I don’t even know where to begin to point out the flaws in your reasoning.

First of all, we did not agree to pay them the amount they are getting, they decided on that themselves. So this is no indication of their competence, just their greed.

To say that they must be right cause they’re paid so much is the same as saying someone must be the best musician cause he or she has the biggest flute/guitar/piano/etc…

It has been argued strongly that elderly Singaporeans are not saving enough, despite the CPF scheme. This is hardly surprising.

The CPF was introduced in 1955 when Singapore was a Third World colony. Our per capita GDP (at current market prices) in 1960 was S$1,306. This figure rose significantly to S$13,725 in 1983 and to S$35,552 in 1996. Today Singapore is a First World nation and this is well backed by our 2006 per capita GDP figure of S$46,832.

The transformation of our country has led to rapid increase in the cost of living as suggested by historical Consumer Price Index (CPI) data. Using 2004 as the base year (=100.0), the CPI was 31.9 in 1961 (1960 figure not available), 74.7 in 1983, 94.3 in 1996 and 101.4 in 2006. (Source for statistics: http://www.singstat.gov.sg/)

Senior Singaporeans played individual minor, but fundamental roles in driving this economic miracle. Back in the 1960s, through the 1990s, they probably could not have imagined, how with hindsight, their salaries, by the same token their CPF savings, will appear so meagre today. Likewise they would not have expected the cost of retirement to be so expensive.

It appears that the pioneer generations of Singaporeans have become victims of their own hard work and success. Having earned Third World wages and made Third World savings in their younger days, they suddenly find themselves living, and dying, under the weight of First World costs.

Over the years Singapore has accumulated substantial wealth, including those made through investments worth millions by the GIC and Temasek Holdings. No one guarantees workers above 62 will find good paying jobs and the proposed compulsory annuity’s payout of $250 to $300 is a drop in the ocean by today’s costs of living. While we applaud our government’s initiatives to stretch our retirement savings, it is high time we tap on our riches to help those with inadequate CPF monies to overcome the disparity of Third World savings, First World costs.

It is increasingly urgent for the government to lower the cost of living for retired Singaporeans. This could be done by co-paying for their essential expenses, such as medical, healthcare and public transport. This should not be viewed as pouring resources into a bottomless pit. Just as government investments into the economy through mega-projects like the IRs and hosting of F1 are now rewarding handsomely, investments into such schemes will generate the economy and the welfare of our people.

The CPF Board website states “CPF ensured that workers could support themselves with dignity in retirement”. Would the government play its part to fulfil this?

Are you sure return on investments are not taxed? I’m sorry if I sound totally uninformed about this but if you could point me to a source on this, I’ll greatly appreciate it.

Like you, I think an annuity is beneficial. However, I don’t think that it should be compulsory. Perhaps voluntary would make the system untenable because of low participation rates but I should think that people should be given the option of opting out. Perhaps the criteria for opting out could be make a little strict by requiring some form of evidence that the person has enough to support himself or herself till 80. It might be a matter of principle for me that people should be given a choice, just that they will have to face the consequences if they make the choice, e.g. having a lower priority in organ transplant queue if one opts out of HOTA.

Thanks for your kind compliments. I’ll continue writing my thoughts and if it will help spark some thoughts on the issues I’ve raised, I’m glad that I wrote about it.

However I will like to add a few info titbits here. Firstly, although the US government bonds have a higher rate of return, they are taxable. Hence your real return is lower. In the case of Singapore, our returns are not taxed. Hence after tax deduction, the returns will more or less be on par.

Secondly, though I do not wish to state my stand on the forced annuity, I will like to share that I believe that delayed annuity (the concept behind this forced annuity) is really beneficial. The expected life expectancy has increased and this delayed annuity will be useful as it provides some money when we are too old to work and we do not have to be a financial burden to our next generation. Of course what I am saying is that we should be more financially responsible and invested in this delay annuity ourselves instead of relying on the government.

Our government have some control over our lives (like all governments over their people), we have control over a large part of it, how we can educate or empower ourselves over the choices we make. Aaron, once again keep up the good work and I will be back real soon-enjoying your wonderful articles

If you looked at the above statistics as of 2006 given by the Statistics Department, you would realise that the number of people going to withdraw money out of their CPF savings would increase tremendously for the next 30 years or so. This would seriously affect those monies that have been taken away from the CPF Board for investments overseas. Could this be the real reason that has propelled the govt to act in the way it is acting now?