> > CPF Life : Annuity without guarantee....
> > "The annuity provides a kind of retirement-income insurance: you
> > contribute funds to the annuity in exchange for the guaranteed income
> > stream of your choosing later in life."
> > - Investopedia [Link]
> > .
> > The basic idea of life annuity is it serves as a form of insurance where
> > the uncertainty of an individual's lifespan is transferred from the
> > individual to the insurer, which reduces its own uncertainty by pooling
> > many clients[Link]. What good is an annuity if income stream from it is
> > not guaranteed? If you can't depend on it, you will need something else to
> > insure against the uncertainty!
> > .
> > This week the govt passed amendments to the CPF Act that allows the govt
> > to vary the payout on CPF Life at the Government's discretion. [Link]. The
> > reason given was that they may have to cut down the payout to ensure the
> > solvency of the CPF Life scheme (due to incompetent management?). What is
> > happening is this : in a life annuity risk is transferred from individual
> > to the insurance company. However, with CPF Life, the govt passed the risk
> > right back to the individuals. So ordinary Singaporeans are forced buy an
> > annuity that we can't count on for a guaranteed income stream. Even with a
> > guaranteed income stream, we are already forced to bear the risk of
> > inflation ...like I said in earlier post, the basic scheme may not even
> > provide enough for McDonald's Happy Meals[Link] due to inflation. However,
> > with the guarantee on the income stream removed, the basic scheme may not
> > even be enough for maggIe mee! ...all to protect the govt's own scheme
> > from insolvency....(hmm....protecting itself from its own lack of
> > competence?)
> > The CPF scheme and its never-ending tweaks that always end up locking up
> > our money longer and longer but never provide any more in the way of
> > financial security for old age and protection against inflation. The whole
> > CPF should be reformed. We should do what other competent govts do instead
> > of locking up the minimum at a low fixed return. Hire the best managers to
> > manage the money properly so that it will be adequate for retirement later
> > on - that is what almost what every other major pension fund in the world
> > does including Malaysia's EPF, Chilean Pension Fund etc etc. Contrary to
> > what the govt tells us, locking money up at a fix rate is completely
> > unsafe and makes us all vulnerable to inflation. The PAP govt endangers us
> > so that the GIC can borrow the money for investments from the CPF. It is
> > very unkind, unjust and ultimately unfair to the ordinary folks who are
> > now asked to work until they are frail and old.
> > posted by LuckySingaporean
> Temasek can't survive without using CPF money and the country's reserves