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Singapore's economic policies are complicated and often misdirecting. I'll break down the misconceptions. The primary purpose of CPF is not a pension scheme. I

Singapore's economic policies are complicated and often misdirecting. I'll break down the misconceptions. The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). The returns are specifically decoupled from the real long term returns. This has historical roots in the government needing vast capital financing. They make enormous amounts of the delta between the short term interest rate and long term capital gains. Singapore has no oil or natural resources, but it's sovereign wealth fund has AUM in the regions of countries like Norway which do for this reason. It is not a shock absorber like the article suggests. The withdrawal terms are strict - housing, a significant medical expense and retirement are the only real ways to get money out of it. "Trying to keep people employed" is a goal, not a policy. In fact the Singapore government maintains a large worker supply through immigration. The foreign worker population, ~30%. The main goal of the government is to maximize the absolute number of people working. The reason it raising the retirement age is effective in workforce participation is because most people have no choice. Retirement only pays out after the age. The working life of an average Singaporean has seen 37% gone to CPF, maybe another 10% to income taxes, another 5% to GST, road tax, property tax, etc. After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees.

ecshafer 8mo ago
The CPF sounds pretty clever. It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. It makes the government money. This sounds like a win win kind of policy.
- foxyv 8mo ago
  Why does the government get to decide when we retire?
  - paxys 8mo ago
    You can retire whenever you want. The government decides when to start funding it. As for why - the same reason why they get to decide what side of the road you drive on and what laws you follow. They rule the patch of land you were born on, and if you don't like it you can either participate in the system (assuming it's a democracy) or leave.
    - foxyv 8mo ago
      This boils down to a "Might makes right" claim. It doesn't answer the question why. Only how.
      - paxys 8mo ago
        What question do you want answered exactly? Why we have governments and not anarchy?
        foxyv 8mo ago
        Why does the government get to decide when we retire?
        paxys 8mo ago
        Like I said, they don't. You can retire today. They decide when you get access to a national retirement plan. Citizens of the country vote for that plan and how it is implemented.
        foxyv 8mo ago
        I personally could retire today. Most people can't. There is no referendum I remember where we decided to raise the retirement age. It seems like our government just kind of decided to do so.
        seanmcdirmid 8mo ago
        Couldn’t you say the same thing about social security or pensions? There is a lot of economic forces that direct people to work until a certain age, the government controlling a benefit is only one of them. As to why, you’ll need to dissect representative democracies in Singapore’s case.
- drivebyhooting 8mo ago
  Except for the part where citizens get low returns and are forced to work their whole lives accruing minimal benefit. How is being a serf win win?
  - butterbomb 8mo ago
    People don’t believe me when I tell them that there’s a large portion of even the American population that will happily accept the simplicity and safety of serfdom.
  - 3rodents 8mo ago
    I can’t speak for Singaporeans and every government has their detractors but the Singaporeans I’ve known loved their system and hated the western systems they were exposed to. They would laugh if you tried to describe their life as serfdom when compared to a life in the U.S. or Europe.
    - InkCanon 8mo ago
      I'll be blunt and say most Singaporeans have a very poor idea of how these policies work. Another major one - virtually all Singaporeans believe they own their houses, and it is a point of pride and financial security. Most houses are on 99 year leases, but the idea that is deeply lodged is that this is longer than you can live so this is inconsequential. While this is true if they only cared about living in it, houses have huge financial/investment value to Singaporeans. Despite the iron mathematical law that these houses must depreciate their lease value, most Singaporeans believe house prices will continue to rise based on historical trends. The math just doesn't work out.
      - delta_p_delta_x 8mo ago
        I think Singaporeans have a decent idea, and given their quality of lives, they have no problems with the trade-offs. If they do, they leave. And many go back, because the trade-offs in the West are even worse. > Despite the iron mathematical law that these houses must depreciate their lease value SERS means that houses slated to be torn down are resold back to the government at near-market rates excluding the effect of the 99-year leasehold. In Singapore, the government owns everything, even ostensibly 'freehold' land. If they want to run an MRT line under your house, and they need to tear your house down to get to it, they will force you to sell your house and your land to them. Has happened before, will absolutely happen again. It's an island city-state smaller than London. There is literally no space anywhere else.
- ww520 8mo ago
  It’s not a win win policy. The citizens lose massive amount of their money to government on the bond yield delta. It preys on people not knowing the effect of long term compound interest. Edit: in fact interest delta is how banks make their huge profits except the government here does it by force.
  - cm2012 8mo ago
    The average person does not make meaningful interest or investment income, its not practical to on individual small salaries.
    - Aurornis 8mo ago
      In this case the citizens are forced to save, but the interest they're given is less than what they would have earned by saving the same amount on their own. Also, the average person in the United States does have meaningful investments toward retirement age.
      - accurrent 8mo ago
        This assumes citizens actually putp a lions share of their money into more risky investmemt vehicles. For reference, this may not be the case with a large swathes of our older population. Bank rates, t bills and bonds here are generally lower than cpf. If you are a high income earner the contribution is capped and combined with low taxes this is not a bad thing.
  - initramfs2 8mo ago
    What's your source on the yield delta? In fact if you bought regular Singapore government t bills you will actually get a lower rate than the CPF rate. And neither do banks and saving plans give higher rates.
- Aurornis 8mo ago
  > instead of just throwing it into a tax. It makes the government money It is a tax, but with extra steps. The reason it makes the government money is because they’re collecting the extra interest that citizens would have earned if they were free to invest it on their own.
  - eru 8mo ago
    Alas, actually not: you can actually invest your CPF by yourself, and most people lose money compared to leaving it with the Gahmen.
  - initramfs2 8mo ago
    The CPF funds actually remain in your account, and the interest goes back to you. 1. The interest is guaranteed unlike a regular investment, and 2. I'm interested to know what to invest in to get better interest than CPF, because that's a very legit benchmark here, so please tell me if you find something that has guaranteed returns + higher interest.
- everforward 8mo ago
  To me it sounds like a tax structured in a strange way so it doesn't obviously read as a tax. It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid. The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out. Most other countries have lower rates on their retirement schemes, which makes it feasible for more people to live on their savings for a few years before the government retirement scheme kicks in. E.g. in the US it's pretty feasible for the upper middle/lower upper classes to retire a few years before Social Security kicks in, especially if they're willing to live frugally.
  - gruez 8mo ago
    >It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid. Yeah there's even a term for it: https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression
  - raw_anon_1111 8mo ago
    It’s almost impossible for an upper middle class couple to retire in the US before their 65 unless they have some type of government provided or private company provided health insurance like teachers, police officers, military etc. It’s about $25K a year for a decent plan which is doable. But you have to hope that Republicans - and yes this is a political issue - don’t successfully kill the ACA and make it impossible to get insurance at any cost if you have a pre-existing condition. If you are old - you will develop a pre-existing condition. My parents are 83 and 81 and retired at 57/55. But my mom was a teacher who still gets benefits through the government and my dad gets benefits from the one factory that didn’t shut down in our hometown. I’m 51 and even if I could retire early financially, I wouldn’t do it and stay in the US. Play the smallest fiddle for us. I “retired my wife” at 44 in 2020 8 years into our marriage when I did a slight transition to an industry where remote work with travel is the norm (cloud consulting + app dev) and we have traveled a lot including doing stints as “digital nomads”. We are staying in one of the countries that we might retire to as a Plan B for six weeks starting next week. Even now that we moved to state tax free Florida and my wife hasn’t had to work in six years, she keeps a current CDL because she can get a job as a school bus driver easily for the benefits and someone will pay me for independent consulting if I lose my job.
- zozbot234 8mo ago
  > It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. Forced saving makes it a tax. It's essentially no different than payroll taxes in the U.S. that fund Social Security. Buying government bonds is still marginally better accounting than a complete Ponzi scam like Social Security in the U.S., but even that ultimately amounts to the same thing - the government is paying itself, so it's a wash.
  - philwelch 8mo ago
    The social security trust fund does buy government bonds.
    - f33d5173 8mo ago
      Social security is not a savings account and is currently underfunded.
- paulddraper 8mo ago
  It’s analogous to the US, where you put money into social security and then withdraw later. The only question is whether the fund is running at a surplus or not. The US has raided its fund to finance other government programs, and then will have to pay it back via tax revenues.
- eru 8mo ago
  There's another clever bit: In times of economic distress the government lowers the employer contribution part of CPF. That effectively gives everyone a wage cut to help employment, but without people complaining too much about it. The government is disciplined enough to raise the rate again later.
- cryptonector 8mo ago
  No, it's a total loss for the citizen because even if they can use that money for "(retirement, medical, housing)" the interest paid is much too low. Forced savings programs aren't actually "savings" for the people on whom the programs are forced!! "Forced savings" is a euphemism for "we're taking your money and calling it savings based on the idea that we're going to invest it well, though you won't see much of any gains, and there might not be any gains to speak of".
DaedalusII 8mo ago
> It is structured as a massive forced bond purchase scheme by citizens the UK effectively does the same thing with DB schemes forced to buy Gilts
- throwaway5465 8mo ago
  DB schemes forced not to take long payment holidays when markets go up. Offering a DB scheme however is an employer's choice, a choice most choose not to make today.
philwelch 8mo ago
> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.
- zozbot234 8mo ago
  Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.
  - drdec 8mo ago
    The trust fund is funded by the overage of collected Social Security taxes compared to Social Security payouts. It is not "tacked on" and does not use "separate government funding". Currently there are more payouts than taxes so the trust fund is being used to make up the difference. When the trust fund is depleted (barring any changes, this happens at some point in the next decade if I'm not mistaken) then there will be a reckoning. If no action is taken by Congress the result is that payouts will be cut by the necessary percentage to match the taxes.
    - zozbot234 8mo ago
      > does not use "separate government funding". Yes, it does. The Obama administration explicitly appropriated general government funds to try and make up a developing shortfall in the 'fund'. There is no money being accumulated because there are more payouts than taxes - but even if that wasn't the case, these are not actual "bonds" that have been bought on any market, they're just non-market government obligations.
- InkCanon 8mo ago
  The main difference is SS bonds are bought at market rates. CPF bonds are not.
Terr_ 8mo ago
> Singapore's economic policies are complicated and often misdirecting. [...] it's sovereign wealth Tangentially, I've had a similar gripe around how some US folks discuss Singapore's similar old-rival Hong Kong. They'll advocate "Hong Kong shows policy X works, we should do X here too", while ignoring the other half of the system required to make it work, policies the same advocates would never want to adopt. In particular, celebrating HK's "tax freedom" while glossing over how the government does fund expenditures. It's the ultimate landlord, deliberately constraining supply (with high subsidies to the poor to prevent revolt), and draws from its huge [0] sovereign-wealth fund. [0] Huge by any US standards, even if far smaller than Singapore or Norway. To put the per-capita amounts in context, if the US is 1x, then HK=80x, Singapore=356x, Norway=379x.
ggm 8mo ago
Like Dubai, many of the migrant workers are ineligible for post retirement life in Singapore and so despite any mandatory savings will not represent any kind of burden on the state compared to delivery of health and housing and care costs. So they are functionally productive and net positive to any scheme about post work funding for the community.
- Grimburger 8mo ago
  This is being entirely disingenuous and is completely different to what goes on in Dubai. I have lived there and can rattle off plenty of criticisms about the country but complaining about migrant workers who clamour to work in SG is not one of them. The vast majority of Singapore migrant workforce are Malaysian citizens who live over the border in JB, you can rent a 2 bed apartment there for $300 a month and eat out in a restaurant for $2 while commuting each day to a developed country and earn those level of wages. To pretend these people have a rough deal compared to back home is absurd and I'd challenge anyone to actually talk to them first before getting on your high horse. Ask them if they would prefer to work in their home country.
  - ggm 8mo ago
    I said nothing of the kind you imply. I know skilled workers who were based in Dubai but who expected to leave immediately their work (court transcription) ended and the same with expat Australians and Britons working in Singapore. The point is not if they get a rough deal or not compared to their home income. The point is that the welfare state costs on the tax base won't be spent to their material benefit, so they are not a cost on the state after working lifetime. Forced saving schemes be they state pension, annuity or superannuation are savings which act as investment capital and i am sure sematek and other bodies leverage this, and then in income phase return to the holder but they are not equal to the lifetime cost of care for the elderly, or provision of housing. Dubai has much more extreme exploitation of low wage migrant labour, not that none of the workforce in Singapore is remittance labour, filipina nannies and the like but I'm not actually talking about construction site labour or the Dubai passport hijack thing.
janpeuker 8mo ago
I think it's also relevant that CPF is not only a pension schema but most importantly also a home ownership scheme via HDB OA https://www.cpf.gov.sg/member/home-ownership/using-your-cpf-to-buy-a-home https://www.cpf.gov.sg/member/home-ownership/using-your-cpf-...
- eru 8mo ago
  You also get health insurance.
- salesynerd 8mo ago
  The "gotcha" here is that the home is, legally and technically, on a 99-year lease from the government. So, the government is free to take it back once the lease expires. This happened a couple of years back with an old enclave - the "owners" had to vacate their units as their lease had expired and the government needed the land for developmental purposes. In fact, this had become a hot button issue in the elections. All this while, and even today the government claims that the people are the owner considering they can sell the units and book profits. On the other hand, they justify the 99-year limit, as a step to being fair towards future generations in a land scarce country. There have been many policy and public discussions around this topic. But, as of date, there is no firm or permanent solution to this conundrum.
  - itemize123 8mo ago
    this is almost entirely orthogonal. you can use cpf for private, non-99year lease housing too.
    - salesynerd 8mo ago
      Thanks for correcting me; I accept that CPF can be used for both the cases you have mentioned. My comment came from two observations: 1. The majority of Singapore citizens live in HDB. 2. The vast majority of non-landed residential properties (private condos and HDBs) are on 99-year leases.
NooneAtAll3 8mo ago
> After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees. how does that work?
eru 8mo ago
> The main goal of the government is to maximize the absolute number of people working. Why? What? You know, they have to win elections? They recently tightened migrant worker visas quite a lot.
- JamisonM 8mo ago
  The Singaporean government is responsive to public opinion to some degree, but it is so they can maintain their current status of not having to worry about winning elections.
- exidy 8mo ago
  The non-resident population of Singapore (which is a reasonable proxy for migrant worker population) is at the highest it's ever been, as is the total population.[0][1] [0] https://www.singstat.gov.sg/publications/reference/singapore-in-figures/population-and-households https://www.singstat.gov.sg/publications/reference/singapore... [1] https://www.mom.gov.sg/foreign-workforce-numbers https://www.mom.gov.sg/foreign-workforce-numbers
brutalc 8mo ago
[dead]
nicholasluimy 8mo ago
A lot of follow up comments are representing this as a forced bond purchase with subpar returns, without also considering that, it essentially forces folks who wouldn't otherwise save for retirement to do so (albeit at the government's definition of retirement age) For those who know how to manage their money, this is absolutely a hit on potential returns. But for many who may not, this is net more than what they would have otherwise

ecshafer 8mo ago

The CPF sounds pretty clever. It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. It makes the government money. This sounds like a win win kind of policy.

foxyv 8mo ago
Why does the government get to decide when we retire?
- paxys 8mo ago
  You can retire whenever you want. The government decides when to start funding it. As for why - the same reason why they get to decide what side of the road you drive on and what laws you follow. They rule the patch of land you were born on, and if you don't like it you can either participate in the system (assuming it's a democracy) or leave.
  - foxyv 8mo ago
    This boils down to a "Might makes right" claim. It doesn't answer the question why. Only how.
    - paxys 8mo ago
      What question do you want answered exactly? Why we have governments and not anarchy?
      - foxyv 8mo ago
        Why does the government get to decide when we retire?
        paxys 8mo ago
        Like I said, they don't. You can retire today. They decide when you get access to a national retirement plan. Citizens of the country vote for that plan and how it is implemented.
        foxyv 8mo ago
        I personally could retire today. Most people can't. There is no referendum I remember where we decided to raise the retirement age. It seems like our government just kind of decided to do so.
        seanmcdirmid 8mo ago
        Couldn’t you say the same thing about social security or pensions? There is a lot of economic forces that direct people to work until a certain age, the government controlling a benefit is only one of them. As to why, you’ll need to dissect representative democracies in Singapore’s case.
drivebyhooting 8mo ago
Except for the part where citizens get low returns and are forced to work their whole lives accruing minimal benefit. How is being a serf win win?
- butterbomb 8mo ago
  People don’t believe me when I tell them that there’s a large portion of even the American population that will happily accept the simplicity and safety of serfdom.
- 3rodents 8mo ago
  I can’t speak for Singaporeans and every government has their detractors but the Singaporeans I’ve known loved their system and hated the western systems they were exposed to. They would laugh if you tried to describe their life as serfdom when compared to a life in the U.S. or Europe.
  - InkCanon 8mo ago
    I'll be blunt and say most Singaporeans have a very poor idea of how these policies work. Another major one - virtually all Singaporeans believe they own their houses, and it is a point of pride and financial security. Most houses are on 99 year leases, but the idea that is deeply lodged is that this is longer than you can live so this is inconsequential. While this is true if they only cared about living in it, houses have huge financial/investment value to Singaporeans. Despite the iron mathematical law that these houses must depreciate their lease value, most Singaporeans believe house prices will continue to rise based on historical trends. The math just doesn't work out.
    - delta_p_delta_x 8mo ago
      I think Singaporeans have a decent idea, and given their quality of lives, they have no problems with the trade-offs. If they do, they leave. And many go back, because the trade-offs in the West are even worse. > Despite the iron mathematical law that these houses must depreciate their lease value SERS means that houses slated to be torn down are resold back to the government at near-market rates excluding the effect of the 99-year leasehold. In Singapore, the government owns everything, even ostensibly 'freehold' land. If they want to run an MRT line under your house, and they need to tear your house down to get to it, they will force you to sell your house and your land to them. Has happened before, will absolutely happen again. It's an island city-state smaller than London. There is literally no space anywhere else.
ww520 8mo ago
It’s not a win win policy. The citizens lose massive amount of their money to government on the bond yield delta. It preys on people not knowing the effect of long term compound interest. Edit: in fact interest delta is how banks make their huge profits except the government here does it by force.
- cm2012 8mo ago
  The average person does not make meaningful interest or investment income, its not practical to on individual small salaries.
  - Aurornis 8mo ago
    In this case the citizens are forced to save, but the interest they're given is less than what they would have earned by saving the same amount on their own. Also, the average person in the United States does have meaningful investments toward retirement age.
    - accurrent 8mo ago
      This assumes citizens actually putp a lions share of their money into more risky investmemt vehicles. For reference, this may not be the case with a large swathes of our older population. Bank rates, t bills and bonds here are generally lower than cpf. If you are a high income earner the contribution is capped and combined with low taxes this is not a bad thing.
- initramfs2 8mo ago
  What's your source on the yield delta? In fact if you bought regular Singapore government t bills you will actually get a lower rate than the CPF rate. And neither do banks and saving plans give higher rates.
Aurornis 8mo ago
> instead of just throwing it into a tax. It makes the government money It is a tax, but with extra steps. The reason it makes the government money is because they’re collecting the extra interest that citizens would have earned if they were free to invest it on their own.
- eru 8mo ago
  Alas, actually not: you can actually invest your CPF by yourself, and most people lose money compared to leaving it with the Gahmen.
- initramfs2 8mo ago
  The CPF funds actually remain in your account, and the interest goes back to you. 1. The interest is guaranteed unlike a regular investment, and 2. I'm interested to know what to invest in to get better interest than CPF, because that's a very legit benchmark here, so please tell me if you find something that has guaranteed returns + higher interest.
everforward 8mo ago
To me it sounds like a tax structured in a strange way so it doesn't obviously read as a tax. It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid. The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out. Most other countries have lower rates on their retirement schemes, which makes it feasible for more people to live on their savings for a few years before the government retirement scheme kicks in. E.g. in the US it's pretty feasible for the upper middle/lower upper classes to retire a few years before Social Security kicks in, especially if they're willing to live frugally.
- gruez 8mo ago
  >It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid. Yeah there's even a term for it: https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression
- raw_anon_1111 8mo ago
  It’s almost impossible for an upper middle class couple to retire in the US before their 65 unless they have some type of government provided or private company provided health insurance like teachers, police officers, military etc. It’s about $25K a year for a decent plan which is doable. But you have to hope that Republicans - and yes this is a political issue - don’t successfully kill the ACA and make it impossible to get insurance at any cost if you have a pre-existing condition. If you are old - you will develop a pre-existing condition. My parents are 83 and 81 and retired at 57/55. But my mom was a teacher who still gets benefits through the government and my dad gets benefits from the one factory that didn’t shut down in our hometown. I’m 51 and even if I could retire early financially, I wouldn’t do it and stay in the US. Play the smallest fiddle for us. I “retired my wife” at 44 in 2020 8 years into our marriage when I did a slight transition to an industry where remote work with travel is the norm (cloud consulting + app dev) and we have traveled a lot including doing stints as “digital nomads”. We are staying in one of the countries that we might retire to as a Plan B for six weeks starting next week. Even now that we moved to state tax free Florida and my wife hasn’t had to work in six years, she keeps a current CDL because she can get a job as a school bus driver easily for the benefits and someone will pay me for independent consulting if I lose my job.
zozbot234 8mo ago
> It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. Forced saving makes it a tax. It's essentially no different than payroll taxes in the U.S. that fund Social Security. Buying government bonds is still marginally better accounting than a complete Ponzi scam like Social Security in the U.S., but even that ultimately amounts to the same thing - the government is paying itself, so it's a wash.
- philwelch 8mo ago
  The social security trust fund does buy government bonds.
  - f33d5173 8mo ago
    Social security is not a savings account and is currently underfunded.
paulddraper 8mo ago
It’s analogous to the US, where you put money into social security and then withdraw later. The only question is whether the fund is running at a surplus or not. The US has raided its fund to finance other government programs, and then will have to pay it back via tax revenues.
eru 8mo ago
There's another clever bit: In times of economic distress the government lowers the employer contribution part of CPF. That effectively gives everyone a wage cut to help employment, but without people complaining too much about it. The government is disciplined enough to raise the rate again later.
cryptonector 8mo ago
No, it's a total loss for the citizen because even if they can use that money for "(retirement, medical, housing)" the interest paid is much too low. Forced savings programs aren't actually "savings" for the people on whom the programs are forced!! "Forced savings" is a euphemism for "we're taking your money and calling it savings based on the idea that we're going to invest it well, though you won't see much of any gains, and there might not be any gains to speak of".

DaedalusII 8mo ago

> It is structured as a massive forced bond purchase scheme by citizens the UK effectively does the same thing with DB schemes forced to buy Gilts

throwaway5465 8mo ago
DB schemes forced not to take long payment holidays when markets go up. Offering a DB scheme however is an employer's choice, a choice most choose not to make today.

philwelch 8mo ago

> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.

zozbot234 8mo ago
Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.
- drdec 8mo ago
  The trust fund is funded by the overage of collected Social Security taxes compared to Social Security payouts. It is not "tacked on" and does not use "separate government funding". Currently there are more payouts than taxes so the trust fund is being used to make up the difference. When the trust fund is depleted (barring any changes, this happens at some point in the next decade if I'm not mistaken) then there will be a reckoning. If no action is taken by Congress the result is that payouts will be cut by the necessary percentage to match the taxes.
  - zozbot234 8mo ago
    > does not use "separate government funding". Yes, it does. The Obama administration explicitly appropriated general government funds to try and make up a developing shortfall in the 'fund'. There is no money being accumulated because there are more payouts than taxes - but even if that wasn't the case, these are not actual "bonds" that have been bought on any market, they're just non-market government obligations.
InkCanon 8mo ago
The main difference is SS bonds are bought at market rates. CPF bonds are not.

Terr_ 8mo ago

> Singapore's economic policies are complicated and often misdirecting. [...] it's sovereign wealth Tangentially, I've had a similar gripe around how some US folks discuss Singapore's similar old-rival Hong Kong. They'll advocate "Hong Kong shows policy X works, we should do X here too", while ignoring the other half of the system required to make it work, policies the same advocates would never want to adopt. In particular, celebrating HK's "tax freedom" while glossing over how the government does fund expenditures. It's the ultimate landlord, deliberately constraining supply (with high subsidies to the poor to prevent revolt), and draws from its huge [0] sovereign-wealth fund. [0] Huge by any US standards, even if far smaller than Singapore or Norway. To put the per-capita amounts in context, if the US is 1x, then HK=80x, Singapore=356x, Norway=379x.

ggm 8mo ago

Like Dubai, many of the migrant workers are ineligible for post retirement life in Singapore and so despite any mandatory savings will not represent any kind of burden on the state compared to delivery of health and housing and care costs. So they are functionally productive and net positive to any scheme about post work funding for the community.

Grimburger 8mo ago
This is being entirely disingenuous and is completely different to what goes on in Dubai. I have lived there and can rattle off plenty of criticisms about the country but complaining about migrant workers who clamour to work in SG is not one of them. The vast majority of Singapore migrant workforce are Malaysian citizens who live over the border in JB, you can rent a 2 bed apartment there for $300 a month and eat out in a restaurant for $2 while commuting each day to a developed country and earn those level of wages. To pretend these people have a rough deal compared to back home is absurd and I'd challenge anyone to actually talk to them first before getting on your high horse. Ask them if they would prefer to work in their home country.
- ggm 8mo ago
  I said nothing of the kind you imply. I know skilled workers who were based in Dubai but who expected to leave immediately their work (court transcription) ended and the same with expat Australians and Britons working in Singapore. The point is not if they get a rough deal or not compared to their home income. The point is that the welfare state costs on the tax base won't be spent to their material benefit, so they are not a cost on the state after working lifetime. Forced saving schemes be they state pension, annuity or superannuation are savings which act as investment capital and i am sure sematek and other bodies leverage this, and then in income phase return to the holder but they are not equal to the lifetime cost of care for the elderly, or provision of housing. Dubai has much more extreme exploitation of low wage migrant labour, not that none of the workforce in Singapore is remittance labour, filipina nannies and the like but I'm not actually talking about construction site labour or the Dubai passport hijack thing.

janpeuker 8mo ago

I think it's also relevant that CPF is not only a pension schema but most importantly also a home ownership scheme via HDB OA https://www.cpf.gov.sg/member/home-ownership/using-your-cpf-to-buy-a-home https://www.cpf.gov.sg/member/home-ownership/using-your-cpf-...

eru 8mo ago
You also get health insurance.
salesynerd 8mo ago
The "gotcha" here is that the home is, legally and technically, on a 99-year lease from the government. So, the government is free to take it back once the lease expires. This happened a couple of years back with an old enclave - the "owners" had to vacate their units as their lease had expired and the government needed the land for developmental purposes. In fact, this had become a hot button issue in the elections. All this while, and even today the government claims that the people are the owner considering they can sell the units and book profits. On the other hand, they justify the 99-year limit, as a step to being fair towards future generations in a land scarce country. There have been many policy and public discussions around this topic. But, as of date, there is no firm or permanent solution to this conundrum.
- itemize123 8mo ago
  this is almost entirely orthogonal. you can use cpf for private, non-99year lease housing too.
  - salesynerd 8mo ago
    Thanks for correcting me; I accept that CPF can be used for both the cases you have mentioned. My comment came from two observations: 1. The majority of Singapore citizens live in HDB. 2. The vast majority of non-landed residential properties (private condos and HDBs) are on 99-year leases.

NooneAtAll3 8mo ago

> After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees. how does that work?

eru 8mo ago

> The main goal of the government is to maximize the absolute number of people working. Why? What? You know, they have to win elections? They recently tightened migrant worker visas quite a lot.

JamisonM 8mo ago
The Singaporean government is responsive to public opinion to some degree, but it is so they can maintain their current status of not having to worry about winning elections.
exidy 8mo ago
The non-resident population of Singapore (which is a reasonable proxy for migrant worker population) is at the highest it's ever been, as is the total population.[0][1] [0] https://www.singstat.gov.sg/publications/reference/singapore-in-figures/population-and-households https://www.singstat.gov.sg/publications/reference/singapore... [1] https://www.mom.gov.sg/foreign-workforce-numbers https://www.mom.gov.sg/foreign-workforce-numbers

brutalc 8mo ago

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nicholasluimy 8mo ago

A lot of follow up comments are representing this as a forced bond purchase with subpar returns, without also considering that, it essentially forces folks who wouldn't otherwise save for retirement to do so (albeit at the government's definition of retirement age) For those who know how to manage their money, this is absolutely a hit on potential returns. But for many who may not, this is net more than what they would have otherwise