Wednesday, 21 May 2014

The 3 idiots in the CPF debate

The CPF is a disaster after numerous tweaks and short term planning made by the PAP government. Contrary to what a typical PAP supporter may claim, the CPF retirement scheme one of the many social/economic/judiciary infrastructures and systems passed down by the British Colonial Government. One simple comparison of what the original CPF looked like is to read up and compare with Malaysia's present EPF system which have hardly changed if at all. Of course, given the amount of propaganda peppered in Singapore, the typical PAP supporter can even tell you Lee Kuan Yew invented the HDB, CPF and even the internet. That being said, today's topic is about the simplicity of the PAP MPs and how shallow their knowledge in CPF is actually preventing them from making the right proposals to the government. Read through this Today's article, and it reflects how astoundingly ignorant PAP MPs are in the CPF aspect:

1) Use less CPF for housing and you can retire!

Ang Mo Kio GRC MP Inderjit Singh suggested that, in tandem with more affordable housing, the CPF Board could allow Singaporeans to use less money from their OA to buy a property. “If we use less for housing, we will have more for retirement. We start earning 4 per cent (interest rate) earlier,” said Mr Singh, who also suggested raising the interest rates, which currently stand at 2.5 per cent per annum for the OA and 4 per cent for the RA.

Basically, Inderjit Singh said: Use less in OA means more for retirement. The next question to him is then what happened to home ownership? Are Singaporeans going to pay more in cash for HDB flats with such ridiculous prices? Fertility rate is already at all time low and denying Singaporean couples their love nests is going to worsen that. Bad idea, stupid MP, NEXT

2) CPF Board is your trusted Fund Manager!

Chua Chu Kang GRC MP Zaqy Mohamad proposed an investment-linked plan managed by the CPF Board to pool together investments from different members and provide higher returns. Mr Zaqy noted: “What Singaporeans are looking for are higher returns but, at the same time, they know there is someone trusted like the CPF watching their backs.”

Did the CPF board make it to the Forbes' Top Hedge Fund Managers list? If Singaporeans prefer ILPs, they should go to the private banking sector or even the insurance giants like Prudential and AIA. Zaqy is simply reinventing the wheel.

Mr Zaqy also called for greater flexibility in the Minimum Sum scheme, which requires Singaporeans to set aside a certain sum in their CPF, so they can receive monthly payouts when they reach the draw-down age. The Minimum Sum has been increased over time to account for inflation.

How can you account for inflation by locking up more funds? Raising interest rates should be the long term solution to inflation, not raising the Minimum Sum. This is really the apex of stupidity, Zaqy has really done himself in in an area where he is not familiar with. Yet another out of touch PAP MP, NEXT

3) Making the people pay more for CPF will enhance savings!

National Trades Union Congress deputy secretary-general Heng Chee How reiterated that raising CPF contribution rates is only one way to enhance savings.

What a talent... Thank you Mr Obvious.

Citing the plight of workers who have low disposable incomes, unionists said employers should bear higher CPF contribution rates.

PAP-appointed unionists are really stupid, what makes them think the employers will not account for these CPF contribution rates and lower the take-home pay?

So before the PAP apologists blast me for blindly criticizing, here are my REAL solutions:

1) Solve the structural dissonance of CPF, Temasek Holdings/GIC and real returns
Nationalize Temasek Holdings and GIC, and make them pay back all profits made from SSGS bonds (aka your CPF money). CPF interest rates can only be raised by raising the lending rate of SSGS bonds, henceforth, Singapore should open up the SSGS bonds to reputable private fund managers like Aberdeen and Templeton, and explore the option of direct lending to finance student education loans and housing loans.

2) Abolish the Minimum Sum, combine OA, SA and MA
How much you have in CPF is how much you get to spend in the areas of housing, medical or retirement. This is a shift in financial responsibilities and correcting the perception of bankruptcy. Do you know when you emptied your MA, you must pay in cash even when you have hundreds of thousands in OA and SA? Or you have to pay your housing loan in cash when you emptied your OA despite having hundreds of thousands in SA and MA? This is the design flaw of the CPF. Money management should be handled by individuals contributing monthly to the fund, not the CPF. Why are Singaporeans entrusted to handle a rifle at the age of 18 but are not entrusted with their own money at the age of 55?

3) De-regulate CPF, propose alternative retirement package from private sector
How good is CPF when it doesn't have competition? By simply comparing it with Retirement Schemes in other countries, the CPF actually sucks in terms of returns. It is time we privatize the nationalized retirement scheme, like Singtel, Singapore Powers and SMRT (maybe not the public transport network as the PAP government privatize the profits and nationalize the losses)

Ideally, CPF should be converted to a nationalized pension scheme with universal healthcare and the CPF contribution rate a form of tax. That of course is out of the picture given how hopelessly subscribed Singaporeans are to the PAP doctrines.

Friday, 16 May 2014

3 reasons why Singaporeans can never save enough CPF

Currently, we have more than 55% of the CPF account holders not able to meet the Minimum Sum. For Singaporeans who are not comfortable with numbers, you can simply have a little walk down the streets and look at the abject poverty happening live. Some of them could be working as cleaners, while the unfortunate ones will be picking cardboards or cans from bins to bins. It is clear most of these poor people are old people who are well above their CPF Withdrawal Age of 55, which begs the question: What happened to the CPF system?

For the reasons why CPF funds for most Singaporeans is inadequate, Singaporeans please do not bash yourselves for not saving enough (in fact we are among the world's highest savers). The PAP may try to quash your ego claiming you are worse off than the foreigners they brought in, the fact is they are pretty good at bullshit.

Here are the 3 real reasons why:

1) "Liberation" of CPF funds to use for housing
Take a look at this chart of the housing price index from the late 1980s.

In 1989, the CPF was "liberated" to allow Singaporeans to use its Ordinary Account to purchase a HDB flat. This easy credit resulted in a surge in HDB prices and has since never came down. The artificial hyperinflation of the HDB prices resulted in more Singaporeans having lesser in their CPF for retirement. And so, this is what happened to the CPF first.

2) CPF Interests depressed
Some years later after the property surge in 2002, Ho Ching became the CEO of Singapore's sovereign wealth fund company Temasek Holdings. Her husband, Lee Hsien Loong, became Prime Minister about a year later.

CPF interest rate has been depressed at 2.5% ever since the Lee Hsien Loong and Ho Ching combo came into effect. With inflation rate outpacing CPF interest rate, Singaporeans naturally will not be able to have sufficient funding for both the overpriced housing and retirement.

SSGS are called "Special Singapore Government Securities". What made them special? Well they are cheap loans (at 2.5% and 4%) given exclusively only to Temasek Holdings and the GIC.

How awesome is 2.5% and 4%? Just imagine if your university education loan is at 2.5%, or your car loan and mortgage loan permanently stuck at 2.5%. Mature adults servicing these loans will know how many thousands in savings you will have in a year.

Why did the PAP Government appoint Temasek Holdings and GIC as the sole fund management companies? The answer is political, and hence the problem is political. It is so politically sensitive I may be haul up to jail or face a letter from Drew & Napier on the very next day if I dare publish this.

Thursday, 15 May 2014

Bursting of the Population Bubble in Singapore

Singapore is overpopulated. This is neither an issue up for debate, nor a biased perception held by Singaporeans - it is a fact backed statistically in terms of population density (ranked 2nd in the world), anecdotal evidence in the continuous breakdowns in public infrastructures and the resulting inflation from the increase in domestic demand. Being the only one responsible entity culpable for the bubble, the PAP government brought in an influx of foreigners calling them talents, so they could depress wages, bring up property prices and rapidly increase the government revenues and salaries of the Ministers and MPs. The result is everything any government wished for and the PAP became obsessed with the amount of taxes and CPF they are collecting each day. The PAP created the population bubble and it is now bursting.

The key question behind a population bubble is what happens when it burst. Like the housing bubble and credit bubble, the sole similar financial impact that concerns every one is a heavily damaged economy that will take years to recover. The artificially inflated domestic demand will eventually cause a runaway cost of living, which already tops the list of grievances of Singaporeans. Resulting from the similar demand, the public infrastructures are giving way and causing more inconvenience. Competition for jobs and wages intensified and created an employment environment based on cheap wages and low productivity as employers become more interested in getting foreign worker quota than improving their company operations or getting new machines to be productive.

The social costs from the population bubble is more prevalent. Stories like employers terminating Singaporeans in preference for cheap foreign workers become a norm, and it is no surprise that the yearly-released statistic shows that Singaporeans unemployment rate is always higher than Permanent Residents.

Most unhappy people in the world? Checked
Least engaged workers in the world? Checked
Highest income gap among comparative economies in the world? Checked
Highest poverty rate among comparative economies in the world? Checked
Lowest wages among comparative economies in the world? Checked

Highest number of elderly employed? Checked

"In 2009 as well, employed older persons (aged 65 and above) made up about 3.1% of the resident Singapore workforce. This was an unprecedented high compared historically." 

Without factoring inherent structure unfairness in terms of CPF and National Service, it is clear Singaporeans across all ages have paid heavily in terms of social costs for the formation of the population bubble at the current number of 5.5 million.

The bursting of the population bubble will result in higher crime rate and intense polarization of society between the rich and the poor, Singaporeans and foreigners. Xenophobia and racism will be rampant as they continue to be fanned by PAP's pro-foreigners policies. The bursting will see more rebellious acts like an open street protest and fights between the Police and Singaporeans. Presently, the Police has admitted they are understaffed, and eventually, they will be overpowered. Once the Singapore Police loses its control over the population, there will be no law and order. Anonymous acts of sabotage or even terrorism against the PAP Government or their supporters will intensify. In a country where there is oppression of the people, assassination is only a matter of time, even though at present, the bodily harm did against PAP politicians are done by mental cases. Politically-motivated crimes will shoot up - some will be caught of course, but how many people can you jail? Employees, both foreign and locals, will stand up against exploitation through strikes and riots. The country will continue its chaotic state until the day the PAP loses power.

It is at Singapore's best interests that the PAP lose power by 2016, because retaliation will be stronger as the PAP continues their anti-Singaporean policies in the name of GDP. The problem of the population bubble is political, and hence interim tweaks and fixing of policies and ramping up of infrastructures will never be the solution.

The solution itself must be political, the message must be anti-PAP.