Of Annuities and Policies
I was reading about annuities implementation and was forwarded to REACH the Singapore Government website to voice their view.
Personally i wonder what the fish is that site for and whether any of the comments would be heard. So much post in there that people took time to write will be useless cause its just an "initiative" to create a facade of openness.
Any way, the discussion is about annuities and this guy call Black Knight brought up a rather interesting pt:
I’d made my calculation to make my case on why we should put the S$700mil "promised" to be spent on the additional 1% rate on the CPF $60K. In my calculation, I made the following assumptions:Annuity Fund returns: 2% annually
No. of 85-ers : 30000 and increasing at a rate of 10% annually
Inflation rate: 5% every yr.
Initial amt payout to 85-ers : $6000/yr & increase at inflation rate.Scheme start 2008Payout start 2009
Yr Fund Amt No. of 85-ers Annual Payout Fund’s Return Rate 85-ers Growth Rate Inflation Rate 1 700000000 30000 6000 2% 10% 5% 2 1234000000 33000 6300 3 1750780000 36300 6615 4 2245671100 39930 6946 5 2713230742 43923 7294 6 3147120994 48316 7659 7 3540011169 53148 8042 8 3883395176 58463 8445 9 4167343044 64310 8868 10 4380388824 70741 9312 11 4509256408 77816 9778 12 4538556688 85598 10267 13 4450493155 94158 10781 14 4224385620 103574 11321 15 3836312078 113932 11888 The outcome of the calculation? 15 yrs down the road,
1. The annuity fund will still hv a total fund value of S$3.8+bil.
2. Total 85-ers population is > 110K.
3. Total Payout per 85-ers increased from S$6K to >S$11K. (Near S$12K)
4. And all these increases funding the scheme with a small return of 2%!
5. And the payout pegging at inflation rate of an unrealistic 5%!
6. And an explosive rate of 10% increasing in 85-ers population!With the above calculation, I prove 1 pt…………
THE S$700mil is ENOUGH to FUND LONGEVITY FUND for at least 15 yrs!
And who dare says it is not enough?
And why must the suggested scheme be compulsory for all CPF members!
And why should we make those that has little to suffer a longer period? (Already the savings is not enough, yet at 55 the poor guy gotta put aside a sum which will eat into their withdrawable amt that could be useful for them to tie over the bad times)
Why is the gov so adament that we must accept the changes?
I will leave readers to comment on this.
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