Is CPF a PONZI SCHEME?

[Private First Class]

I just found out from my friend, who is a finance professional, the meaning of PONZI SCHEME. We discussed the case of SUNSHINE EMPIRE where the boss ended up being charged.

Basically a PONZI SCHEME is an investment scheme that doesn't actually make money from investmetns. Rather, it takes money from later investors to pay to earlier investors (with returns + capital) to create the impression of high returns from "investment".

My first question was: IS CPF A PONZI SCHEME?

No one actually knows where our CPF money is going since they don't publish details of accounts. But we KNOW that they lost billions of our CPF money in overseas investment such as Suzhou, Hangzhou, Shin Corp, Merrill Lynch, Standard Chartered Bank. In fact, they even admitted that there was a lost.

So, if they are actually LOSING money, then where are they getting the money to pay out when people withdraw their CPF at age 65??

Answer: from the contribution of CPF "investors" who are younger. Who in turn get "reimbursed" by younger generations later on etc.


So the thing is, is THIS WHY they are increasing the CPF withdrawal age from 62 to 65, to delay payouts???


Second thing, is THIS WHY they are SO concern with the 'greying population', because in a few years time there will be MANY more people withdrawing their CPF with not enough funds injected from the younger generation?? And they have to fight this problem by getting in FTs to becoming Sinkies to bolster the CPF fund??? In order to pay out those older ones who turn 65??

Thirdly, is this a SKELETON IN THE CLOSET which is why they are so frightened of oppositions coming into power, to the point that LKY threatened to send in the army in case of a "FREAK RESULT"??


Answers are desired please... anyone can comment?

 

[ponpokku]

this has been debated to death.

give u the conclusion:

micro implementation aside, on the whole CPF is beneficial and necessary and truely a good insurance, on the bright side. on the darkside, it is at least a necessary 'evil'. think about it, on top of ur salary, ur boss is oso paying for ur retirement.

to look further,

the problem here is, govt didnt give enuff option for the withdrawal. last time ppl withdraw all at once then some, yes some, tio conned or put into bad investment then in the end they lose their money, some pretty bad situation. basing on that alone govt decided to implement repay by installment, then extend age limit, hantam everything to CPF and other monkey business later on, and then a lot of kpkb and speculation from all sides after that.

the reality with every implementation is usually some cok ups in the beginning. so the first few batch of CPF withdrawal, sure got ppl got high after see so much money at once and lost their footing. the positive steps to do is to provide infomation, warnings and education for ppl eligible for withdrawal prior and after their withdrawal. but then pappies that time cannot tahan blackmark one. got any problem the solution is ban ban ban. they cannot admit that they didnt do enuff homework or didnt anticipate the possible social problems that comes with it.

should at least give the option to choose, whether it's one time u die ur problem, or separate over, say 10-15 yrs, or lastly repay by installment till u die. like that no ground to make noise liao.

but of cos i dun expect incumbents to do things that facilitate the public. most of the time they would rather keep their own workload at minimal.

 

[ponpokku]

on the losses on their investments, dun worry, they arent that patient to play with ur CPF. just a few more increments in GST and whatever price hike they can to get it back. they are shameless on these things nowadays.

 

[cancer81]

I doubt that GIC and T-Holdings were playing with CPF funds...

CPF should be doing other kinds of investments or holding onto bonds issued by those two bodies and not simply giving them funds to play with....

while GIC and T-Holdings have made wrong decisions, the impact should be kept apart from CPF.

 

[appleVorange]

It is if they use all manners to prevent one from withdrawing his/her savings.

 

[earthyblue]

My first question was: IS CPF A PONZI SCHEME?

So, if they are actually LOSING money, then where are they getting the money to pay out when people withdraw their CPF at age 65??

CPF is not a Ponzi scheme, however there are certain areas that need fine tuning and depends whether the govt wants to fine tune it.

They have to use the money for investments somewhere. 1 portion for HDB loans where they charge 2.6% and give back 2.5% to those who have money in CPF.

Medisave and Special accounts are practically money being locked in for a long long time.

Why does the govt want to increase retirement age from 62-65 years old? Because this is the only way for them to lock in another 3 more years for CPF by increasing from 62-65. So now if we are in 30s, by the time we reach 60 or 65, I forsee retirement age to be at least till 70.

 

[idkelvin]

or maybe if they are elected for an even longer period of time, they will repay u by burn give you at wad ever interest rate u wan..
gt the cpf money still can get money from welfare or not? even get both also not enuff for old people lah.. rent up food up all up..
einstein say anything goes up muz come dw.. here we only have price go up nv down

 

[Wong K-Y]

Dont care whatever they invest make profit or make loss. When reach retirement age, just give me back the money plus interest can already. If no longer around, pass it to my next of kin. We know ourself that we dont have any discipline of holding on money, espically one large sum.

 

[iluvit]

its a ponzi scheme. take in young ppl money to pay the older ppl money ( who are retiring and will withdraw )

they oso can use the money to invest..
like someone loh. lost $50 billion in an 'investment'

 

[goenitz33]

Seriously if each and every SG person who have CPF now were to force government to give it back to them in the form of cash, do you think the government is able to?

 

[ponpokku]

Seriously if each and every SG person who have CPF now were to force government to give it back to them in the form of cash, do you think the government is able to?

that is not realistic. credibility is one important feature of modern finance. withdrawing all = zero credit. market cannot function. it's like asking the banks to meet all it's customers' withdrawal in one shot. probably didnt even have that amount of cash in the first place. we can only keep a good watch but not bankrupt it.

 

[[[小马哥]]]

this has been debated to death.

give u the conclusion:

micro implementation aside, on the whole CPF is beneficial and necessary and truely a good insurance, on the bright side. on the darkside, it is at least a necessary 'evil'. think about it, on top of ur salary, ur boss is oso paying for ur retirement.

to look further,

the problem here is, govt didnt give enuff option for the withdrawal. last time ppl withdraw all at once then some, yes some, tio conned or put into bad investment then in the end they lose their money, some pretty bad situation. basing on that alone govt decided to implement repay by installment, then extend age limit, hantam everything to CPF and other monkey business later on, and then a lot of kpkb and speculation from all sides after that.

the reality with every implementation is usually some cok ups in the beginning. so the first few batch of CPF withdrawal, sure got ppl got high after see so much money at once and lost their footing. the positive steps to do is to provide infomation, warnings and education for ppl eligible for withdrawal prior and after their withdrawal. but then pappies that time cannot tahan blackmark one. got any problem the solution is ban ban ban. they cannot admit that they didnt do enuff homework or didnt anticipate the possible social problems that comes with it.

should at least give the option to choose, whether it's one time u die ur problem, or separate over, say 10-15 yrs, or lastly repay by installment till u die. like that no ground to make noise liao.

but of cos i dun expect incumbents to do things that facilitate the public. most of the time they would rather keep their own workload at minimal.

Ya , I knew some folks their parents last time withdraw all out scare gov eat up their CPF money .

sadly some can't manage their money well and spend all finish.
So that why you can see some old folks still working.

but that't apply for the early batch.

even now they delay also cause problems.Elderly still go out work or some even sell tissues paper or pick up cardboards as usual.

why?Well I feel is due to global inflation over these years.

can't keep up.Inflation too fast.

These problem somehow also have to blame those greedy businessman.

Gov now also in a confusing states.Over these 5 years,I can see they are testing their plans but sadly it don't seem please most singaporean.

I feel SG is like bank. They use your despoit money and invest.
every year slowly pay some interest.

hmm that why you can see some new candidates are former working in banks?

 

[tequila_powered]

I suggest a read of Economist magazine of three issues ago. The weekly focus was on pension schemes worldwide. Many articles in there discussing different aspects different issues including aging. In essence, more and more of the much-touted western democracies are either going towards or are already implementing some of the schemes underlying CPF.

eg
defined benefits vs defined contributions
opt-in vs optout
raising withdrawal/retirement age, limiting early withdrawal
payasyougo
etc

While the rate of contribution can be objected (too high?), the general principles behind CPF system (the policies of the mechanism, taking aside the question of the rates or making it easier for some to be used earlier for more area) is essentially starting to be used worlwide, with some already implemented. Of course, that doesn't mean some parts cannot be tweaked. But addressing the title, is CPF a ponzi scheme that the rest of smart folks in democracies worldwide are heading to blindly, chucking aside their previous vaunted pension schemes?

 

[cancer81]

pension schemes are in essence too heavy on the current generation of workers as their income taxes will go towards paying the retired.

Quite a few European nations are discussing increasing the retirement age iirc. Which is a sacrilege of human rights I tell ya.... all the over 50s should break their knees and claim disability from their governments

 

[ponpokku]

Ya , I knew some folks their parents last time withdraw all out scare gov eat up their CPF money .

sadly some can't manage their money well and spend all finish.
So that why you can see some old folks still working.

but that't apply for the early batch.

even now they delay also cause problems.Elderly still go out work or some even sell tissues paper or pick up cardboards as usual.

why?Well I feel is due to global inflation over these years.

can't keep up.Inflation too fast.

These problem somehow also have to blame those greedy businessman.

Gov now also in a confusing states.Over these 5 years,I can see they are testing their plans but sadly it don't seem please most singaporean.

I feel SG is like bank. They use your despoit money and invest.
every year slowly pay some interest.

hmm that why you can see some new candidates are former working in banks?

the first few batches who got their CPF, they been thru hard times, some even went thru WW2, and a lot of them had lower education. they had a false sense of insecurity, feeling money is best in their hands, hide under their beds better than keeping in a bank acct. some just got overwhelmed by the sudden influx of zeros in their acct and loose their footings. then they lost it.

but as the populace got more matured and educated, such things are less likely to happen. still happens, but definitely less. this is not a problem seen only in sg. the father of one of my japanese fren starts buying expensive stuff every now and then after he got his pension. golf clubs, hi-fi sets etc. not that he's ever into these, but a sense of existance that he's still alive and kicking and can do wadever he likes or still 'in with the crowd/fashion'.

increasing the age limit is controversal... but think about it from another way, ppl are living longer, this is a fact. i feel that a proportionate amount of work is beneficial. at least better than patrolling the streets with a bird cage in hand or sitting ard doing nothing aft 62yo. of cos not heavy duty work like u see some ah mahs pushing full trolley of empty carton boxes.

 

[cancer81]

well.... like my dad put it in his rather straightforward way

if he was to retire and just nua at home, he will get sick very quickly.

As long as you are mobile, mentally active then you should go and do something. Even my neighbour who retired and is recovering from a bout of throat cancer is driving a cab...

he just wants to hit target (profit 100 dollar) and then call it a day. And he gets there rather easily on the good days. He can be at home shaking leg and playing with grandaughter by noon...

while I heard of another case of taxi driver but keeps going home to rest when he hear got traffic jam on radio.... while he seems to be in one place all the time...

 

[tequila_powered]

Some of the mentioned Economist reads. Not Gospel but should be worth more than the stuff being thrown around in TemasekReview.com I reckon.

http://www.economist.com/node/18529505?Story_ID=18529505

Pensions

70 or bust!
Current plans to raise the retirement age are not bold enough

http://www.economist.com/node/18433194

A nudge and a wink
How to persuade employees to provide for their old age

http://www.economist.com/node/18502005

Too much, too young
Watch your wallets: the baby-boomers are beginning to retire

ps note that Economist has some kind of reading limits for non-subscribers. I think it could be 10 articles or so per a certain period before it locks down and gently asks you to subscribe. So don't suka suka click over all unless you are ready to sit down to read.

 

[xdivider]

I just found out from my friend, who is a finance professional, the meaning of PONZI SCHEME. We discussed the case of SUNSHINE EMPIRE where the boss ended up being charged.

Basically a PONZI SCHEME is an investment scheme that doesn't actually make money from investmetns. Rather, it takes money from later investors to pay to earlier investors (with returns + capital) to create the impression of high returns from "investment".

My first question was: IS CPF A PONZI SCHEME?

No one actually knows where our CPF money is going since they don't publish details of accounts. But we KNOW that they lost billions of our CPF money in overseas investment such as Suzhou, Hangzhou, Shin Corp, Merrill Lynch, Standard Chartered Bank. In fact, they even admitted that there was a lost.

So, if they are actually LOSING money, then where are they getting the money to pay out when people withdraw their CPF at age 65??

Answer: from the contribution of CPF "investors" who are younger. Who in turn get "reimbursed" by younger generations later on etc.


So the thing is, is THIS WHY they are increasing the CPF withdrawal age from 62 to 65, to delay payouts???


Second thing, is THIS WHY they are SO concern with the 'greying population', because in a few years time there will be MANY more people withdrawing their CPF with not enough funds injected from the younger generation?? And they have to fight this problem by getting in FTs to becoming Sinkies to bolster the CPF fund??? In order to pay out those older ones who turn 65??

Thirdly, is this a SKELETON IN THE CLOSET which is why they are so frightened of oppositions coming into power, to the point that LKY threatened to send in the army in case of a "FREAK RESULT"??


Answers are desired please... anyone can comment?

CPF is not ponzi, but CPF Life is in a way. Think abt it..........

 

[pyu]

You do realize that in Singapore (well anyplace really), the government can simply create more money to pay you? You are getting it in SGD, you know? What's a little more inflation between the state and the people?

That was said in a joking tone, but it is really no joke. That is why government debt is different from say, the debt of a company or personal debt. The government can simply create more currency to pay it off.

If you are willing to take it.

Therein lies a very, very good reason not to do this. Perhaps some other peeps who are well-versed in economics and finance will come in and talk about it.

 

[cancer81]

oh not the print money to spend method....

you do not see the USA improving their balances with this move do you?