Wednesday, June 4, 2014

First Cut Is Always Deepest

People support CPF cuts
According to the table (see below) at the Central Provident Fund (CPF) website, the first CPF change was introduced on 1 Oct 2003, the cruel contribution cut to 33%. "The First Cut Is The Deepest" is also the title of a song by Rod Stewart, but nobody has the mood to sing after this.

And since the Prime Minister said, “People support CPF cuts because there are no protest outside parliament,” the CPF board got carried away with the implicit consent. CPF Minimum sum, salary ceiling, lower contribution rate for older workers, Medisave minimum sum, phasing of withdrawal rules, etc - the sky's the limit.

And the table does not include one more significant change - the erosion of CPF interest rate over the years. It was 5% in 1963, went up to 6.5% in 1974, and then the slide started heading south to current 2.5%. The formula for calculating the interest rate is a complicated business. From 1 July 1999 to present, the formula is supposedly 80% fixed deposit rate and 20% savings rate of the average of the major local banks over the preceding relevant 3 months. Problem with this method is that the banks have a different rate for someone depositing $100, and another with $100 million to park here. Just ask any wealth management executive.

Don't set your hopes too high up for the coming 7 June gathering of disgruntled voices at Hong Lim Park. Even the sympathetic members of parliament calling for higher rates and improvements to our CPF system will be met with same deaf ears. Technology makes it easy for the cold hearted, they simply switch off the hearing aid. Maybe what we need is a change of venue, say, outside parliament house.


  1. Do you think we should leave our CPF money in the hands of an anti--Singaporean party?
    Do you think PAP is an anti-Singaporean party?

  2. Is CPF a tax on Singaporeans?

    How many times do you have to pay taxes for your car?
    a. COE
    b. PARF
    c. Road tax
    d. ERP
    did I leave out anything else?

    1. What about the 45% import duty and the 7% GST?

    2. How about Petrol for your vehicle ?
      I try to use my bicycle for most trips but if too many follow suit, the moneyface Government will start to collect from all cyclists using public space..

  3. and petrol tax and and GST on top of it, VICOM checkings, parking fees ...

    1. Ah!
      The smell of PAP bullshit we all share.

      Has Roy Ngerng woken us all up yet?

  4. FYI - Gopalan Nair suggests that people protest in front of the CPF building at Robinson Road. Both the parliament house and the CPF building are far better protest venues than a small hidden out of the way public park.

    1. It is illegal for Singaporean citizens to peacefully assemble in Singapore.
      - that is what an anti Singaporean party would say & do right?

    2. We should all stroll down to Parleement House or CBF Building on 7 June. No poster, just show our faces.

  5. LHL quotes UK's Financial Times to support his defamation suit against Roy.

    Do you think UK's Financial Times is interfering in Singapore's domestic politics?
    Don't you think it would be ridiculous to accuse LHL of being a foreign agent just because of something a foreign newspaper wrote.

  6. There are more than 1 problem of pegging CPF return to local banks returns. a) FD bank deposits are for fixed duration, at the maturity of which (3 months or 1 year) the bank will pay you back the principal. The CPF is well, gone for life. b) Do any banks say, "top up your principal, because inflation just shot up!"? c) you have a choice to go to the bank that you deem is solvent to place your FD or savings, can you choose the Malaysian govt to keep your CPF for you? d) I can choose between a bank's local or foreign currency FDs, how can the CPF offer the same choices? If savers have to forego all these equally safe choices (our banks are all AAA right?), CPF should yield higher rates than bank FDs. And don;t even get me started on how much more flexible savings accts money can be withdrawn from the nearest ATM, even in Batam or Alaska! Can you do the same with CPF? How is CPF safer than an FD with DBS, or with ANZ or Bank of China?

    MAS' statement that GIC returns has "nothing to do with CPF interest rate" is laughable, and reminds me of Huck Finn's memorable quote : 'saying so doesn't make it so!' Clearly, MAS is behaving like the bureaucratic setup it always is - and arrogant beyond reasoning. Even in the light of clear logic, it keep denying that the bulk of GIC's funds comes from CPF. Sure there might be some budget surpluses in the reserves, but clearly this is puny wrt the CPF's hundreds of billions, probably trillion by now. Their distorted logic somehow telss them that when your money passes compulsorily from your CPF acct to Sing govt's pockets, who then lends to MAS, who then places it with GIC Temasek, after this smoke-throwing camouflage, your CPF money and its returns are no longer yours! The link somehow disappears? Then prey tell, how is it that after the same merry go round, a popular religious organization's money flow runs foul of the law? Does roy have a point or not?

    1. b"...How is CPF safer than an FD.."

      When they said "safe", they meant safe from you.

  7. The picture dispels all myths that the Merlion is a fictional fantasy creature, Uncanny, complete with spouting lips.

  8. Your point about different deposit amount is most valid!
    Problem with this method is that the banks have a different rate for someone depositing $100, and another with $100 million to park here. Just ask any wealth management executive.

    I heard banks offer very high interest rate guaranteed for just a few million dollars. The CPF is billions and billions of dollars.

    The CPF rate should be based on the interest rate for long term huge amounts.

  9. I wonder if LHL vs Roy Ngerng over the CPF is Singapore's Minsky Moment.

    Minsky moment - An Emperor’s New Clothes event, where all of a sudden we come to our senses and realize that the Emperor is naked, PAP is not always on the side of Singaporeans, and LKY was wrong.

  10. As if we are not already taxed enough, our moneyface PAP Govt just reminded us recently that GST is payable on our return trip to Spore exceeding 48 hours for new goods exceeding S$600 ?

    Just wondering if some rich tai-tai bring back wearing new diamonds & gold ornaments all over her body, is the customs officer going to stop her & how to prove they are all new & therefore payable of GST ?

    Or they can only target those who bring back new handphones, ipad, laptops which some idiot Minister is stupid enough to conclude these aspirations are the root cause of our exceptionally high living costs?

  11. These days, CPF benefits the government more than the people. It allows housing, medical and education costs to inflate (higher GDP, more GST), reduces government's spending on housing and medical (budget surpluses) and supplies government with abundant low-interest loan for investment.

    More than 50% of the people will have to work beyond 65 years old, downgrade or sell their flat because they can't meet the minimum sum just so that the government can continue to enjoy the benefits brought about by the CPF system.

    CPF helps you to retire, sure? Or it ensure you can't retire? With the current PM in power, the latter is more likely the answer.

  12. Temasek's spokesman still insist that Temasek funds has nothing to do with our CPF savings, which conveniently absolves it of profitting from our hard earned savings.

    Then Temasek's fundings comes from where, he doesn't want to elaborate ? Drug monies, loan sharks, or corrupt funds, I presume may be since he doesn't wants to tell us the truth?

    I suppose these people don' know how to draw a flow chart of where source of funds origin because they have very good reasons to hide their sources ?

    They really think we are idiots like our PM is it?

  13. Problem here is not PM idiot...problem here is self serving leetards put themselves first before Singapore and the idiot PM....and if they have to feed the PM information/advice to save themselves or earn much more they jolly well will let the PM and Singapore suffer to their detriment for their own gains...

    Any idiot can see what they doing...but the PM...i was hopefuly....but now i am no so hopeful...really is zzzz

  14. The CPF table has 3 mistakes:

    1. Changes to CPF started many decades ago. E.g. in the 1970s they keep on increasing the contribution rates until become 25% employer & 25% employee in the early 1980s. After SG first major recession in 1986, PAP reduce the contribution rate to 20% + 20%.

    2. The biggest mistakes are PAP allowing CPF to be used for all sorts of things --- buy property and pay for children higher education. These are no-no in any proper retirement / pension planning anywhere else in the world. PAP reasoned that seniors can downgrade next time, and children must obey filial piety to pay for parents' retirement. Reality today is that property inflation has sky rocketed way above salary increase. And expensive SG degrees are no match for legs-open ah neh & cheena degrees. The degree-holder children are having difficulty setting up their own family, don't talk about sponsoring old parents' retirements.

    3. The target of MS $120K (in 2003 dollars) was not achieved in 2013. Due to the hyper-inflation in 2008 & the GFC in 2008/2009, this is pushed to July 2015.
    So you will see another $8,000 increase in the MS for 2015 --- about $163K.
    From 2016 onwards, MS will be increased by the PAP-stated inflation rate.

    In case you're wondering, the original planned MS increases from 2003 to 2013 comprised of 2 parts: $4K + inflation adjustment.
    This is to achieve MS increase from $80K (in 2003) to $120K (in 2003 dollars).
    90% of staff working in CPF have forgotten this actual plan. High-level CPF staff can even give explanation to Straits Times that the big increase every year is simply inflation. They're wrong. It includes a fixed increase TOGETHER with inflation adjustment. That's why so big increase.

  15. By their own damn CPF Act, 2.5% is the minimum stipulated (yes, by law!) they have to pay in interest. They are already paying the minimum they are allowed to. And we wonder why people wonder whether it is solvent or not.

  16. Target them a good favour by voting them out and gifting them the opportunity of resuming their deserving private sector careers.

  17. His designer hearing aid probably switched to "hear only the good stuff" mode. That's why he is totally oblivious to our feedback.

    1. I do not discount the possibility his hearing aid is essentially to receive transmitted instructions on what to say.
      This is to prevent the idiot from making "Pork soup from the tap and free smoke jokes", or declaring, "Actually I have 20/20 vision when it comes to fixing the opposition but not in running the country."
      Having said, this idiot will expect the whole bunch of PAP stooges to laugh with him.

  18. - Just close down Temasek & GIC.
    - Hire a clerk.
    - Dollar cost average and buy Berkshire Hathaway shares.

    We get Warren buffet for free as our investment manager.

  19. The song "The First Cut is the Deepest" was written and first recorded by Cat Stevens, now known as Yusof Islam. Have always been a fan of this Cat Stevens !

  20. Is the PAP government so worried about our CPF money that they are fighting with Singaporeans over the right to look after our money.
    - even to the extent of suing Roy

    But what about our elderly parents?
    - Why don’t you see a PAP government fighting with us to look after our elderly parents?
    - Do you see PM Lee suing Roy for the right to look after Roy’s parents?

    The PAP government does not see the issue of the CPF (government) looking after our money as “subsidy mentality”.
    - But when it comes to looking after our elderly parents
    - Ah! This one is subsidy mentality
    - This one the Singaporeans must do (or they will prosecute us for not looking after our parents)

    Is this yet another example of PAP hypocrisy?
    - An example of PAP loving our money BUT hating Singaporeans?
    - Is this a fair comment?
    What do you think?

    1. First, "PAP hypocrisy" is triply redundant.

      Secondly, the PAP exists solely for the purpose of transferring the wealth of Singapore and Singaporeans to The Minister and His Cronies. Any actual governance performed by them is either in service of that goal or an "unfortunate" accident that will no doubt be remedied immediately.

      Third, the people trying to discourage us from voting in a democratic Government in 2016 by saying "they'll do the same thing the PAP have done once they get into power" are…well-Connected to the PAP! Self-interest, much?

  21. PM Lee looks very smart here, in his defamation suit. ;-)

    1. Equally smart is the old man's con fu tze red silk jacket with matching silk nappies.

  22. The current CPF system as in most govt policies are just getting too convoluted.
    Too many smart Alecs .