July 28, 2009
Lucky Tan said:
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. 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 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?)
Recommended by at82: "What good is an annuity if income stream from it is not guaranteed?! "