CPF is a time bomb

[Sammyboy RSS Feed]

An honorable member of the Coffee Shop Has Just Posted the Following:

CPF is a time bomb

June 6th, 2014 | Author: Contributions


CPF is a ticking political time bomb that the govt. is trying to defuse without much success. The 2.5% interest rate paid on ordinary balance is just a political ‘bribe’ paid to placate the people. So what if it is 2.5% p.a. risk-free, can you really take out your CPF funds if you need it?

The long journey into CPF hell was simply political – LKY wanted to harness economic power using political influence. From the late 60s to 70s, the Singapore govt. pulled in foreign MNC investments and manufacturing expertise via tax incentives like pioneer status, etc. As the Singapore economy took off, LKY initiated the CPF as a forced saving plan or accumulated capital source. To achieve full employment, husband & wife were required to go out to work. The ‘Stop at Two’ family planning policy was not Malthusian in intent – the true intention was economic! Less time spent on child bearing & upbringing meant more time spent working! That was why LKY is still so unrepentant to this day – it was economic not social.

The CPF was harnessed & channeled to drive Govt. linked companies for the domestic economy via population first followed by outward investment via Temasek Holdings & GIC. Truth be told, LKY was more communist than capitalist. He believed that the govt. should be in control of economic power in addition to political power. No surprise then that local entrepreneurship in Singapore is quite stagnant plus SMEs are quite weak.

The govt. has dominated the domestic economy with over 60% as well as acquired over 80% of land through the Compulsory Land Acquisitions Act. Our own CPF was used for funding GLCs and to acquire vasts tracts of private land for pennies.

The 2000s destroyed Singapore govt’s capital intensive investment policy – ACC 1998, Internet & China’s rise all contributed to the demise of past economic growth pillars! Post-2000, what has kept Singapore seemingly growing economically are foreign population growth ponzi, the construction bubble and the IRs {casinos}. As our local PMET class is disintegrating, the CPF is not growing as fast to accumulate capital – Temasek Holdings has to raise capital via capital markets.

The current govt. policy of PROFIT MAXIMIZATION across all sectors – GLCS, STAT BOARDS & Govt fees & levies – they are pressing for cost push inflation. What are the CPF implications? Inflation robs CPF balances as 2.5% is insufficient against rampant inflation. It also gives the govt. an excuse to retain more CPF sums to meet inflation for retirement. You see, it is all a game where HEADS THEY WIN, TAILS YOU LOSE!

CPF-is-a-time-bomb


Click here to view the whole thread at www.sammyboy.com.