IPS forum on CPF: Future needs and wants of seniors.

The next speaker was Associate Professor Tan Ern Ser from the Department of Sociology in NUS. His presentation looked at three categories of seniors aged 55-65, 65-74 and those 75 and older.

In general, younger seniors as well as male seniors do better in having CPF savings. More older seniors receive retirement funding from their children compared to the younger seniors. 

This, to me, shows that the CPF has become a more important part of retirement funding for Singaporeans and will continue to be so for younger generations, basic safety net though it may be.

Prof Tan also revealed that despite some worries, most of our seniors have seemingly been prudent with the CPF money they withdrew. See table below:

Usage of withdrawn CPF money.

Frankly, if I were to withdraw my CPF money just to plonk almost half of it in a savings account, I would rather leave it in the CPF to earn 4% per annum in interest. 

Of course, this could change in future. Who knows? By the time I reach 55 years of age, fixed deposits in the banks here could attract interest payments of more than 5% per annum.

What I also found interesting is in the next slide:

Prof Tan asked whether good relationships with children lead to financial adequacy for the seniors or does financial adequacy of the seniors affect their relationships with their children? 

Well, I think that if the reliance on children should be an important part of some people's retirement planning, then, this could be an interesting question to ponder.

OK, who threw a shoe at me? Who? Who?

See slides: here.

Related posts:
1. AK attended a forum on CPF.
2. What is our attitude towards having children?

IPS forum on CPF: The Future Retirement Landscape.

The first speaker at the forum was Associate Professor Kalyani Mehta who is the head of the Gerontology Programme in the School of Human Development and Social Services at SIM University. In case you are wondering, Gerontology is the study of social, psychological and biological aspects of ageing. Big word, I know.

The main take away for me here is how people are living longer but they are not necessarily healthier. So, we have longer life expectancy (LE) today but what is also important to note is healthy life expectancy (HALE) and this might not match up. Take a look at the slide below:

So, on average, a male would be unhealthy (i.e. needing medical and maybe even palliative care) for 6.6 years while a female would be so for 6.8 years before saying good-bye to this world.

There will also be a growing number of aged who are single or divorced. They could be childless. So, there would be more elderly who stay alone in future.

We always say that family is the first line of defence but for these elderly people, the State will have to take a more active role in providing the necessary care.

What do I think?

Well, it is true that life expectancy has risen as nutrition and hygiene standards improved over time. Medical science has also improved. These factors help to promote longevity.

So, as people live longer, they will need more money for a longer time and healthcare costs will be a big burden if they are not well prepared. I like how our government has come up with Medishield Life to provide coverage for all Singaporeans for life, including those with pre-existing medical conditions. That is fantastic and I can't wait for it to be implemented because it will help people like my father who has pre-existing medical conditions and is almost 70 years old.

More importantly, we have to accept the fact that there will be more elderly people who are without children in future and if they happen to be financially disadvantaged at the same time, how can the government help them to meet their needs in their old age?

The CPF is a system that rewards employees. For those who were not gainfully employed for most of their lives for various reasons, what then? For these people, the CPF will not figure largely in their retirement plans, if at all. Those in such a situation who did not plan for retirement at all would be in dire straits.

The CPF is a system that help people who are able and willing to help themselves.

See slides: here.

Related post:
AK attended forum on CPF.

AK attended a forum on CPF and Retirement Adequacy with Mr. Tan Chuan Jin and Mr. Tharman Shanmugaratnam.

This really came as quite a surprise:

It took me a while to decide on whether I  should attend the event or not because of privacy considerations. Then, when I was talking to my younger sister about it, she told me quite bluntly that the media won't be interested in a certain obscure blog run by a certain obscure AK. They would be zooming in on the ministers! OK, that made up my mind for me.

So, I took a day leave from work and went for the event to see and hear for myself discussions regarding the CPF by probably some of our country's more brilliant thinkers. Issues regarding the CPF and retirement adequacy interest this frog in a well and it is really a privilege for me to be at the forum.

It has been a long day and I am feeling mentally and physically exhausted. Mentally exhausted because I had to process so much information in such a short time. I have not felt so taxed since my undergraduate days! Physically exhausted from sitting down for a whole day? Yup, I also walked from the Shangri-La Hotel to Orchard MRT station. I am so out of shape, I know.

I will try to share more in detail on what was discussed today at the forum in the coming days. I will also share some of my thoughts then.

For this blog post, I am just going to share some photos as well as an outline of the topics discussed.

Here are some photos:



Kiasu AK was quite early so that he could choose a good seat.

Panel discussion in the morning:
Meeting current and future needs and aspirations of Singaporeans.

Minister for Manpower, Mr. Tan Chuan-Jin.



Panel discussion in the afternoon:
Achieving the desired outcomes in a sustainable way.

DPM and Minister for Finance,
Mr. Tharman Shanmugaratnam.

Here is an outline of the issues discussed:

1. Future retirement landscape: Key influencing health and social trends.

2. Future needs and wants of seniors.

3. Housing and the CPF system.

4. Behavioural perspectives of the CPF system.

5. International retirement income systems.

6. Balancing returns, risks, facts and fallacies.

7. Analysing the CPF-IS and its alternatives.

8. Improving the CPF system.

From these 8 titles alone, I think you can guess that my brain had a fulfilling day. Now, some time is needed for digestion.

Related posts:
1. An(other) open letter to the Prime Minister.
2. E-books: Thoughts on financial security for Singaporeans.

Getting paid more while waiting for opportunities.

I have blogged about the importance of having a war chest or a few (i.e. money in the bank, SRS, CPF-OA and CPF-SA). I also blogged about how I have a preference to put most of my money in the bank in fixed deposits for higher interest income.

Of course with fixed deposits, there is a lock up period but if we should need the money, breaking a fixed deposit simply means forfeiting the higher interest income and nothing else. So, try to have several fixed deposits instead of putting all our money in a single fixed deposit and try to go for shorter lock up periods.

We want to keep a good percentage of our money in the bank liquid enough to react quickly to opportunities. Unfortunately, with interest rates in local savings accounts around 0.05% to 0.1% per annum, we have to pay a pretty steep price for having liquidity. As I have a relationship with UOB, I am paid 0.2% interest per annum for money in my savings account. Yah. Big, fat, hairy deal, right?

Although some have told me about other banks like OCBC offering up to 3.05% per annum in interest on savings (up to a maximum of $50,000 deposited in the OCBC 360 account), I have been slow to act because of the various conditions which look complicated to me and I am a simple (or, some might say, lazy) person. Conditions? Must go online to make 3 bill payments a month and must charge $400 worth of purchases to a credit card issued by OCBC per month, for examples.

Taken from OCBC's ad.
3.05%? Sounds good, doesn't it?

Well, to be fair, why shouldn't OCBC have conditions which have to be fulfilled if they are paying us so much more? Even if we met only 2 out of the 3 conditions, it would mean getting 2.05% interest per annum and for $50,000, that would be a nice $1,025 a year in interest income. Good enough for a short holiday. OK, lazy, er, I mean simple AK, put this is on your "to do" list.

Also, recently, I opened a savings account with CIMB because they are offering 0.5% per annum in interest and 0.8% per annum if I were to deposit $500 in the account every month. No minimum spending required. No payment online required.

To save me the trouble of depositing $500 each month, I could even give them a lump sum upfront which I did and they would treat it as monthly deposits in advance. I get an ATM card and a free cheque book too. I am still very old school and believe that a cheque book represents convenience.

Like OCBC, there is a cap on which the higher interest rate would apply. In OCBC's case, it is $50,000. In CIMB's case, it is $750,000. Wow! I don't have that much liquidity. So, it doesn't matter to me but I know where I should be squirrelling my excess liquidity now.

An interest rate of 0.8% per annum is 4x more than what UOB is paying me. Sheesh. Why should I not consider parking more money in CIMB from now on (after parking $50,000 in OCBC 360, that is)? OK, need to visit OCBC soon.

If you should be interested, here are the links:
CIMB Star Saver Account
OCBC 360 Account

In case you are wondering, this is not an advertorial. Just talking to myself, as usual.

Related posts:
1. A foreign chest for emergency funds.
2. A special chest for emergency funds.
3. Why fixed deposits over structured deposits?
4. $350,000 gets peanuts? Upsize the peanuts!
5. If we want peace, be prepared for war!