MPs offer ideas to improve CPF

[nsengkia]

^^^ in theory our kids should strike out on their own with no help from the parents when they are of working age

In theory people should take care of their own retirements and not be swayed by Batam

In theory we shouldn't really care if the streets are littered with young and old vagabonds. To each his own and they probably deserve it

In theory each should take care of their medical needs and if thou should be stricken by a disease then all the best.

Until the society can come to peace and agree to being indifferent to the plight of fellow citizen, the govt should perform some social duties. Then again if that day comes when we are indifferent, probably humanity has become irrelevant.

In general, I agree that policy making should strive towards practicality. But my problem with the interactions between existing CPF schemes and other government policies is that it incentives behaviour that I believe will cause long term societal problems:

a. CPF interest below inflation rate (which is the upside down way of looking at the problem) drives non-investors into attempting to become (mainly property) investors.
b. Allowing bank loans to rank before CPF repayments (when properties are sold) encourages lenders to supply lots of cheap debt.
c. Cost of mortgage debt below CPF interest rate encourages borrowers to maximise leverage.
d. Rental returns are cash flow today whereas dividend returns are locked away.

The net result is over-consumption of property and mal investment into (mickey mouse) investment property. This in turn contributes to insufficient retirement savings and (if my worse fears come through) the coming destruction of home equity as a possible alternative retirement pot. Even worse is that the whole system generates its own feedback loop because one of the main drivers of inflation is too much property investment in the first place.

Having said all the above, I do note that the government has introduced macro prudential measures to reduce the amount of money flowing into property (mal?) investment. But I am afraid that it maybe too late to save some of the citizens' retirement pot (see http://www.stproperty.sg/articles-proper...lassifieds)