The email address in "Contact AK: Ads and more" above will vanish from November 2018.


Featured blog.

This guy has 800K in his CPF. (AK responds to HWZ Forum.)

A reader pointed me to a thread in HWZ Forum which discussed about my CPF savings being more than $800K. He wanted to clarify certain que...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.


"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Recent Comments

ASSI's Guest bloggers

"Purpose of CPF is to make the rich richer."

Monday, October 9, 2017

My view is. Cpf is workable for rich ppl ......high educated/ professionals group. This system can help them richer.

It’s not really help those below average. Only can make sure they got food when they old n can’t work. No luxury.

In other word, cpf is workable for those above average n PR. But not for those below average Singaporean,who really need money to survive ( except 月光族)。So, what is the main purpose for CPF ?

Your question is rhetorical because you gave your answer in your first paragraph. So, is the main purpose of the CPF to make the rich richer?

The CPF is meant to help the masses. 

It is not meant to help the rich.

This is quite obvious when the CPF has annual contribution limit and a limit to top ups to the SA and RA. It prevents members with a lot more cash to exploit the system.

This is quite obvious when the CPF gives 2% more interest for the first $30K and 1% more interest for the first $60K of CPF savings. It is to help members with less savings.

The real problem lies in the lack of simple financial prudence and basic financial literacy amongst the masses.

Lacking in simple financial prudence, they spend all the money they make or more than what they make. 

They are too easy with spending money.

Lacking in basic financial literacy, they allocate capital foolishly. 

Some losing money to simple scams like magic stones or elaborate scams like PONZI schemes or buying expensive financial products or locking up funds in illiquid non-productive assets.

The CPF is a system that is meant to help the masses to help themselves.

If we think the system cannot help us, it is probably because we have not tried to help ourselves.

Of course, there will be some who are physically or mentally handicapped and these are people who genuinely need help. 

They cannot help themselves.

However, for most of us in Singapore, we don't really have anyone to blame but ourselves if we languish in poverty.

Read a couple of emails from readers who have helped themselves:
Power to become financially stronger is within us!


Cory said...

Well, he is correct that it helps the Rich that they know what CPF can do for them. Most below average do not have financial sense to know that CPF helps them most. :) Ops Sorry is by no mean trying to be sarcastic if it helps.

I am always amaze the returns I got from CPF for the relative small amount of money inside CPF.


AK71 said...

Jack James:
Somehow in a way , yes .
It is a privilege for those who are able to max out the CPF contribution for themselves , parents and children . And of course you need quite a fair bit of 💰!

Raymond Ng:
CPF mission has stated clearly.
Sometime somehow some people just read it differently. ;)

Jimmy Ng:
Actually, on the surface, he is correct. It helps those who can read and write to get rich.
Why ?
Simple. The CPF articles from ASSI and other blogs AND CPF sites, helps to clarify the concerns. So, if you cannot understand and unwilling to try to understand by asking CPF directly. How to huat ?

Raymond Ng:
Many people just don't want to 'understand' .... bcos they just want take out their money at 55.

Jimmy Ng:
then spend it all on XMM and trips to cowboy land,
then later complain PAP sucks and never give them pension or take care of them..
Based on true stories of my retired biker friends over decades ago.
then back to work as McD or security guards etc etc.

Spur said...

CPF helps the rich, land & capital owners become richer ... but not directly :)

Thanks to CPF & the whole idea of self-reliance:
1) Taxes both personal & corporate can be kept low --- CPF funds act as relatively cheap float for govt to finance higher-return investments, from industrialization (e.g. Jurong Industrial Park) & GLCs in the early years to current high-value initiatives for future e.g. smart nation, AI, healthcare, pharmaceuticals, highly efficient construction methods, cybersecurity, start-up incubators, stakes in foreign high-growth companies (haha!), etc.

2) CPF for properties acting as nitro-boosters for the core property & banking sectors, and helping to oil the other segments of the economy. The initial boost from 1990-1996 was practically 2 generations' worth of property increase compressed into 6 years.

CPF itself is worth pretty little to the rich folks --- if you've the privilege to bring up CPF to them like I unfortunately have, chances are you'll be informed condescendingly (& sometimes with a smirk) that CPF doesn't even register on their finances or in their minds! Hahaha!!!

AK71 said...

Hi Spur,

Well said.

The CPF makes a difference to a peasant millionaire like me but not to the truly rich.

They don't need it. :p

MSAPersonalFinance said...

Hi AK71,

I think in general, a person who earns $1500 and spends $500 a month as compared to a person who earns $3000 and spends $500 a month, the latter will definitely has easier life. The point is it is in general but not specific to CPF only.

No matter how hard you try, a person who earns $1500 a month can only save <$700 but a person who earns $3000 can save <$1900. So, the conclusion is try to increase your income along the way while still keeping your expenses low is the only way to success.

AK71 said...


Oh, that is for sure and I have been saying this since the early days of my blog too. :)

Do you want to be richer?

Potatoish said...

Hi AK,

Honestly I do not believe rain or shine common folks like me almost living by paycheck is willing to contribute 20% to their CPF monthly if not forced. That is why CPF is enforced. Buying a HDD WITHIN one means is important (eg: 2k salary, get a 3RM isntead of a 4/5RM)
I am sure many fellow Singaporeans have benefited from CPF's force save and slightly better than banks interest that enabling them to buy their first HDB.


AK71 said...

Simeon Kong on my FB wall:

The CPF’s mechanism is ready meant for the lower income who will have difficulty retiring. If it’s for the rich it will have no ceiling for contribution, the rich will then be “richer”.

Do you think company is ready “happy” to pay CPF, if not forced by the Gov we will not have forced saving even to purchase housing or basic health care insurance ....

I truly understand why so many ppl is not happy and feel that their money is locked in the CPF system and its would be nice to take them out and enjoy since it is our money. But another way is to not to think of it until later in life.

AK71 said...

Ervin Ong on my FB wall:

Don't understand why people would claim that CPF is for the rich, when the return is not really high for the rich.

CPF is really for the masses, who don't know how to invest to get higher return.

iwimsasl said...

I would say CPF benefit the middle working class(30-70%) population the most as they will have little problem in meeting either BRS-FRS-ERS plus MS ceiling.
Those towkays and rich ppl like OHL don't even bother - he actally donated all($1.6m)to charities some years ago.

全自然 said...

Hi AK and readers

Let me have your views on this;

Currently cpf ceiling is 6000. Why based on an absolute amount? If i earn 6000 and less, 20% of my salary goes to cpf, it is a lot to me. So any policy changes made to cpf , i will be paying a lot attention.

Now, they are a lot people, high income earning people who make a few tens even hundreds of thousands a month, i am sure people who make such policies changes earn salary in that ranges. My question is, why not we have cpf policy that regardless of how much you earn, 20% of your salary goes to cpf? Isn't this more fair to everyone? Will they make the same cpf policy of cpf if this is the case?

Remember, everything goes in proportional, so the question of retirement adequacy should not arise.

I kind of amazed people keep complaining cpf, but why nobody raised this question?

全自然 said...

Just to add on, someone may say that if i earn 200k a month, i don need cpf to help retirement, but who is that to say i need cpf to help if i earn 6k a month?
Removing the ceiling also goes a long way in helping the cpf to boost up its reserves which in turn benefits every one, so is not just about fairness, it is also social responsibility. Those who made the policy will also can better appreciate the benefits cpf bring to them, I think

AK71 said...

Hi 全自然,

The CPF system is not meant to help high flyers and the rich. These people have greater financial ability to prepare for a comfortable retirement and they should not burden the system.

The CPF does not contribute to our country's reserves. The money is used to buy special bonds issued by our government and our sovereign wealth fund has to generate returns to honor the currently guaranteed interest rates.

You might want to read this:

AK71 said...

Tong Xiang Yap on my FB wall:

I think the reader did not consider the employer contribution portion, if there is no cap on salary ie means the employer would have to fork out a lot more say for example for an employee that earn 10k a month vs, cap at 6k a month employee.

Not to burden the CPF system (yes i agree!) because probably high income earner would have other ways to save up for retirement.

Another important point is that by having no cap to CPF contribution would simply means higher employer contribution = higher expense for the employee and makes us less competitive in terms of overall salary. Business may move out to cheaper location, hard truth.

全自然 said...


I am not convinced how can more money by contributors in CPF be burdening the system. While the return of CPF is higher than fixed deposits or bonds, the money is locked almost permanently, well you get what i meant.

To give a comparison, a whole life insurance can give a compound return of 4%, the insurance company will welcome more money if you are willing to put in.

To Tong Xiang Yap, i meant the employee portion of cpf. Employer's portion can leave it as is.

If i earn 6K a month, I don't need the gov to plan my retirement, i can DIY, or the gov can say it is optional for me how much i want to contribute. Why is it that people who earn 20K a month need less retirement planning than a person who earns 6K a month? How comfortable people during their retirement life is not dependent on how much per month they earn, is how well they managed their finance during their productive years. To lead the same lifestyle during retirement as during working life, a person may spend for instance 50% of his nett earnings every month, is not whether 3000 or 10K is enough. A person who earns 6K will find that 3K is enough to for him to live comfortabley, while a person who earns 20K a month will need 10K to live the same happy lifestyle he used to have. So don't brand CPF as a board to help so called the poor people only, it is something where people talk about retirement planning. Now, it will be interesting for me to know how many people who earns 20K or more a month is willing to have 20% of his take home money put inside CPF, we need to find out...

AK71 said...

Hi 全自然,

Please see:
Remove CPF Annual Limit.

Would be interesting to have more perspectives on this. :)

MSAPersonalFinance said...

Hi AK71,

I think the rich that the reader is referring to is middle class to me (PMETs who are graduated from tertiary education and earning about $6K a month). My definition of rich is those earning $200K per annum. Like I say, people who are earning $6K a month definitely having more comfortable life than those who earn $1500 a month. After setting aside 20% of $6K, there are still plenty left. On top of that, they have higher saving in CPF and as a result earn more interest from CPF as well.

In my view, I feel that one should put in effort to understand the details of government policy and think how should you react to optimize the benefit from it. Right mindset is playing important role in your success. The negative feeling will affect your health. Furthermore, after spending decades of lifetime complaining, it won't make CPF to be abolished and money to be returned to you. I will think this way instead, without CPF I am earning $6K a month. With CPF, I am actually earning $7020. If not for CPF, my employer will not be paying me extra $1020 a month.

AK71 said...


That's the spirit. Instead of complaining and not doing anything, why not make the system work for us instead? :)

My definition of "rich" is different. See:
Becoming a millionaire next door.

Unknown said...

Hi AK,
CPF scheme is to make the rich/wealthy richer without taking any risks. Let assume I have a new kid now, the govt will credit 4k into the kid Medisave a/c and hence the kid already will have his CPF acc open once he/she is born. All the rich need to do is top top up the kid special acc to the Max of $166k as this amount to wealthy people is not considered a big sum. In this way, he does not need to worry about his kid getting the money too soon but when his kid retires at age 65, he/she will have 2M dollars by then due to the compounding effect. I believe this gift from a wealthy parent is not bad......

Unknown said...

CPF is to make the rich richer without taking on risks! If today the wealthy have a new born, he could easily top up his CPF Special to its max of 166k and by the time his kid turn 65, that's a cool $2m, assuming 4% compounded! I dont think anyone in that position will complain if our parents do that for us last time ...

AK71 said...

Hi P Lee,

Thanks for the perspective.

You might be interested in this blog:
Planning a $1.4m legacy but be aware of this.

Frankly, I do not think $1.4 million 55 years from now is going to be a big deal and probably doesn't make a big difference to the truly rich. Of course, it does not detract from the fact that it is something they can do.

breakaway said...

Hi AK,

Currently working, 31 years old.

Quick question - My current SA sits at $40k and MA sits at $40K.
Based on current MA limit = $54,500, remaining money will go to my SA account.

I have started contributing $7000 yearly into my SA account for tax relief.
Based on my calculation and projected increase of limit yield of 4.4% per annum on MA, my MA contribution will flow into my SA account in 3-4 years time.
When that happens, my monthly contribution to MA and SA will be around $15K/year (Including VC of $7K), taking into consideration of the 4.4% increase limit of MA per year.

With that projection again, I will hit the current FRS of $171K in 7-8 years time.

Does it still make sense to transfer my CPF OA account money to my SA account?

AK71 said...

Hi breakaway,

A blog inspired by your comment:
Sensible to do CPF OA to SA transfer?

Gambatte! :)

AK71 said...

Acer Lim says...
The MSTU is limited by the prevailing minimum sum (MS) or what is now known as the full retirement sum (FRS).

In this case, how we can achieve the ERS in our retirement account by 55 years old?

AK says...
If we have enough money in the OA, can use to top up to ERS at 55 lor.

The CPF is meant to help average members and not the richer members.

This is why the MSTU is limited to FRS.

I also want to put more money in my SA but cannot. :(

AK71 said...

Henry said...
Aiyo AK so humble. Humility is good. You are already very successful to me.
"Very rich" or some call UHNWI means net worth of US$20 mil i think.

AK said...
I am just being honest. :)

I am also very fortunate to be a Singaporean.

When people ask if I am patriotic, I would tell them that I feel patriotic whenever I look at my CPF statement. :p

Monthly Popular Blog Posts

Bloggy Award