For those who are earning <$2k, savings and insurance are their less priorities because they are having a hard time providing for shelter and food.
Are they, assuming we're talking about citizens and basic shelter and basic food?
It'd certainly help if the government determined what the poverty line is in Singapore, updated it every year, and counted the number of households below the poverty line. I don't know how it's possible to declare that poverty isn't a problem if you won't even measure it at least reasonably well against a well determined benchmark.
Remember Maslow Hierarchy of Needs? The low income group has to satisfy the lowest pyramid first before they can go to higher level of needs.
CPFL is under long term savings which is the 2nd order.
....But it's for basic shelter and basic food from age 65 onward!
BRS-level CPF LIFE, Standard Plan, age 65 payout start is about $760 per month with no escalation to combat inflation. That's a lot less than, say, $1,800/month, isn't it? $760/month is certainly not a champagne and caviar income stream.
If you're talking about someone who's trying to live on, say, $800/month or less of income, you might have a point. But CPF contribution rates are lower for earned income below $750 per month, so this stuff all fits together fairly well. (We could certainly quibble about the exact numbers, but there was/is some logical policy design thinking applied here.)
Poverty sucks, no doubt. But elder destitution sucks even more, no doubt.
I refrain from disagreeing with the alternative that one got choice to cut one's NRIC as an option to terminate CPF cause I thought that was dumb answer
Dumb leads to dumb, which is the whole point.
For example, it'd be terrific if CPF Special, MediSave, and Retirement Accounts earned 8% interest on every dollar. But they don't. They earn attractive interest that's well above market rates (and getting more above market lately). It's dumb to discuss alternatives that don't exist, except possibly in broad policy proposal terms, especially when they are fully funded policy proposals. There is no "breakeven age" for CPF LIFE based on 4+% interest forever and ever -- there is no such alternative. (Well, except for my "dumb" counterexample, if you'd like to choose it.) There's no God given right to above market interest on pre-tax/never taxed dollars.
"Oh, but the old system was different...." Yes, it was, but it's no longer available. Moreover, those under the old system also "enjoyed" lower contribution rates (particularly on the employer side, which given how wage elasticities work means they were/are worse off than younger cohorts), lower median real wages, much less bonus interest (which only started in 2008), and fewer or no free money top ups. In other words, their CPF account balances are substantially lower -- and thus they are substantially poorer -- even with the same career experience as somebody working under the new system. And everybody under the old system has to start payouts no later than age 70, too.
With respect to the "oh, bonus interest wasn't tied to CPF LIFE," that's dumb. It doesn't have to be
rule tied to CPF LIFE to be highly
mathematically tied to CPF LIFE cohorts, which is exactly what it is. Bonus interest benefits younger cohorts much, much more than older cohorts. Bonus interest is not paid retroactively, for the part of your working career that spanned 1988 through 2007, for example. But if you started your working career 10 years ago, then your entire working career will enjoy the benefits of bonus interest...and you're a CPF LIFE cohort.
