to be told that you can't get the lump sum payment that you rightfully earned?) The elderly who attended the forum are not members of the opposition. Although some wacky PAP supporters have claimed that they were coached by the pro-opposition camp, it is an unlikely story.

In other words, no matter what we choose, everything has a price. Some elderly people in Singapore are paying the price now for the government's future peace of mind. 



In a great show of how angered they were by the comments resulting from the elderly lady's gutsy speech, the pro-PAP camp has even gone so far as to publish on their Facebook page a zoomed-in picture of a house with a very specific street name and a photo of the old lady at the forum. The caption: "Feeling SORRY for her? She lives in a bigger house than you".

The implication is that the semi-detached house in the picture (screenshot from Google Maps) is the residence of the elderly lady. The argument being made is that since she owns a landed property, there's no need for the government to give in to her requests for the return of her funds. There are always "options" for asset-rich people like her, the admin of the page quipped. Some have suggested that she could sell her house to finance her funeral arrangements. However, to my knowledge, if a comment by a participant of the forum is to be believed, the house is jointly owned by the lady and her estranged siblings. You can see how that could be a problem if it is true.

What is disturbing is how the admin of a pro-PAP Facebook page can be so specific about the home address of a citizen who spoke up against the CPF policies.... Upon being questioned online, the admin claimed that the post does not mention the exact address. However, several commenters have pointed out to him that the picture zooms in on only one house. Further, there are four streets in the same estate and he has named the specific drive that the house is on. It would be easy for a crook to locate the house using the admin's screenshot.

Till date, there has been no official acknowledgement from both the party and its supporters that the grievances the retirees have about the CPF are justifiable. They have only acknowledged that some people are unhappy, but the extent to which party supporters have gone to discredit an elderly lady (a former civil servant, too), who had shown so much trust towards the government and is simply feeling played out by the new rules, shows just how resistant some people in Singapore still are towards any suggestions that the CPF rules need to be re-assessed for their viability. I think that says a lot about our intransigent political landscape.

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