CPF: B in global rating is wrong/ Ang mohs sotong on CPF Life

In CPF, Financial competency on 14/07/2015 at 4:49 am

Actually we should be in C or D not B.

When we were upgraded to B from C in 2013, the constructive, nation-building BT reported: The Republic has moved up sharply in the latest Melbourne Mercer Global Pension Index rankings, placing its Central Provident Fund (CPF) among the top 10 retirement-income systems in the world.

Singapore jumped from 13th to seventh spot, with its overall index value at 66.5 this year, up from 54.8 last year.

Although the Republic moved up a grade – from C to B – Mercer said the CPF system has room for improvement in some aspects “that differentiate it from an A-grade system”, although it had a sound structure and many good features.

The 20 countries in the rankings were scored in three key areas: adequacy, sustainability and integrity.

Denmark, the Netherlands and Australia held onto their top three spots. Denmark, the first country to achieve an A grade last year, maintained it this year, despite its overall score falling to 80.2 from 82.9.

Mercer said: “Denmark’s well-funded pension system with its high level of assets and contributions, the provision of adequate benefits and a private pension system with developed regulations, are the primary reasons for its top spot.”

Singapore’s B grade puts it in the company of other highly developed countries such as Germany, the US and France.

Mercer said the Republic’s overall index rose mainly because the Organisation for Economic Co-operation and Development (OECD) revised its approach to recognise the CPF’s three separate accounts, instead of just its retirement account.

The OECD also updated its data on private pension coverage.

Obviously Mercer and the OECD don’t realise how CPF Life is structured. It sucks as this piece explains why (Warning I quote some chim analysis which is no BS like Roy’s analysis).

We get screwed even though it’s our own money that’s funding our retirement.

Because as Chris K (writes for TRE but is no cybernut) one of the persons I quoted in above link concludes: The writer does not accuse the government of deliberately profiting from the financial risks of longevity.  However, the triple provision, triple redundancy or in the strictly local parlance “kiasu, kiasi, kiabo” of absolutely ensuring not a single cent is spent on retirement funding, can only mean that there will be excess money left from CPF LIFE which reverts back to the government.

Some may call this conservative financial management but there is a very thin line between such conservative financial management and indolent financial management which arises from coercion and monopoly over retirement savings. Undoubtedly, the usual price of not getting more from their retirement funds is paid by you and me.

(My emphasis)

Btw, an FT actuary tells me that Chris K argument is financially sound.


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