Opt out no more

I had intended to write about my holiday, but the mood's all gone. The straw has fallen. Brace for impact!

Gee, they are doing it after all. Who'd thunk?

"Giving more details on the compulsory annuities, Dr Ng said only part of the minimum sum from the CPF will be set aside for it." - Manpower Minister.

Sounds "reasonable" initially doesn't it? Every "member" contributes.

However, the ST paper has this information: On annuities, which will be made compulsory for members aged 50 and below, Dr Ng explained the CPF member pays a basic premium which goes into a general pool that will start giving out monthly payouts after the member turns 85. However, if he lives less than 85 years, the premium goes towards supporting others in the pool who are still alive.

Young people funding their elder's retirement? Err... is that not a varitation of a pension system? (Wait, in the long run, did this not turn out pretty bad for similar systems in Japan, America, and etc.?) As far as I know, when a person purchases an annuity in the traditional sense, the payout only goes to that person and the designated family members. Not to strangers. Furthermore, if it is deducted directly from the OA (like how MediShield is deducted from Medisave), it would seem that the deduction continues even after a person stops contributing to the CPF before the age of 50.

I do not know how many people realize this but, this is effectively a new form of Taxation. It is a pension tax. And there's no escaping it.

I really like the last quote in the CNA article: "The government is not preventing members from investing their CPF funds." Ho hum, really? If this goes the way I think it is going, they are only reducing my total available investable assets.

Sigh, that means I'll have to maintain a larger portion of my portfolio in "Cash".

Opt-out nation

Okay, first there is the opt-out organ harvesting scheme.
Then, the opt-out CPF insurance plans (e.g. Eldershield)
Later, (maybe) the opt-out HIV-screening for hospital admission (huh? males only?)
Even later on, comes this: "Govt may make buying annuity compulsory"

I really am wary when the people in charge here say "maybe", because a policy will just get pushed through regardless of whether people like me (I would think the majority in this case) disagree. Not that I can do anything about it anyway.

Get $500/month till I am 100? What about inflation? What if I croaked at 70 or 80? That'd be $150.000 - (5 or 15)*12*500 = $120.000 or $60.000 free money for the company that provides the annuity (discounting their investment gain). Heck, $150.000, properly invested, can easily earn an average of $9.000 per annum! (at 6% return). I can hire a financial adviser and use a wrap account (-1% management fee) and still get $500/month while still retaining the capital!

I had decided on not using my CPF money for property purchase. But if doing so will enable me to go below the minimum amount required to trigger the "compulsary annuity purchase", I will consider using it for property purchase. (The economic feasibility still need to be thought out. Argh!)

When I retire, I damn well want to enjoy *my* money, and I can plan my own spending, thank you very much! I think I have mentioned a few times how I hate the CPF system. This is like a straw the size of a lamp post on my poor skinny camel's back.