CPF LIFE is not commercially viable. (Remove the CPF Annual Limit and...)

Read comments section: HERE.

In reply to AK's comment that not having a cap (i.e. CPF annual contribution limit) would be a burden to the system,


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.

AK said...
I spoke to a CEO of an insurance agency before and he says that he does not even try to sell private annuities because there isn't any out there that is stronger than CPF LIFE.

The returns from private annuities simply cannot match CPF LIFE's.

What does this suggest?

CPF LIFE is not commercially viable. 




CPF LIFE exists largely because of government intervention.

If a product is not commercially viable, it is a burden to the provider.

For people with more money, once they have maxed out their CPF membership benefits, they can always get private annuities to supplement CPF LIFE if they like.




CPF LIFE is a part of CPF's strategy to help all members achieve a basic level of retirement adequacy.

All CPF members should take full advantage of this.

CPF LIFE is a basic safety net.

CPF LIFE will help in ensuring retirement adequacy for all members and there should be no argument about this.




CPF LIFE aside, paying 4% to 6% interest for savings in the CPF-MA, CPF-SA and CPF-RA is a huge burden. 

Even paying 2.5% per annum for our CPF-OA savings could be considered a burden to the system because our AAA rated Singapore government is probably able to access cheaper funds. 

This could change in future, of course.







If we have more money, we have to look elsewhere to stash it.


I am sure insurance companies will welcome our money but I am not sure they will be able to guarantee a return of 4% per annum. 

These days, such a guarantee would be quite a burden.



-----------------------------------------
Two blogs published earlier today:
1. Is AK right 6x out of 10x?
2. REITs and rights: Good at right price.

Related post:
Would you rather have it or not?

REITs and rights issues: Good at the right price.

Reader:
Can I ask u a question regarding to recently cache log have issue a right maybe know is it this right can be convert able into share when expired?

AK:
Once they have expired, rights are worthless.





Reader:
Alamak
Did u know when is expired date? Pls
And How do I sell off

AK:
It has already expired.

Reader:
Alamak like that mean nothing can I do with it?

AK:
I blogged about this. I even posted a reminder on my FB wall. 😉
All instructions and closing date in the package sent out by the CDP too.




Please be very careful and take note of all the dates when there are rights issues.

Exercise your rights to avoid dilution and, possibly, a big decline in distribution yield before the closing date.

How did Cache Logistics Trust's rights issue turn out for me?

I took up my entitlement and also subscribed for excess rights, receiving 40% more rights units than my entitlement as a result.




All investments are good at the right price and because heavily discounted rights units give the highest yields, unless it is a basket case, applying for as many excess rights as I can afford to makes sense to me.

Read this blog from earlier today?
Is AK the investor right 6x out of 10x?

Related posts:
1. Nil-paid rights and excess rights. 
2. Cache Logistics Trust 18 for 100 rights issue.