I believe some people have recently read the The Real CPF SCAM article written by Balding. There are a few issues with this article. For those with a mind of their own, read on. For those who just want to hate irrationally, carry on your FB activities. Ok, here we go. While the writer himself may be neutral, the articles from which he referred to, are pretty much biased in nature. No doubt, facts and figures dont lie. But the writings and wordings used in those articles shows a strong inclination to mislead or distract the average readers who do not have a strong understanding in either finance or CPF, or both. Worse if the reader does not have a mind of his own and is easily swayed by anti-government sentiments. Firstly, it is to note that CPF is NOT a tax. The definition of tax is a compulsory contribution to state revenue, levied by the government on workers income and business profits, or added to the cost of some goods, services, and transactions. Tax means it is something that you pay, and it doesnt come back to you. At least not directly in the form of cash. CPF is your money. It is your savings. It is your retirement nest egg, it is your contigency funds (medical), it is the reason why you can afford to buy a HDB flat. The moment you misunderstand the nature of CPF, your discernment would be clouded. Secondly, the article talks about returns. In short, it is basically two issues : (1) Low returns to the CPF member, and (2) High returns on the Fund itself, which does not go to the CPF member (directly). On the issue of (1) : Low returns to the CPF member. No doubt, 2.5% - 4% may not sound attractive - to the investment savvy people. But ask yourself a few questions : - How many Singaporeans are really that investment savvy? - How many people around YOU are investment savvy? - Assuming that CPF did not exist, what would people do with that 20% income? Ultimately, the question is : If you are given freedom with that 20%, 30 years later, are you going to have that kind of money that Balding is talking about? Chances are, with the exception of the few investment-savvy ones, the answer is no. Or at best, maybe. What Balding overlooked, is the fact that the majority of Singaporeans are not financially savvy people. And that is also due to the fact that most Singaporeans, while concerned over finances, are ironically, not actively getting themselves properly financially educated. They are not actively seeking out sound investments. Or when good investment opportunities come by, they get skeptical. On the issue of (2) High returns on the Fund itself. If there is anything to take home from Baldings article, it is the last two paragraphs: The most important point is this: CPF is your money and investment returns are the investment returns of hard working Singaporean savers. The investment returns from CPF capital and public surpluses do not belong to the government, the PAP, Temasek, or GIC but to the Singaporean people. CPF, GIC, and Temasek returns are not the governments money. They belong to the savers and tax payers of Singapore who have made it a great country. Remember: this is your money. He is very right - the money is YOURS. Except that the money is NOT INDIVIDUALLY YOURS. But it is STILL YOURS. Confused? There is one thing that people often misunderstand - there is no such thing as Governments money. The money doesnt belong to the Government. This money is only ADMINISTERED and MANAGED by the Government. They do not own the money. And neither do ANYONE. The money is owned by Singapore, collectively, as a nation. Think of it as a joint account that everyone is a part of, but only appointed people have administration rights over it. This money is ultimately used on ourselves, on our infrastructure, our GST packages, our workfare bonuses, etc. We still do benefit from it. Its a matter of perception, at the end of the day.
Posted on: Thu, 07 Nov 2013 10:20:23 +0000
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