Singapore's economic policies are complicated and often misdirecting. I'll break down the misconceptions.
The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). The returns are specifically decoupled from the real long term returns. This has historical roots in the government needing vast capital financing. They make enormous amounts of the delta between the short term interest rate and long term capital gains. Singapore has no oil or natural resources, but it's sovereign wealth fund has AUM in the regions of countries like Norway which do for this reason. It is not a shock absorber like the article suggests. The withdrawal terms are strict - housing, a significant medical expense and retirement are the only real ways to get money out of it.
"Trying to keep people employed" is a goal, not a policy. In fact the Singapore government maintains a large worker supply through immigration. The foreign worker population, ~30%. The main goal of the government is to maximize the absolute number of people working.
The reason it raising the retirement age is effective in workforce participation is because most people have no choice. Retirement only pays out after the age. The working life of an average Singaporean has seen 37% gone to CPF, maybe another 10% to income taxes, another 5% to GST, road tax, property tax, etc. After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees.
I had the privilege of getting a working gig in Singapore for a small AI startup: such a well run country! There is a sense of community for helping by employing people who need jobs, the police were friendly and I felt very safe there (I like to take long walks either early in the morning or late at night and I felt very secure.)
Amazing what the people and government have achieved since the end of WW2. 100% respect for them.
A side comment: I enjoy listening to English language news from many countries around the world to get different viewpoints. News media from Singapore is very interesting, indeed!
I spent years in Singapore and loved it there. Never had to face road rage (which so many of us experience daily several times driving in Texas! NextDoor is full of these stories) or aggressive behavior by anyone in authority including police and immigration officers. I know many people find Singapore boring after a while but it didn't bother me much. On the flip side, the cost of living is high as a foreigner and traveling to the US is very tiring due to the long distance.
A confounding factor here is that savings behavior is cultural rooted: https://pmc.ncbi.nlm.nih.gov/articles/PMC6135367/. Studies show that people within a country can have substantially different savings behaviors, robustly correlated with their origin countries, even among people who are third generation immigrants. It’s a mistake to treat either the U.S. or Singapore as homogenous populations for purposes of this analysis.
75% of Singaporeans are ethnically Chinese so based on what you are saying it would be worth comparing SG Chinese to Chinese CN on regret since China has a much less robust safety net.
Both sides see declines when hit with economic shocks
We are talking about material impacts, not culture
You know who they didn't interview: those who regret saving so much. Many of those people are dead and so the regret is something we can only apply on assumption that they would. I've known a few people who unexpectedly died before they hit retirement age. I've know a few people who retired and died suddenly. The vast majority of people in a "first world" country have an expected lifespan of about 80 - but there is a statistical curve and people start dieing in significant numbers at 65, while you are not an outlier until you make it to near 100 (though some exist).
You need to have some emergency savings. You should save for retirement somehow. If you can structure the above as insurance - and you can trust the insurance - (I know a few cases where the insurance type system went bankrupt and those with a "policy got nothing") that is best.
Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.
Indeed. In fact, I would go further and say than, more than saving money, one should make preparations for a dignified passing should one's time come early. Living happy, dying before a gruesome disease completely erases that treasure. And, if destiny has it that one gets old enough, and one does so with little more than a camping tent, leaving this world because the night was too cold and one succumbed to hypothermia beats what most people get at the end.
People who save a lot are typically people comforted by sitting on a big nest egg. Saving a lot for retirement and then dying the day before retirement isn’t necessarily going to be a source of regret, because they had 30 years of warm fuzzy feelings about eventually hatching their nest egg. They could have spent it all instead, and had a life full of anxiety.
You’re looking for people who didn’t want to save but begrudgingly saved at the expense of their pre-retirement life and then died before they could enjoy retirement. That’s a much smaller group.
This is more fleshed out in the book "Die with Zero" which may be a bit too extreme.
But in general you have three things to spend in your life: time, money, and effort.
You don't want to spend all your time saving money because you'll run out of time eventually, but you also don't want to spend all your money saving time because you'll run out of money.
It's all about balance and thoughtfully understanding what you actually want and how to get it.
Money can be passed down to your children and grandchildren though.
If you follow the fairly common path of "various expensive, intermittent medical problems for a couple decades, a handful of years of very-bad medical problems, nursing home, then hospice care" in the US, and you don't have a shitload of money, you don't really have a savings of your own, you're just temporarily taking care of the medical and end-of-life-care industries' money. There's not going to be much to pass down.
This becomes more true by the year, as those costs keep rising faster than broader inflation.
You can do it before you die if you want to do that. They're not much helped by you sitting on it until you die.
You just get taken in by life though, it isn't even about saving for some idealized retirement to me. As you age and your parents get old and you have kids and a spouse you just live less and less for yourself. You have to adopt a mental state where you feel gratification in sacrificing for others, if you constantly regret the things you can't do because people depend on you, you will drive yourself nuts. That sort of "I am a reliable provider and helper" mentality lends itself to obsessively building up a "safety net" because you can feel good about how stable and safe you make your loved ones.
> Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.
I get it to a certain extent, don't live in poverty if you don't have too, but I am a major saver. I rarely buy new things if an old thing is working fine. If I die early at least my family will will be set.
Really the social safety nets in the US are basically non-existent so having a big savings buffer makes me feel a bit safer. Honestly dying early doesn't worry me too much, I'll be dead so doesn't bother me. What does worry me is the economy tanks and all my saving become worthless. Then I would have some regrets...
I save out of a combination of buying into minimalism as a kid (though obviously it's nuanced) but also out of laziness, lol.
As someone who used to save too much, I agree.
Numeracy questions are on page 20 here https://www.rand.org/content/dam/rand/pubs/working_papers/WR...
People who score well on probability numeracy are likely better educated and better paid and have more in automatic savings plans. So if someone is maxing out their 401k they don’t feel they need to save more.
The article shows that in the US there is a 25 point gap between high and low income on savings regret, and a 14 point gap between high and low numeracy scores.
In Singapore where savings are more automatic numeracy is a more powerful predictor.
Forced savings like done in Quebec, Canada is likely the best model for most people even though I dont like it as an individual that knows how to manage its portfolio. It also has the benefit of creating a sovereign wealth fund that can invest locally and be an economic driver but independent from the government.
I actually like the forced saving of Québec. I also have a defined benefit pension plan, a TFSA and RRSP but I am happy to be forced to contribute the RRQ for the general welfare of the province even though I know how manage my portfolio.
Considering that they also have to consider economic development in their investment decisions, the RRQ funds are well managed by the CDPQ.
"Saving regret" ought to also refer to when you have saved too much. The shocks in that case would be things like "inflation ate away all my savings before I got to use them" or "the government confiscated my savings via wealth taxes" or just generally "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."
> "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."
This is a particularly funny one tbh. A nation's kids _are_ the retirement plan. It doesn't matter how many numbers you put in spreadsheets dated for 20-40 years into the future, if in said future, there isn't actually anyone to accept those numbers in exchange for labor.
Raising kids in a society where people hate their community and don't want to contribute through things like taxes generally isn't a society that is good for kids and their development.
That seems like it causes a different category of problems than "I wish I had saved more but I didn't and now I have nothing"
This article seem to be confounding external impact with internal motivation.
Yes the jobloss impact caused the people to be unable to save and in turn they wished they have saved more.. but ignored is whether they could to begin with.
Of course external impact had little to do with internal procrastination.
It's not confounding at all. It's making the point that internal motivation, according to the study, has no major factor in savings regret.
It says that understanding risk (as operationalized by understanding probability) has a larger effect.
But it is also saying that the more external impact someone has, the more they regret saving more -- in the United States but not Singapore.
The study is explicitly saying that internal motivation does not seem to matter. And the article is arguing the reason why.
Maybe I read the article too fast but I didn’t get that takeaway at all?
It’s basically just saying that the uninsured catastrophic event risk in America magnifies shock events.
E.g., if you have a major hospital visit in America you’re way more likely to regret not saving enough, but in Singapore there’s basically no effect since hospital stays don’t drain your savings account.
That’s what I also got from this article
Not just healthcare stuff, but also apparently Singaporeans tend to have a lower unemployment rate, so they be able to recover from stuff faster
Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore (maybe even disproportionately so since there can be a long wait to get in, you are older and more settled at that point). Immigrants that get milked dry and go broke and jobless during a shock are booted from the country before they can be polled.
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Vs say US, where immigrants and those funding public housing are generally better off than the people getting subsidized housing. Public housing is more a progressive than regressive tax in the US, so quite dissimilar. Immigrants in US are on average far better off than those on public housing. Asking "but how is this any different" (after I already answered it, lol) over and over doesn't negate this, nor the fact that immigrants are like half of workers in Singapore vs only 10% in the US so the funding dynamic and dependency is far different.
>Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore
It's similar in Vienna where only native Viennese are immediately eligible for social housing, but outsiders will end up paying into the system without being eligible.
> outsiders will end up paying into the system
By definition, outsiders don't have to pay into the system since they already have a gov't somewhere else that is dedicated to them, just like the Viennese do.
>By definition, outsiders don't have to pay into the system
They absolutely do pay into the system when they move to and work in Vienna. By outsiders in this context I meant foreign workers. I assumed that was clear from the context of the discussion.
I think you can buy if youre PR and married (or old enough). If you are lucky you can receive your PR in 1 year.
The Singapore PR system is purposefully racist. If you are white, your probability of getting a PR and citizenship is way lower than someone of the Chinese race. The government does not want significant changes to the country’s racial composition.
How is that different from the US? Immigrants also get booted here if they lose their job. They also pay social security, Medicare, and other taxes but usually don't get the benefits unless they stay here for long enough and get a green card.
The difference is the number. Workers on temporary visas make up ~1% of the labor force in the US. And a large chunk of them will eventually get citizenship or permanent residency and qualify for benefits later in life.
Countries like Singapore and all of the Middle East meanwhile rely on a revolving door of cheap immigrant labor. In the extreme cases like Qatar 95% of the working population are on short term visas. Most of these countries don't have a pathway to citizenship at all for this worker class. You could live there, work and pay taxes for 10 or 20 or 50 years, but the day you "retire" you need to pack up and leave.
The US also has a huge pool of undocumented immigrants who don't get any benefits, don't pay into the social security system, and can be paid below minimum wage (because officially they don't exist). Any time this labor supply is threatened, the construction and agriculture industries rise up (and probably sponsor all those massive protests you see in the news).
No one is paying protesters, people like us in Minneapolis actually do organically hate the current regime and its apologists (you?) that much.
And undocumented immigrants pay around 25 billion dollars annually into social security
> probably sponsor all those massive protests you see in the news
Most Americans do not need to be paid to dislike fascism.
That sounds quite similar to the US.
"In Singapore, people who report never putting off difficult things are more likely to express saving regret than those who sometimes do."
That seems like what they should have been looking at re procrastination--conscientiousness.
I am not at all surprised that people who Take Care of Business lament not doing a better job (saving) and people who YOLO don't as much.
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>They’re failing to save because the world is rough, and their institutions don’t do enough to help them weather it.
Well, America is rough. It turned on hardcore capitalism mode for itself because a significant portion of its population wants to try and solo socioeconomic hardships and hates any one who doesn't want the same challenge.
But not to just blame the voter, lots of money is spent for setting up systems to be amenable to acquiring more money. The very richest have correctly made a bet that uprisings to displace the wealthy and politicians just don't occur here these days, and therefore there is no real threat or need to change the way things have been going for the last 25 years or so.
Isn't it more a cultural issue though? As a European, I think many Americans take pride and love to succeed "on their own" and accept they could "die trying" (exaggerating a bit, hence the quotes, but the feeling holds).
Yes, the systems are amenable to acquiring more money, but I would claim that all that the richest need to do is to push the idea that "anyone can make it" - which was probably (more) true 50 years ago, but is probably an illusion today (some comments at: https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...).
Edit: I do not claim one model is better than the other; just that the culture influences the outcome more than other aspects.
Most Americans I know in my middling years are counting on the government to support them in their old age, quite the opposite that you’re exposed to via online manipulation hitpeices.
Depends on which cohort of Americans you're talking about, but it's less that they see it as the government supporting them and more that they see it as the government "giving back what they owe." Social Security and Medicare have always been framed as something you pay into now and get back later in life, like you're lending money to the government. That's why most Americans don't view it as government support in the way Europeans do, and why they see no hypocrisy in spitting venom at "government handouts" while cashing their Social Security check and Medicare coverage.
And the government will - sortof. It is enough to eat and keep the heat on. However if you want anything other than a basic simple life (travel, hobbies...) it is easy to run out of money.
if by "culture" you mean rampant corporate propagandized media then yes. the US has historically been pretty close to europe over the last 100 years on many aspects. In the 70s there was legitimate debate about college being free. Now the debate is how much debt someone should take on. The overton window has shifted significantly since the 80s. We're now more like Russia with an entrenched oligarchy.
> Isn't it more a cultural issue though?
No. Culture is downstream of institutions.
A large part of it is originally rooted in racism if you look how the US implemented its welfare state. Many benefits were skewed towards white americans (GI Bill, right to claim land, redlining and social security). I'm sure most Americans aren't nearly as racist right now as back then but the being 'on their own' is linked to the 'don't want 'lazy' african americans to get benefits'.
How were Social Security and the GI Bill skewed towards white Americans, exactly? I haven't heard that before.
Like half of our budget goes to welfare (Social Security, Medicare, Medicaid, Income Security, etc). https://www.usaspending.gov/explorer/budget_function
Yes, the US spends by far the most on healthcare per capita, and still gets the worst outcomes. It's not about throwing money at problems. You have to actually solve them (and want to solve them).
Social Security is a separate tax in a separate fund (invested in T-bonds). If you split that out of the budget, the budget looks even worse. The boomers retiring is just going to be bonds maturing without the holder (social security) reinvesting the money.
Boomers are getting way more than they ever put in.
What annoys me the most about this is I'm like 80% sure none of those programs will exist by the time I retire.
And yet that GINI keeps rising and cost of living outpaces inflation over the past 40 years in housing, healthcare, and education. If you are bottom quintile, maybe bottom 2, you are poorer now than 40 years ago on average. Recent policy changes seek to drop the third quintile as well.
America is designed for rich people
The bottom quintile gets everything handed to them and it's still not enough. We all live at the mercy of them and their dysfunction.
Seeing an actual "Lucky Ducky!" in the wild is always a trip.
> Singapore's economic policies are complicated and often misdirecting. [...] it's sovereign wealth
Tangentially, I've had a similar gripe around how some US folks discuss Singapore's old rival Hong Kong. I see advocacy that "Hong Kong shows X works, we should do X here here", while ignoring the other half of the system required to make things work, aspects that they would not support adopting.
For example, celebrating its "tax freedom" while glossing over public/subsidized housing, and the revenues of an enormous sovereign-wealth fund.
The CPF sounds pretty clever. It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. It makes the government money. This sounds like a win win kind of policy.
To me it sounds like a tax structured in a strange way so it doesn't obviously read as a tax.
It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.
The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out. Most other countries have lower rates on their retirement schemes, which makes it feasible for more people to live on their savings for a few years before the government retirement scheme kicks in. E.g. in the US it's pretty feasible for the upper middle/lower upper classes to retire a few years before Social Security kicks in, especially if they're willing to live frugally.
It’s almost impossible for an upper middle class couple to retire in the US before their 65 unless they have some type of government provided or private company provided health insurance like teachers, police officers, military etc.
It’s about $25K a year for a decent plan which is doable. But you have to hope that Republicans - and yes this is a political issue - don’t successfully kill the ACA and make it impossible to get insurance at any cost if you have a pre-existing condition. If you are old - you will develop a pre-existing condition.
My parents are 83 and 81 and retired at 57/55. But my mom was a teacher who still gets benefits through the government and my dad gets benefits from the one factory that didn’t shut down in our hometown.
I’m 51 and even if I could retire early financially, I wouldn’t do it and stay in the US. Play the smallest fiddle for us. I “retired my wife” at 44 in 2020 8 years into our marriage when I did a slight transition to an industry where remote work with travel is the norm (cloud consulting + app dev) and we have traveled a lot including doing stints as “digital nomads”.
We are staying in one of the countries that we might retire to as a Plan B for six weeks starting next week.
Even now that we moved to state tax free Florida and my wife hasn’t had to work in six years, she keeps a current CDL because she can get a job as a school bus driver easily for the benefits and someone will pay me for independent consulting if I lose my job.
"Live frugally" , "FIRE" , "work in tech"
All incompatible with 99% of the upper class, neither do they want to eat ramen to retire early.
You're also one medical disaster away from being "very very wrong"
And health insurance as soon as the ACA is gutted and you have a pre existing condition? Sure I could retire to Costa Rica or Panama. One of those are a plan B and we will be in CR for six weeks and we are both learning Spanish - I am. decent at it.
I bet you also your idea of upper middle class is not statistically valid.
https://dqydj.com/household-income-percentile-calculator/
Statistics! Can a person below the median income afford to retire early? The answer is a resounding no. Can a person the top 10th percentile (upper middle class) afford to retire early? Yes.
Thanks for living frugally. Since you now have some spare money, I decided it's time for a rent increase. And a tax increase.
Ah yes, the 4chan retirement plan. Die of a preventable cause at age 42 while waiting for your captcha.
>It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.
Yeah there's even a term for it: https://en.wikipedia.org/wiki/Financial_repression
> The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.
It also robs the individual's freedom to gamble with their retirement funds while expecting/demanding a bailout when shit hits the fan.
In the USA we have thoughtful policies that allow people over a certain amount of wealth invested in key industries to do that.
That's not all that different than US Social Security. SS has a much lower required contribution/tax rate, but the overall scheme seems similar (lower than market returns, etc) and naming (despite SS actually being called a tax, many residents think of it as a required personal retirement savings account).
It’s not a win win policy. The citizens lose massive amount of their money to government on the bond yield delta. It preys on people not knowing the effect of long term compound interest.
Edit: in fact interest delta is how banks make their huge profits except the government here does it by force.
The average person does not make meaningful interest or investment income, its not practical to on individual small salaries.
In this case the citizens are forced to save, but the interest they're given is less than what they would have earned by saving the same amount on their own.
Also, the average person in the United States does have meaningful investments toward retirement age.
> instead of just throwing it into a tax. It makes the government money
It is a tax, but with extra steps.
The reason it makes the government money is because they’re collecting the extra interest that citizens would have earned if they were free to invest it on their own.
Why does the government get to decide when we retire?
You can retire whenever you want. The government decides when to start funding it.
As for why - the same reason why they get to decide what side of the road you drive on and what laws you follow. They rule the patch of land you were born on, and if you don't like it you can either participate in the system (assuming it's a democracy) or leave.
It definitely answers why. You are asking for an appeal to some moral justification. But there isn't one, and it doesn't matter. That's the whole point of "might makes right".
What question do you want answered exactly? Why we have governments and not anarchy?
It doesn't (you can retire early), but it does decide part of what you will need to be saving and how.
And the reason it decides that, apart from "because it can", is because many societies have seen what happens when it's left to individuals to take care of this, and they fuck it up in massive numbers, and the outcome of that then fucks up society.
It is really easy to "Fuck it up" when greedy assholes jack up the price of necessities like food, shelter, and medical care. 66% of bankruptcies are due to medical costs. We should just socialize necessities like food, shelter, and medical care so there is no chance of "Fucking it up." That would cover the possibility of disability as well.
It sounds to me like we have built a system to exploit people as much as possible. Treating them like farm animals.
This question cannot be asked in good faith on a user board. It requires an 800 pages book on politics, history, philosophy, economics to be properly answerered and it would barely scratch the surface.
You might as well ask similar questions about most basic laws and concepts behind how western societies work.
We should each ask ourselves such questions and review our view on them from time to time during our life because they're important, but mostly by doing our own research and self study. But asking point-blank strangers such a vague question is putting an unfair burden on them.
There's maybe a few hundred people worldwide who could casually drop a proper answer to your question while casually browsing hn.
I believe it'd be more fair to start answering your own question to show how far you are in your intellectual journey on that topic.
The government decides when we can retire and they help us out. You can stop working today if you want, Government shouldn't pay you for it for no reason. Your duty as a citizen is to work and build your nation, eventually the government pays back that service with benefits.
Not for the majority of retirement savings in the US, where Social Security makes up only about 25%.
In the case of 401(k)s/DC plans and private pensions/DB plans, the government allowed savings without "confiscation," i.e. immediate taxation. They gave us the benefit of deferred taxation if you wait until retirement age.
A lot of that here in the US is because we've lost the will to participate in the systems that establish these things. We leave that to other people, and those other people represent our interests poorly. The people in a democracy take a really long time to effect change. It can be a life's work for some people. But the premise is that if we can find common ground we can eventually see some of our ideas take shape. That does still work here, but we have to actually have real conversations with each other that respect each others' differences to get anywhere.
> A lot of our taxes in this country seem like a giant waste or are grossly inefficient at best.
It's our duty to elect people who use tax dollars wisely and to vote out officials who neglect their responsibility to the people and use tax money to enrich themselves and anyone else willing to bribe them. Our government is filled with grifters because we've failed to hold them meaningfully accountable for robbing us and failing to provide the benefits we're funding.
Many of the grifters in government have been working hard to make it difficult to hold them accountable. They disenfranchise voters, they keep us afraid and our futures uncertain, they collude against efforts to reform the system they've established for their own benefit.
Government was never going to just let us have "liberty and justice for all" the job was always on "we the people" to insist on it. We can't just pay taxes and expect everything to work out. We have to use the democracy we have to force the government to work for us and not just for themselves. If we've reached a point where that's no longer possible then it's our duty to "refresh the tree of liberty" until we have a government that works for us.
I wouldn't mind taxes if everyone paid their fair share and it went to improving the lives of everyone instead of the wealthy few. We live in the most productive times per capita that have ever existed. Why do we need to scrimp and save to buy food while the number of billionaires continues to climb?
There is no "we" and has never been. Anybody who talks to you about "we" or "us" or your "duty" is just seeking to exploit you, hoping that you're dumb enough to fall for it.
The government doesn't decide when you retire. The government decides when it is willing to pay you to be retired.
If you don't like it, join the Amish and file a Form 4029.
> It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax.
Forced saving makes it a tax. It's essentially no different than payroll taxes in the U.S. that fund Social Security. Buying government bonds is still marginally better accounting than a complete Ponzi scam like Social Security in the U.S., but even that ultimately amounts to the same thing - the government is paying itself, so it's a wash.
The social security trust fund does buy government bonds.
Social security is not a savings account and is currently underfunded.
It’s analogous to the US, where you put money into social security and then withdraw later.
The only question is whether the fund is running at a surplus or not.
The US has raided its fund to finance other government programs, and then will have to pay it back via tax revenues.
Except for the part where citizens get low returns and are forced to work their whole lives accruing minimal benefit.
How is being a serf win win?
Singapore is one of the last countries one will be a 'serf' in.
The parent contributor has conveniently left out the fact that the 37% of CPF contributions is split 20-17 in terms of employee-employer contributions[1], and has a ceiling of S$8000[2], so if one earns more than that, every additional dollar goes entirely to them, which is also taxed at globally low income tax rates[3]. One can put all one's post-tax money into any stocks/bonds/funds, and there is also no capital gains tax[4].
[1]: https://www.cpf.gov.sg/employer/employer-obligations/how-muc...
[2]: https://www.cpf.gov.sg/employer/infohub/news/cpf-related-ann...
[3]: https://www.iras.gov.sg/taxes/individual-income-tax/basics-o...
[4]: https://www.iras.gov.sg/taxes/individual-income-tax/basics-o...
>The parent contributor has conveniently left out the fact that the 37% of CPF contributions is split 20-17 in terms of employee-employer contributions[1]
This point is a shell game, because the employer's share is still effectively being taken from the employee. It's equivalent of "tariffs are paid by foreigners!" that's trotted out for supporting tariffs.
Yes. Bluntly put, the government maximizes residence of high net worth individuals, and a 37% forced purchase of low interest bonds would be outrageous to them.
You mean the US, right? Especially with the part 2?
I know this may sound like a shock because you are privileged but 7% yoy return on capital is NOT the norm for the rest of the world. Just look at any other index not called the S&P or the Dow. Look up US exceptionalism.
The US policy for retirement savings shackles the younger generation with a ticking time bomb. Forcing your own citizens to save money for themselves is a lot better than forcing your own citizens to pay for others. Which one is more morally cruel?
HK has a similar forced savings, but that ROI is like 1 or 2% and the options to invest are paltry.
Some perspective is necessary. Yes it’s not great but compared to the rest of the world it’s stellar.
Well, would you have a better standard of living with $0 or $1000 when you retire?
Even if that $1000 used to be worth $10000, that $0 is still worth $0.
People don’t believe me when I tell them that there’s a large portion of even the American population that will happily accept the simplicity and safety of serfdom.
I can’t speak for Singaporeans and every government has their detractors but the Singaporeans I’ve known loved their system and hated the western systems they were exposed to. They would laugh if you tried to describe their life as serfdom when compared to a life in the U.S. or Europe.
> virtually all Singaporeans believe they own their houses, and it is a point of pride and financial security. Most houses are on 99 year leases
It's not as if the US fairs any better. Here you never own your home, you have to pay property taxes your whole life (basically rent) or it will be taken from you. Eminent domain means that they can take your property from you at any time even if you've kept paying them.
Singapore has a home ownership rate of ~90% vs 65% in the US and prices are so unaffordable that on average people buying their first starter homes in the US are in their 40s! Most Americans, if they're lucky will get maybe get 30 years of their life in a home they own while they are still young and healthy enough to enjoy it.
Last I heard Singapore only had about 1,000 homeless. Whatever they're doing with housing could probably be improved on, but they seem to be doing a lot better than we are.
99 year leases make complete sense. Much of the value of a 'house' in an urban area like Singapore is actually in the land, and the value is being created by the community on a day-to-day basis. It makes no sense for that value to be captured for all future time by a single owner, that just encourages pointless speculation and makes it harder to allocate real estate towards its highest and most valuable use.
I think Singaporeans have a decent idea, and given their quality of lives, they have no problems with the trade-offs. If they do, they leave. And many go back, because the trade-offs in the West are even worse.
> Despite the iron mathematical law that these houses must depreciate their lease value
SERS means that houses slated to be torn down are resold back to the government at near-market rates excluding the effect of the 99-year leasehold.
In Singapore, the government owns everything, even ostensibly 'freehold' land. If they want to run an MRT line under your house, and they need to tear your house down to get to it, they will force you to sell your house and your land to them. Has happened before, will absolutely happen again. It's an island city-state smaller than London. There is literally no space anywhere else.
Unless we scale back our lives significantly, and are fine with a lot less stuff and vacations and devices and modernized living (houses and transit today are vastly more complex systems than a few decades ago), there simply is no way to let a large number of people live like rich people.
I grew up in East Germany, and while it was a total failure, they got at least one idea correct in the workers paradise: We need to work. (Never mind the implementation, I already said it was a total failure, okay? It's about problem recognition, not about the quality of the solution.)
And you know what? I'm actually like my grandfather, who without any need whatsoever continued to work well past retirement, privately, painting a house here, doing some paint shop there, designing and installing a sun dial somewhere. He only got off the scaffolding on a house's paint job a week before he died.
I too would hate to just laze around. I LOVE doing useful stuff. I worked and made money many times as a child already, and it was always fun!
What stopped the fun was the coming of The West (which I too went to the streets for and wanted, still, "side effects may apply"). While I studied CS I took a job in a chocolate factory, not because I needed the money, but because that's what I always did and was used to. Being in the production of stuff is actually FUN! Except then came some western management idiot to make it clear fun is over. I had just setup a machine to work as efficiently and as well as possible (because that's fun!), so now I had to wait a few minutes for it to finish. Just a few minutes, no time to start something else. So I briefly sat next to it and waited for it to finish. In comes the management idiot, immediately jumping on me, why am I lazing around??? That's not what they pay me for!
Just an anecdote, and of course it is much better in knowledge jobs, but that, and the fact that the money accumulates towards the top is what I think is a HUGE problem in today's capitalism. No wonder they have to make live as miserable as possible for the working majority, because there is no fun. The managers and owners think we don't want to work, and treat us accordingly. But it is THEM who are responsible for much of that.
Adult coloring books are a thing. I could definitely see a person enjoying a version of that, that also had a purpose beyond killing time.
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You get lots of vacations? And fancy transit systems? Where do you live and work?
> It is structured as a massive forced bond purchase scheme by citizens
the UK effectively does the same thing with DB schemes forced to buy Gilts
> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%).
Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.
The main difference is SS bonds are bought at market rates. CPF bonds are not.
Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.
The trust fund is funded by the overage of collected Social Security taxes compared to Social Security payouts. It is not "tacked on" and does not use "separate government funding".
Currently there are more payouts than taxes so the trust fund is being used to make up the difference.
When the trust fund is depleted (barring any changes, this happens at some point in the next decade if I'm not mistaken) then there will be a reckoning. If no action is taken by Congress the result is that payouts will be cut by the necessary percentage to match the taxes.
> does not use "separate government funding".
Yes, it does. The Obama administration explicitly appropriated general government funds to try and make up a developing shortfall in the 'fund'. There is no money being accumulated because there are more payouts than taxes - but even if that wasn't the case, these are not actual "bonds" that have been bought on any market, they're just non-market government obligations.