TL;DR – CPF scheme is bad only for those who do not bother to find out how it works.
Why do Singaporeans hate the Central Provident Fund (CPF)?
CPF seems to be a dirty word that is enough to get a lot of detractors people riled up and ready to criticize the scheme and how much it sucks at the mention of it.
The most popular narratives, of course, would be how the Government takes away 20% of our salary, how the Government keeps increasing the minimum sum, making it almost impossible for us to withdraw what is rightfully our money when we reach 55.
However, I beg to differ.
Why does Government take away 20% of our salary?
When I first started working in my first job, taking away 20% of my monthly salary was a huge deal for me, considering my measly salary.
I cursed and swore at the Government for this stupid scheme because it’s a downright insult. Like, hello? I’m an adult! Did the Government think that I cannot be trusted to save and manage my own money? It’s my money, damn it! Give it back to me!
But unfortunately, they are right. I cannot be trusted with my own money even though I thought I could.
As my disposable income increased, my expenses also increased. No matter how much I earned, I always seemed to find myself broke at every end of the month and asking myself the same question, “where did all my money go?” (Oh, they went to credit card bills, Grab, Starbucks, bubble tea, Spotify subscription, Netflix subscription, online shopping, Sephora, the list goes on…….)
Setting aside a portion of my salary as my own savings didn’t work either – I ended up “borrowing” money from my almost non-existent savings fund, promising to put the money back on my next payday. But I never did.
Can you if imagine there are no forced savings like CPF to “lock away 20%” of my savings? I’d have little or no retirement savings to depend on, and I’d end up living like a degen, having to tap on to taxpayers’ money for living.
Hence, for people (like me) who cannot be trusted to even save for a rainy day or budget their expenses properly without chalking up credit card debts, CPF is great!
But of course, there’d be still a group of people who insist that they can manage their own money. Well, stop deceiving yourself – because many of you can’t.
You wouldn’t even be harping about that 20% if you’re that good #justsaying
Why does Government keep increasing the CPF Retirement Sum?
As of today, a Retirement Account (RA) will be created for Singaporeans and Permanent Residents (PRs) when they turn 55. Savings from the Ordinary Account (OA) and Special Account (SA) will be transferred to RA, up to the Full Retirement Sum (FRS).
Every year, the retirement sums for members turning 55 that year increases.
Some Singaporeans take offence at this increase, asking why the government is “shifting goal post”.
However, if you think about it, the Retirement Sum is meant to safeguard our retirement. Is it not common sense that this amount should increase too after taking into consideration the inflation rates, increasing standard of living in Singapore, as well as the longer life expectancy of Singaporeans?
For this reason, it is only right that the Retirement Sum must increase for each cohort so that Singaporeans have enough payout for retirement.
Also, the eligible payout age for the withdrawal of retirement sum still stays at 65.
And even if you suay-suay kick the bucket before you can even receive your payout, you can rest assured that your money will still go to your next-of-kin. But if you live longer than 88, you can earn more than you put in CPF!
Personally, I find CPF a good scheme because if not for these forced savings for retirement, I probably wouldn’t have invested the same amount into a retirement pool as large as my CPF LIFE in future.