Monday, August 18, 2014

Freezing minimum sum for CPF?

I was always wondering if there are going to be any significant changes to the CPF, such as freezing the minimum sum instead of increasing it as per inflation.

The rationale is very simple. We cannot control the salary that is given by the bosses, regardless of what all those career coaches or HR tells you. Your control is usually limited to asking your boss politely or "jumping ship" to another company with a salary increment.

Since we have little control over the salary given, and CPF is a controlled environment where you can't really do much with it, there is no use raising the minimum sum because whoever who contributes to it will not be able to fulfill it anyway.

Yes, you can highlight that you can contribute to the CPF but who will bother to contribute to it if they know the minimum sum and retirement age will forever be going up. You're effectively locking up your money in CPF until god knows when and not being able to tap on it when you need it most in your present life.

Yes, I say present life because CPF's funds are meant for the future... Retirement. Most of us are too busy worrying with the present than to think of the future. Yes, you can save all you want for the future but why make yourself suffer in the meantime? I don't think it makes much sense.

If you take inflation out of the equation for contributors, and this risk is instead transferred to CPF, then CPF to Singaporeans becomes more viable. It means that with regular contribution, you should be able to hit the minimum sum and retire adequately. Note the word adequately, not comfortably.

What's the use of setting the minimum sum which many Singaporeans will have trouble hitting it?

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