Nine speakers hit out at what they say are inflexible, shifting rules
The Sunday Times, 8 Jun 2014
Amid the ongoing public debate about the Central Provident Fund (CPF) system, a large crowd gathered at Hong Lim Park yesterday to protest against several aspects of the compulsory savings plan.
The nine speakers at the "Return Our CPF" protest criticised what they perceived to be the inflexible and shifting rules of the scheme, its low rate of returns and the lack of transparency in how CPF monies are managed by the Government.
The last speaker, blogger Roy Ngerng, got the loudest cheers. He is being sued by Prime Minister Lee Hsien Loong for alleging that Mr Lee misappropriated CPF monies.
Speaking for almost 45 minutes, Mr Ngerng said the connections between CPF monies, GIC and Temasek Holdings are unclear. He asked if there is a conflict of interest with ministers sitting on the board of GIC, which manages the Government's assets.
He called for more transparency on the reserves, and claimed that the late former president Ong Teng Cheong had clashed with the Government on this issue in the past.
He and protest organiser Han Hui Hui, also a blogger, charged that wage increases have not kept pace with the increases in the Minimum Sum, which will be $155,000 next month.
He called for more transparency on the reserves, and claimed that the late former president Ong Teng Cheong had clashed with the Government on this issue in the past.
He and protest organiser Han Hui Hui, also a blogger, charged that wage increases have not kept pace with the increases in the Minimum Sum, which will be $155,000 next month.
The CPF issue was discussed in Parliament last month, and the Government said it is looking at ways to improve the scheme. Manpower Minister Tan Chuan-Jin had said that while the scheme may not be perfect, it provides "peace of mind".
At the protest, Ms Han called for returns on CPF savings to be raised to 6.5 per cent. CPF interest rates now stand at 2.5 per cent for the Ordinary Account and 4 per cent for the Special, Medisave and Retirement Accounts. An extra interest of 1 per cent is paid on the first $60,000 of CPF savings.
She estimated that 6,000 turned up yesterday, though some news agencies reported a crowd size of 2,000.
The harshest criticism on CPF interest rates came from blogger Leong Sze Hian. He compared the CPF rates to those earned by pension funds of other countries such as Malaysia, where returns exceeded 6 per cent in the last two years, and said Singaporeans were being "short-changed".
Former presidential candidate and former NTUC Income chief executive Tan Kin Lian, who kicked off the protest yesterday, said Singaporeans should have the freedom to opt out of the Minimum Sum scheme and CPF Life annuity. However, Mr Tan said if interest rates improve, it would still be prudent for Singaporeans to keep some money in their CPF accounts.
Mr Tan and other speakers also called for the monthly CPF Life payouts to be raised.
Singapore Democratic Party chief Chee Soon Juan, who is overseas, sent a message that was read out by representative Ariffin Sha, 17.
He said CPF has strayed from its 1955 origin as a pension scheme where employees and employers each contributed 5 per cent and savings could be withdrawn upon retirement. Reiterating this, former SDP member Vincent Wijeysingha said the Government is now using CPF as a "mop-up scheme" for too many purposes such as housing, health care and education.
Reform Party chief Kenneth Jeyaretnam said the defamation suit that Mr Ngerng is facing has had a "chilling effect". Another protest is scheduled for July 12, said Ms Han.
SINGAPORE is confronting the perils of please-all economics. Ageing citizens are pushing the Government for bigger nest eggs and more subsidised health care and housing. There is also popular resentment against letting more foreigners in, and not much appetite for increasing the 7 per cent consumption tax. Squaring this fiscal circle will be a long-term challenge.
Already, there's simmering anger in the city-state about overcrowded trains and costly public housing. About 2,000 people gathered recently to demand that the state-run retirement plan raise its 4 per cent annual interest rate.
People protested last year, too, when the Government unveiled a plan to boost the resident population by 30 per cent to 6.9 million by 2030, with immigration compensating for a drooping birth rate.
The multifaceted discontent puts Singapore's fiscally conservative Government in a quandary.
Expanding the economy - and the tax base - with less foreign labour will mean improving the productivity of the local workforce. That's a long shot.
Another way to pay for everything people want is to tax companies more heavily. But Singapore's business costs are already quite high. A third strategy could be for the city-state to try to earn more on its substantial sovereign wealth by buying riskier assets. That could backfire, leaving less money for welfare.
Alternatively, the Government could skimp on investing. The outlay on the city's development budget in the most recent five- year period has jumped by a third.
Slowing the pace might be a mistake, however. Pricey real estate would swoon if Singapore loses its urban buzz and stops attracting investors and tourists. That will make Singapore's property- loving citizens less wealthy and more miserable. The trade-offs are difficult. But Singapore has some advantages.
Rival Hong Kong is facing an existential threat as China tightens its grip on the former British colony and boosts alternatives like Shanghai. By contrast, Singapore offers investors proximity to India and Indonesia, neither of which will boast a global city soon.
For all the grumbling, the majority of Singaporeans are too pragmatic to opt for unbridled welfarism at the next elections, which will take place by 2016.
Still, please-all economics is scratching at the door. If it finds a way in, prosperity could be in jeopardy.
Andy Mukherjee is a columnist with Reuters BreakingViews.
Can't compare CPF rates with that of Malaysia's EPF
Although it has been repeatedly pointed out that Central Provident Fund (CPF) interest is not the same as investment income, the confusion persists at a recent protest ("CPF protest draws crowd"; last Sunday).
It is the legal distinction between a depositor and an investor that makes it clear what benefits accrue to each. Had it not been so, bank depositors can demand to partake in their banks' profits. Banks borrow at 1 per cent but lend at 10 per cent, making huge profits. Have the depositors been short-changed? Shouldn't the depositors also stage a protest?
Once this distinction is understood, it will be clear that the role of Temasek Holdings and GIC has no bearing on CPF interest rates.
Similarly, CPF members have no reason, much less right, to question how the Government applies its budgetary surplus.
The call by protest leaders for rates of more than 6 per cent is misguided, considering that the country's prime rate is only 5.25 per cent. Interest rates are determined by market forces for the economy to function properly, smoothly and free from imbalances.
The higher interest rate paid by Malaysia's Employees Provident Fund (EPF) actually reflects financial stress in the country. Since 1997, Malaysia has run up fiscal deficits that have made the country uncompetitive, with high inflation, unemployment, debt and a much depreciated currency. Last July, Fitch rating agency downgraded Malaysia's sovereign outlook to "negative", leading to yet higher borrowing costs or interest rates.
In short, we cannot have the higher interest rate regime of another country without also importing its economic ills.
The Minimum Sum must necessarily increase over the years as it is projected to meet future needs of longer working life and higher life expectancy, and to offset inflation.
Tan Yip Meng
ST Forum, 15 Jun 2014
ST Forum, 15 Jun 2014
No comments:
Post a Comment