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Singapore's economic policies are complicated and often misdirecting. I'll break down the misconceptions.

The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). The returns are specifically decoupled from the real long term returns. This has historical roots in the government needing vast capital financing. They make enormous amounts of the delta between the short term interest rate and long term capital gains. Singapore has no oil or natural resources, but it's sovereign wealth fund has AUM in the regions of countries like Norway which do for this reason. It is not a shock absorber like the article suggests. The withdrawal terms are strict - housing, a significant medical expense and retirement are the only real ways to get money out of it.

"Trying to keep people employed" is a goal, not a policy. In fact the Singapore government maintains a large worker supply through immigration. The foreign worker population, ~30%. The main goal of the government is to maximize the absolute number of people working.

The reason it raising the retirement age is effective in workforce participation is because most people have no choice. Retirement only pays out after the age. The working life of an average Singaporean has seen 37% gone to CPF, maybe another 10% to income taxes, another 5% to GST, road tax, property tax, etc. After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees.

> Singapore's economic policies are complicated and often misdirecting. [...] it's sovereign wealth

Tangentially, I've had a similar gripe around how some US folks discuss Singapore's old rival Hong Kong. I see advocacy that "Hong Kong shows X works, we should do X here here", while ignoring the other half of the system required to make things work, aspects that they would not support adopting.

For example, celebrating its "tax freedom" while glossing over public/subsidized housing, and the revenues of its large [0] sovereign-wealth fund.

[0] Not nearly as large as Singapore or Norway, but significant. To put it in context (and per-capita)... if the US is 1x, then HK=80x, Singapore=356x, Norway=379x.

The CPF sounds pretty clever. It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. It makes the government money. This sounds like a win win kind of policy.

To me it sounds like a tax structured in a strange way so it doesn't obviously read as a tax.

It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.

The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out. Most other countries have lower rates on their retirement schemes, which makes it feasible for more people to live on their savings for a few years before the government retirement scheme kicks in. E.g. in the US it's pretty feasible for the upper middle/lower upper classes to retire a few years before Social Security kicks in, especially if they're willing to live frugally.

It’s almost impossible for an upper middle class couple to retire in the US before their 65 unless they have some type of government provided or private company provided health insurance like teachers, police officers, military etc.

It’s about $25K a year for a decent plan which is doable. But you have to hope that Republicans - and yes this is a political issue - don’t successfully kill the ACA and make it impossible to get insurance at any cost if you have a pre-existing condition. If you are old - you will develop a pre-existing condition.

My parents are 83 and 81 and retired at 57/55. But my mom was a teacher who still gets benefits through the government and my dad gets benefits from the one factory that didn’t shut down in our hometown.

I’m 51 and even if I could retire early financially, I wouldn’t do it and stay in the US. Play the smallest fiddle for us. I “retired my wife” at 44 in 2020 8 years into our marriage when I did a slight transition to an industry where remote work with travel is the norm (cloud consulting + app dev) and we have traveled a lot including doing stints as “digital nomads”.

We are staying in one of the countries that we might retire to as a Plan B for six weeks starting next week.

Even now that we moved to state tax free Florida and my wife hasn’t had to work in six years, she keeps a current CDL because she can get a job as a school bus driver easily for the benefits and someone will pay me for independent consulting if I lose my job.

The FIRE community and my own personal situation prove you very, very wrong. It's absolutely possible for a upper middle class family to retire in their 50s, even in their 40s, if they live frugally.

"Live frugally" , "FIRE" , "work in tech"

All incompatible with 99% of the upper class, neither do they want to eat ramen to retire early.

You're also one medical disaster away from being "very very wrong"

FIRE doesn't depend on having a tech job. Its all about income to expense ratio. Planning for medical events is something that gets talked to death in these communities.

How do you plan for a potential quarter million dollar medical bills over a couple of years?

The same way that an employed person would plan for this. Catastrophic insurance plans put a cap on how much your medical bills can be.

90%+ chance the person you are replying to has health insurance that will cover them in case of medical disaster.

I absolutely have health insurance, the most expensive available on my state. That doesn't protect me 100%, but what health insurance (including the ones available at most companies) does?

People who have poor money management skills believe that FIRE=Ramen and no health insurance... In fact, it's about getting a 30K car (the one I bought new 3 years ago) instead a 70K car despite having the money.

And what happens when the Republican Party gut the ACA and you have a pre-existing condition. Do you know what life was like trying to get insurance with a pre-existing condition before 2012?

99% of people have poor money management skills? It's statements like this that makes FIRE a fringe scene.

And health insurance as soon as the ACA is gutted and you have a pre existing condition? Sure I could retire to Costa Rica or Panama. One of those are a plan B and we will be in CR for six weeks and we are both learning Spanish - I am. decent at it.

I bet you also your idea of upper middle class is not statistically valid.

https://dqydj.com/household-income-percentile-calculator/

Costa Rica is on my retirement shortlist. I really like it there and have taken the family for vacation a couple times. I've driven the whole country pretty much North to South. Puerto Jimenez is one of my favorite places but it's very rural. There's some nice areas an hour or two North of San Jose as well. I've met a handful of US families that, when the pandemic hit, just sold everything they owned and moved to Costa Rica. As far as central america goes Costa Rica is a bright spot of stability and like a functioning government. I live in Dallas so pretty much have to know a little Spanish but there isn't much of a language barrier at all. You could do a lot worse than Costa Rica.

I didn't get where I am by taking random bets, but I'll say you'd lose your money here.

Were you around and trying to get health insurance before 2012? I was. The startup I worked for shut down and while I had a well paying contract lined up literally the next week, I couldn’t get health insurance at any price because of a pre-existing condition even though at the time, I was a part time fitness instructor and I had just gotten through running my first (and last) two half marathons.

If you are betting on the stability of the US health care system outside of employer funded health care, that is a monumentally stupid bet with one party actively trying to kill the ACA.

So what did you do? Clearly you didn't die. Did you just have no insurance for the week before the new job started, or what?

This also happened to you while you were working and slightly between jobs. So it's not really a FIRE concern if the concern is the US messing up the health care system even more in that it would effect everyone whether working or not. Generally speaking, an answer to mitigating a lot of types of risk with a FIRE model is: you just go back to work for a while. This is easier the younger you are.

Edit: Also I thought COBRA would have been a more recent thing but it was Regan era. So did you not have employer-sponsored coverage with the startup?

No, my then fiance/now wife and I canceled our wedding we had planned, and went to the courthouse and got married six months earlier so I could get on her insurance.

Also, just so happen I did end up in the hospital three weeks later because something happened that affected my breathing for an entire year.

And how do you “go back to work” if the entire reason you need to go back to work is that you have a health condition?

If you haven’t checked, jobs aren’t that easy to come by quickly in 2026 in tech like they use to be. Sure I could find someone to give me a contract if not hire me full time - but we are still back to not having insurance .

The US messing up insurance on the open market is the concern and it being back like it was pre ACA. That only affects the unemployed under 65.

As far as being between jobs - usually you can get COBRA for a limited amount of time - not an option for FIRE.

Oh yeah, that brings up another point, I did pay for COBRA for two months back then. The contract I had paid more than enough to afford it. Then the acquiring company shut down their insurance plan and COBRA wasn’t even an option

Statistics! Can a person below the median income afford to retire early? The answer is a resounding no. Can a person the top 10th percentile (upper middle class) afford to retire early? Yes.

https://dqydj.com/household-income-percentile-calculator/

So the top 10% is a household income of $250K and most of those couples didn’t reach that until their 40s. They aren’t making $225K as an L5 at 25 years old like a former intern/new grad I mentored when I was at BigTech

Most software developers won’t even see above $160K inflation adjusted during their career. Most work in second tier cities in the “enterprise”z.

Thanks for living frugally. Since you now have some spare money, I decided it's time for a rent increase. And a tax increase.

https://mrmoneymustache.com/blog/ Read this story and more in the fire community, it's not impossible

Does that answer the question about what happens when the ACA is gutted and you can’t get insurance at any price with a pre-existing condition?

That happened to me right before the ACA went into affect. I was engaged to my now wife and we moved our marriage up early so I could get on her insurance.

With health marketplace you can get insurance, or you can get a PPA service, or save money into a HSA, like there is multiple ways to do it.

Until the Republican Party finally succeeds at gutting the ACA or make it so bad that insurers wing cover it.

Let’s say you maxed out your HSA for 20 years and have $200K - that can be wiped out with one uncovered major medical incident the HSA max is relatively low.

So Texas also doesn’t have income tax but my siblings house (assessed at a lower value than mine) is assessed property tax almost triple wha mine is, dwarfing my state income tax plus property tax. Not sure about Florida - YMMV.

My property taxes are $3000 a year. They were around $7K a year before we moved. We also downsized to a two bedroom condo -1200 square feet - from a 3500 square foot house in the most expensive county in GA (Forsyth) after my step son graduated in 2020 and after Covid. We sold our house for twice what we had it built for 8 years earlier and bought our condo for the same price as we paid for our house in 2016.

Florida - especially when you live in the same county as DisneyWorld - is heavily subsidized by tourism

The other way to avoid a pre-existing condition is to just avoid medical care entirely.

Ah yes, the 4chan retirement plan. Die of a preventable cause at age 42 while waiting for your captcha.

If you accept that cancer is a death sentence, it’s not absurd to “self fund” your insurance with a nest egg.

You can shop around quite a bit for non urgent care, and get good cash discount.

If you accept cancer as a death sentence, you're an idiot. I had cancer at age 41. If I left it untreated, sure I'd be dead, probably by age 43. But I'm not an idiot, I had good health insurance, I was treated, and now that health event is over twenty years in the past.

Had I self-funded with a (non-existent) nest egg, I would still be in debt over $600k. Instead, my insurance had to deal with that...

While I will not argue that in your case insurance was bad, there is no way that $600,000 is the cash price for cancer treatment (especially 20 years ago, but also today).

The average cost of cancer treatment is $150k [1], and lower with cash price + shopping.

[1] https://treatcancer.com/blog/cost-of-cancer/

600k once in 40 years is cheap compared to the total cost of insurance, especially when you consider the compound interest you could have made on premiums not paid, plus with the freedom to get cancer care cheaper someplace privately outside the US.

Your insurance company got the last laugh by a long shot. A typical family on insurance would pay $600,000 (between their take-home and the reduced wages paid by employers to cover insurance) in just 25 years, and that's before considering the opportunity cost of lost investments/yield.

How much of a nest egg do you think would let you afford a major operation like heart surgery or cancer care?

Read the qualifier.

And heart surgery is ~$60k. [1]

That's <36 months of insurance premiums according to the earlier poster.

[1] https://cost.sidecarhealth.com/ts/heart-bypass-surgery-cost-...

It cost $30k for a loved one just to go to the hospital when their heart "felt weird" but absolutely nothing turned out to be wrong and all they did was run a couple quick scans and tests. I do agree with the overall idea of what you're saying that usually the premiums are way more than what you could get care for if you just saved the money, but the numbers on the website seem very wrong. I realize it's a total anecdote but from loved one's bills it is $20-30k just to get in the door and that is if actually nothing is wrong and there is no heart attack yet they're quoting $30k for an actual heart attack care.

Even a minor one.

> The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out...

But they can pull out for housing right? That's an enormous portion of most people's expenses. If I didn't have to worry about housing, I could be living large on less than half of my salary, I would certainly semi-retire at least.

>It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.

Yeah there's even a term for it: https://en.wikipedia.org/wiki/Financial_repression

> The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.

It also robs the individual's freedom to gamble with their retirement funds while expecting/demanding a bailout when shit hits the fan.

In the USA we have thoughtful policies that allow people over a certain amount of wealth invested in key industries to do that.

That's not all that different than US Social Security. SS has a much lower required contribution/tax rate, but the overall scheme seems similar (lower than market returns, etc) and naming (despite SS actually being called a tax, many residents think of it as a required personal retirement savings account).

It’s not a win win policy. The citizens lose massive amount of their money to government on the bond yield delta. It preys on people not knowing the effect of long term compound interest.

Edit: in fact interest delta is how banks make their huge profits except the government here does it by force.

The average person does not make meaningful interest or investment income, its not practical to on individual small salaries.

In this case the citizens are forced to save, but the interest they're given is less than what they would have earned by saving the same amount on their own.

Also, the average person in the United States does have meaningful investments toward retirement age.

> instead of just throwing it into a tax. It makes the government money

It is a tax, but with extra steps.

The reason it makes the government money is because they’re collecting the extra interest that citizens would have earned if they were free to invest it on their own.

Why does the government get to decide when we retire?

You can retire whenever you want. The government decides when to start funding it.

As for why - the same reason why they get to decide what side of the road you drive on and what laws you follow. They rule the patch of land you were born on, and if you don't like it you can either participate in the system (assuming it's a democracy) or leave.

This boils down to a "Might makes right" claim. It doesn't answer the question why. Only how.

It definitely answers why. You are asking for an appeal to some moral justification. But there isn't one, and it doesn't matter. That's the whole point of "might makes right".

In an attempt to steelman, you are saying:

"There is no moral justification for the government setting a retirement age, but they are able to. So it doesn't matter."

The government doesn’t set the retirement age. You can retire whenever you want. There are no laws against a 50 year old retiring and living off his own savings, nor against a 70 year old continuing to work.

There is a minimum age to collect old age benefits from the government. The justification for that should be obvious.

The choice between working and starving to death is not a choice. If your savings have been taken by the government, then you don't have a choice.

The justification is to force people to work until they are too old to do so. Then steal whatever they have left with medical bills and price hikes on necessities.

> The justification is to force people to work until they are too old to do so.

Actually, the justification is to prevent old people from having to work. Retirement didn't really exist until the creation of pension systems in the late 19th century, and the modern social security system was a poverty alleviation measure introduced in the 1930s. Hell, social security was initially resented by older workers because of the cover it gave employers for firing them for being too old.

And if I was emperor, I would abolish payroll taxes and phase out Social Security. Unfortunately, we live in a democracy.

Social security was sold to the populace for purposes of voting as "insurance." Lawmakers straight up admitted they purposefully wrote the law in a confusing way[] -- resulting in evasion of democratic scrutiny and the scrutiny of the constitution. Then they briefly switched to not calling it insurance just for the purpose of scrutiny of the courts.

Social Security constitutionality was ruled on just months after the 'switch in time that saved 9' associated with a threatening to pack the courts and evade the checks and balances built into our "democracy." They ruled it was covered under 'general welfare' in a way that was totally historically inaccurate.

Furthermore, FDR and congress purposefully had it packaged in an omnibus style bill to evade democratic scrutiny over the individual portions, by purposefully torpedoing other aid to needy individuals if SS didn't pass, so that lawmakers wouldn't be able to vote on democratic view of SS but rather being damned in a catch-22 where they'd be accused of not helping out the needy in other ways.

Basically the whole thing was designed to not only evade democracy but also the constitution.

[] Recollections of the New Deal, by Thomas H. Eliot, pp. 102-115 (Northeastern University Press, Boston, 1991).

But the CPF isn't represented as benefits from the government. It's represented and claimed to be your own savings that you have set aside. At gamed bond rates where the government skims off the top.

I'm just saying it is the answer.

To make an overly dramatic analogy, if you were kidnapped and asked why the kidnapper was able to hold you against your will, the answer is because they've chained you up and they have the gun, and so on. That's literally the answer to why. The fact that what they're doing is morally wrong is completely irrelevant.

I know why they are able, what I want people to think about is "Why." The kidnapper has a reason.

CPF makes a moral justification by arguing it is a "savings and pension plan" under the auspices of a moral justification of helping citizens set aside their own money. The very first thing you are greeted with on their website is that it's savings and an overview represents it as "setting aside" your own funds.

The government makes a moral justification of a savings plan but then when we dig down to it it's all ether and really just a scheme for bond rate arbitrage for the government.

The point isn't that might makes right is false, it's that the moral justification is a facade.

When are moral justifications not facades?

What question do you want answered exactly? Why we have governments and not anarchy?

Why does the government get to decide when we retire?

Like I said, they don't. You can retire today. They decide when you get access to a national retirement plan. Citizens of the country vote for that plan and how it is implemented.

I personally could retire today. Most people can't. There is no referendum I remember where we decided to raise the retirement age. It seems like our government just kind of decided to do so.

Couldn’t you say the same thing about social security or pensions? There is a lot of economic forces that direct people to work until a certain age, the government controlling a benefit is only one of them. As to why, you’ll need to dissect representative democracies in Singapore’s case.

You can retire whenever you want, but you specifically would probably die in the wilderness.

You apparently know very little about me.

Edit: Although, when my time comes as it inevitably will, I think the wilderness would be a nice place to do it. Maybe in a tree.

It doesn't (you can retire early), but it does decide part of what you will need to be saving and how.

And the reason it decides that, apart from "because it can", is because many societies have seen what happens when it's left to individuals to take care of this, and they fuck it up in massive numbers, and the outcome of that then fucks up society.

It is really easy to "Fuck it up" when greedy assholes jack up the price of necessities like food, shelter, and medical care. 66% of bankruptcies are due to medical costs. We should just socialize necessities like food, shelter, and medical care so there is no chance of "Fucking it up." That would cover the possibility of disability as well.

It sounds to me like we have built a system to exploit people as much as possible. Treating them like farm animals.

>We should just socialize necessities like food, shelter, and medical care so there is no chance of "Fucking it up."

How does socializing work if there are insufficient workers relative to non workers? I.e. the supply of food/shelter/medical care is insufficient to meet the demand?

Why would there be insufficient workers relative to non-workers? Socializing health care, shelter, and food does not lead to a worker shortage. In fact, having a healthier and taken care of population leads to prosperity in general. In addition, it leads to reduced costs. Countries with socialized medicine pay a fraction of what America does for better health outcomes.

This question cannot be asked in good faith on a user board. It requires an 800 pages book on politics, history, philosophy, economics to be properly answerered and it would barely scratch the surface.

You might as well ask similar questions about most basic laws and concepts behind how western societies work.

Yes, you should be asking similar questions about most basic laws and concepts behind how western society works.

We should each ask ourselves such questions and review our view on them from time to time during our life because they're important, but mostly by doing our own research and self study. But asking point-blank strangers such a vague question is putting an unfair burden on them.

There's maybe a few hundred people worldwide who could casually drop a proper answer to your question while casually browsing hn.

I believe it'd be more fair to start answering your own question to show how far you are in your intellectual journey on that topic.

My own answer is this. We have created a system of exploitation where we extract value from people's labor and transfer it to an oligarchicy that is slowly increasing in power. Governments are captured by that ruling class and are unwilling to do anything that threatens them. In addition, they are slowly reducing the rights and social mobility of the middle and lower class in order to expand the power and capital of the oligarchy.

Any money that is possessed by the working classes is then taxed in the form of increased living expenses or directly by the government until they can barely afford the necessities that allow them to continue working. Once they are no longer able to do so, they are discarded and allowed to die of preventable illness, starvation, drug use or exposure.

The government decides when we can retire and they help us out. You can stop working today if you want, Government shouldn't pay you for it for no reason. Your duty as a citizen is to work and build your nation, eventually the government pays back that service with benefits.

This isn't something the government gives you. It is something they have confiscated and held on to.

> Your duty as a citizen is to work and build your nation

What about the duty of the trust fund babies and idle wealthy? What about the duty of the capital owners? Why is the retirement age going up instead of down as productivity increases?

Not for the majority of retirement savings in the US, where Social Security makes up only about 25%.

In the case of 401(k)s/DC plans and private pensions/DB plans, the government allowed savings without "confiscation," i.e. immediate taxation. They gave us the benefit of deferred taxation if you wait until retirement age.

What about the people who do not make enough to save and all their money goes to inflated living expenses? When do they get to retire?

These days I wonder about that duty I have. It sure felt obligatory some time ago. I thought of myself as a patriot and that the rule of law was something we we should be proud of. A country whose own anthem spoke of "liberty and justice for all".

The current trajectory makes my question a lot of things, including this whole "government pays back that service with benefits" as it will be some time before I ever see a penny of SSI.

A lot of our taxes in this country seem like a giant waste or are grossly inefficient at best.

A lot of that here in the US is because we've lost the will to participate in the systems that establish these things. We leave that to other people, and those other people represent our interests poorly. The people in a democracy take a really long time to effect change. It can be a life's work for some people. But the premise is that if we can find common ground we can eventually see some of our ideas take shape. That does still work here, but we have to actually have real conversations with each other that respect each others' differences to get anywhere.

> A lot of our taxes in this country seem like a giant waste or are grossly inefficient at best.

It's our duty to elect people who use tax dollars wisely and to vote out officials who neglect their responsibility to the people and use tax money to enrich themselves and anyone else willing to bribe them. Our government is filled with grifters because we've failed to hold them meaningfully accountable for robbing us and failing to provide the benefits we're funding.

Many of the grifters in government have been working hard to make it difficult to hold them accountable. They disenfranchise voters, they keep us afraid and our futures uncertain, they collude against efforts to reform the system they've established for their own benefit.

Government was never going to just let us have "liberty and justice for all" the job was always on "we the people" to insist on it. We can't just pay taxes and expect everything to work out. We have to use the democracy we have to force the government to work for us and not just for themselves. If we've reached a point where that's no longer possible then it's our duty to "refresh the tree of liberty" until we have a government that works for us.

Psychologically the deterioration of we the people's power happens at an even more basic level when children are taught to resolve their conflicts by seeking out an adult.

I wouldn't mind taxes if everyone paid their fair share and it went to improving the lives of everyone instead of the wealthy few. We live in the most productive times per capita that have ever existed. Why do we need to scrimp and save to buy food while the number of billionaires continues to climb?

Because we're failing to hold those billionaires accountable to the system that allows them to accumulate their wealth.

Bingo!

There is no "we" and has never been. Anybody who talks to you about "we" or "us" or your "duty" is just seeking to exploit you, hoping that you're dumb enough to fall for it.

There is in fact a we. It's just not based on race, religion, ethnicity, language, gender, or sexuality. "We" are the ones who create and work for a living instead of living off the backs of others. "They" are immensely wealthy oligarchs that exploit us using their ownership of land, buildings, communication networks and machines we need to survive.

The government doesn't decide when you retire. The government decides when it is willing to pay you to be retired.

Social security is an entitlement. They have taken money from your paycheck to fund it. In fact, they have taken more from your paycheck than they will pay back to you in order to pay for an aging population. The extra goes to bonds which the government then uses to reduce inflation when they decide to invade random countries or bail out a bank.

Now, why does the government get to decide when I retire with my own money?

If you don't like it, join the Amish and file a Form 4029.

https://en.wikipedia.org/wiki/Ergo_decedo

It’s analogous to the US, where you put money into social security and then withdraw later.

The only question is whether the fund is running at a surplus or not.

The US has raided its fund to finance other government programs, and then will have to pay it back via tax revenues.

> It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax.

Forced saving makes it a tax. It's essentially no different than payroll taxes in the U.S. that fund Social Security. Buying government bonds is still marginally better accounting than a complete Ponzi scam like Social Security in the U.S., but even that ultimately amounts to the same thing - the government is paying itself, so it's a wash.

The social security trust fund does buy government bonds.

Social security is not a savings account and is currently underfunded.

Except for the part where citizens get low returns and are forced to work their whole lives accruing minimal benefit.

How is being a serf win win?

Singapore is one of the last countries one will be a 'serf' in.

The parent contributor has conveniently left out the fact that the 37% of CPF contributions is split 20-17 in terms of employee-employer contributions[1], and has a ceiling of S$8000[2], so if one earns more than that, every additional dollar goes entirely to them, which is also taxed at globally low income tax rates[3]. One can put all one's post-tax money into any stocks/bonds/funds, and there is also no capital gains tax[4].

[1]: https://www.cpf.gov.sg/employer/employer-obligations/how-muc...

[2]: https://www.cpf.gov.sg/employer/infohub/news/cpf-related-ann...

[3]: https://www.iras.gov.sg/taxes/individual-income-tax/basics-o...

[4]: https://www.iras.gov.sg/taxes/individual-income-tax/basics-o...

>The parent contributor has conveniently left out the fact that the 37% of CPF contributions is split 20-17 in terms of employee-employer contributions[1]

This point is a shell game, because the employer's share is still effectively being taken from the employee. It's equivalent of "tariffs are paid by foreigners!" that's trotted out for supporting tariffs.

$8000 is considerably above median income, no?

Yes. Bluntly put, the government maximizes residence of high net worth individuals, and a 37% forced purchase of low interest bonds would be outrageous to them.

You mean the US, right? Especially with the part 2?

I know this may sound like a shock because you are privileged but 7% yoy return on capital is NOT the norm for the rest of the world. Just look at any other index not called the S&P or the Dow. Look up US exceptionalism.

The US policy for retirement savings shackles the younger generation with a ticking time bomb. Forcing your own citizens to save money for themselves is a lot better than forcing your own citizens to pay for others. Which one is more morally cruel?

HK has a similar forced savings, but that ROI is like 1 or 2% and the options to invest are paltry.

Some perspective is necessary. Yes it’s not great but compared to the rest of the world it’s stellar.

If ROI is lower than inflation then what’s the point of saving? So you can have an even worse standard of living after you retire?

Forced investment in low ROI vehicles is just a tax by another name.

Well, would you have a better standard of living with $0 or $1000 when you retire?

Even if that $1000 used to be worth $10000, that $0 is still worth $0.

People don’t believe me when I tell them that there’s a large portion of even the American population that will happily accept the simplicity and safety of serfdom.

I can’t speak for Singaporeans and every government has their detractors but the Singaporeans I’ve known loved their system and hated the western systems they were exposed to. They would laugh if you tried to describe their life as serfdom when compared to a life in the U.S. or Europe.

I'll be blunt and say most Singaporeans have a very poor idea of how these policies work. Another major one - virtually all Singaporeans believe they own their houses, and it is a point of pride and financial security. Most houses are on 99 year leases, but the idea that is deeply lodged is that this is longer than you can live so this is inconsequential. While this is true if they only cared about living in it, houses have huge financial/investment value to Singaporeans. Despite the iron mathematical law that these houses must depreciate their lease value, most Singaporeans believe house prices will continue to rise based on historical trends. The math just doesn't work out.

> virtually all Singaporeans believe they own their houses, and it is a point of pride and financial security. Most houses are on 99 year leases

It's not as if the US fairs any better. Here you never own your home, you have to pay property taxes your whole life (basically rent) or it will be taken from you. Eminent domain means that they can take your property from you at any time even if you've kept paying them.

Singapore has a home ownership rate of ~90% vs 65% in the US and prices are so unaffordable that on average people buying their first starter homes in the US are in their 40s! Most Americans, if they're lucky will get maybe get 30 years of their life in a home they own while they are still young and healthy enough to enjoy it.

Last I heard Singapore only had about 1,000 homeless. Whatever they're doing with housing could probably be improved on, but they seem to be doing a lot better than we are.

99 year leases make complete sense. Much of the value of a 'house' in an urban area like Singapore is actually in the land, and the value is being created by the community on a day-to-day basis. It makes no sense for that value to be captured for all future time by a single owner, that just encourages pointless speculation and makes it harder to allocate real estate towards its highest and most valuable use.

> It makes no sense for that value to be captured for all future time by a single owner, that just encourages pointless speculation and makes it harder to allocate real estate towards its highest and most valuable use.

How do 99 year leases fix the problem? Do people actually get kicked out at 99 years, or does the government renew it for a nominal fee?

If the lease gets renewed at market value then there's no point in speculating about what that land might be worth in the farther future. It's a key difference from a system where all of the future value must be captured at once by a single owner.

Doesn't that just turn into a property tax of 1% per year, without a massive tax bill every 99 years? 99 years is long enough that there's going to be at least 2 owners, which means all sorts of strategizing required on how to plan for the renewal of the lease.

I think Singaporeans have a decent idea, and given their quality of lives, they have no problems with the trade-offs. If they do, they leave. And many go back, because the trade-offs in the West are even worse.

> Despite the iron mathematical law that these houses must depreciate their lease value

SERS means that houses slated to be torn down are resold back to the government at near-market rates excluding the effect of the 99-year leasehold.

In Singapore, the government owns everything, even ostensibly 'freehold' land. If they want to run an MRT line under your house, and they need to tear your house down to get to it, they will force you to sell your house and your land to them. Has happened before, will absolutely happen again. It's an island city-state smaller than London. There is literally no space anywhere else.

> If they want to run an MRT line under your house, and they need to tear your house down to get to it, they will force you to sell your house and your land to them.

Eminent domain exists in the U.S. and other developed countries too. The point of it is largely to prevent any single owner from "holding up" a non-trivial project like an MRT line.

I think whether houses should be sold on a 99 year lease vs property is a large and separate question. The vast misunderstanding of it still remains - the idea that a house is owned, not rented. Selective properties might be bought back. But the fundamental invariant of this whole situation is that all 99 year leases will worth 0 eventually. Any rise in prices now only increases the eventual depreciation. And add on that massive loans are taken out on depreciating assets, so it's not an investment, it's a liability. And the significant majority of Singaporeans bears this liability on their books.

Unless we scale back our lives significantly, and are fine with a lot less stuff and vacations and devices and modernized living (houses and transit today are vastly more complex systems than a few decades ago), there simply is no way to let a large number of people live like rich people.

I grew up in East Germany, and while it was a total failure, they got at least one idea correct in the workers paradise: We need to work. (Never mind the implementation, I already said it was a total failure, okay? It's about problem recognition, not about the quality of the solution.)

And you know what? I'm actually like my grandfather, who without any need whatsoever continued to work well past retirement, privately, painting a house here, doing some paint shop there, designing and installing a sun dial somewhere. He only got off the scaffolding on a house's paint job a week before he died.

I too would hate to just laze around. I LOVE doing useful stuff. I worked and made money many times as a child already, and it was always fun!

What stopped the fun was the coming of The West (which I too went to the streets for and wanted, still, "side effects may apply"). While I studied CS I took a job in a chocolate factory, not because I needed the money, but because that's what I always did and was used to. Being in the production of stuff is actually FUN! Except then came some western management idiot to make it clear fun is over. I had just setup a machine to work as efficiently and as well as possible (because that's fun!), so now I had to wait a few minutes for it to finish. Just a few minutes, no time to start something else. So I briefly sat next to it and waited for it to finish. In comes the management idiot, immediately jumping on me, why am I lazing around??? That's not what they pay me for!

Just an anecdote, and of course it is much better in knowledge jobs, but that, and the fact that the money accumulates towards the top is what I think is a HUGE problem in today's capitalism. No wonder they have to make live as miserable as possible for the working majority, because there is no fun. The managers and owners think we don't want to work, and treat us accordingly. But it is THEM who are responsible for much of that.

Working as a painter for lack of imagination of what else to do is not fun. It reminds me of being “institutionalized” from Shawshank’s redemption.

Adult coloring books are a thing. I could definitely see a person enjoying a version of that, that also had a purpose beyond killing time.

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You get lots of vacations? And fancy transit systems? Where do you live and work?

> It is structured as a massive forced bond purchase scheme by citizens

the UK effectively does the same thing with DB schemes forced to buy Gilts

> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%).

Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.

The main difference is SS bonds are bought at market rates. CPF bonds are not.

Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.

The trust fund is funded by the overage of collected Social Security taxes compared to Social Security payouts. It is not "tacked on" and does not use "separate government funding".

Currently there are more payouts than taxes so the trust fund is being used to make up the difference.

When the trust fund is depleted (barring any changes, this happens at some point in the next decade if I'm not mistaken) then there will be a reckoning. If no action is taken by Congress the result is that payouts will be cut by the necessary percentage to match the taxes.

> does not use "separate government funding".

Yes, it does. The Obama administration explicitly appropriated general government funds to try and make up a developing shortfall in the 'fund'. There is no money being accumulated because there are more payouts than taxes - but even if that wasn't the case, these are not actual "bonds" that have been bought on any market, they're just non-market government obligations.

I had the privilege of getting a working gig in Singapore for a small AI startup: such a well run country! There is a sense of community for helping by employing people who need jobs, the police were friendly and I felt very safe there (I like to take long walks either early in the morning or late at night and I felt very secure.)

Amazing what the people and government have achieved since the end of WW2. 100% respect for them.

A side comment: I enjoy listening to English language news from many countries around the world to get different viewpoints. News media from Singapore is very interesting, indeed!

I spent years in Singapore and loved it there. Never had to face road rage (which so many of us experience daily several times driving in Texas! NextDoor is full of these stories) or aggressive behavior by anyone in authority including police and immigration officers. I know many people find Singapore boring after a while but it didn't bother me much. On the flip side, the cost of living is high as a foreigner and traveling to the US is very tiring due to the long distance.

A confounding factor here is that savings behavior is cultural rooted: https://pmc.ncbi.nlm.nih.gov/articles/PMC6135367/. Studies show that people within a country can have substantially different savings behaviors, robustly correlated with their origin countries, even among people who are third generation immigrants. It’s a mistake to treat either the U.S. or Singapore as homogenous populations for purposes of this analysis.

75% of Singaporeans are ethnically Chinese so based on what you are saying it would be worth comparing SG Chinese to Chinese CN on regret since China has a much less robust safety net.

Both sides see declines when hit with economic shocks

We are talking about material impacts, not culture

You know who they didn't interview: those who regret saving so much. Many of those people are dead and so the regret is something we can only apply on assumption that they would. I've known a few people who unexpectedly died before they hit retirement age. I've know a few people who retired and died suddenly. The vast majority of people in a "first world" country have an expected lifespan of about 80 - but there is a statistical curve and people start dieing in significant numbers at 65, while you are not an outlier until you make it to near 100 (though some exist).

You need to have some emergency savings. You should save for retirement somehow. If you can structure the above as insurance - and you can trust the insurance - (I know a few cases where the insurance type system went bankrupt and those with a "policy got nothing") that is best.

Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.

People who save a lot are typically people comforted by sitting on a big nest egg. Saving a lot for retirement and then dying the day before retirement isn’t necessarily going to be a source of regret, because they had 30 years of warm fuzzy feelings about eventually hatching their nest egg. They could have spent it all instead, and had a life full of anxiety.

You’re looking for people who didn’t want to save but begrudgingly saved at the expense of their pre-retirement life and then died before they could enjoy retirement. That’s a much smaller group.

This is more fleshed out in the book "Die with Zero" which may be a bit too extreme.

But in general you have three things to spend in your life: time, money, and effort.

You don't want to spend all your time saving money because you'll run out of time eventually, but you also don't want to spend all your money saving time because you'll run out of money.

It's all about balance and thoughtfully understanding what you actually want and how to get it.

Money can be passed down to your children and grandchildren though.

You won't be able to in the future unless you are very wealthy.

Countries cannot afford the benefits and healthcare promised to retirees. So governments are getting more grabby. That pattern seems to be occurring in many countries.

New Zealand example: when you are in nursing or elderly care you must spend all your savings and sell your home. The retirement age also needs to increase - one fund suggested to 70+ https://www.rnz.co.nz/news/business/586737/retirement-age-wi...

Netherlands example: new capital tax 36% rate. A capital growth tax (vermogensaanwasbelasting) applies to stocks, bonds, savings, and cryptocurrencies. A separate capital gains tax applies to real estate and startup shares, taxing only upon sale.

US: see medical debts.

Articles usually talk about savings as though you can bank some funds while working, earn interest, and withdraw the savings later.

Don't deceive yourself thinking like that.

"Savings" cannot work in the future due to demographic issues (especially due to people living longer) even if you saw it work in the past.

Look at how many workers support one retiree. In New Zealand it used to be 7 workers to one retiree, and in the future it looks like 2 workers to 1 retiree.

This is a core issue for anyone below retirement age. Not only do we deceive ourselves about solutions, we are deceived by articles and history.

If you follow the fairly common path of "various expensive, intermittent medical problems for a couple decades, a handful of years of very-bad medical problems, nursing home, then hospice care" in the US, and you don't have a shitload of money, you don't really have a savings of your own, you're just temporarily taking care of the medical and end-of-life-care industries' money. There's not going to be much to pass down.

This becomes more true by the year, as those costs keep rising faster than broader inflation.

You can do it before you die if you want to do that. They're not much helped by you sitting on it until you die.

Indeed. In fact, I would go further and say than, more than saving money, one should make preparations for a dignified passing should one's time come early. Living happy, dying before a gruesome disease completely erases that treasure. And, if destiny has it that one gets old enough, and one does so with little more than a camping tent, leaving this world because the night was too cold and one succumbed to hypothermia beats what most people get at the end.

You just get taken in by life though, it isn't even about saving for some idealized retirement to me. As you age and your parents get old and you have kids and a spouse you just live less and less for yourself. You have to adopt a mental state where you feel gratification in sacrificing for others, if you constantly regret the things you can't do because people depend on you, you will drive yourself nuts. That sort of "I am a reliable provider and helper" mentality lends itself to obsessively building up a "safety net" because you can feel good about how stable and safe you make your loved ones.

> Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.

I get it to a certain extent, don't live in poverty if you don't have too, but I am a major saver. I rarely buy new things if an old thing is working fine. If I die early at least my family will will be set.

Really the social safety nets in the US are basically non-existent so having a big savings buffer makes me feel a bit safer. Honestly dying early doesn't worry me too much, I'll be dead so doesn't bother me. What does worry me is the economy tanks and all my saving become worthless. Then I would have some regrets...

I save out of a combination of buying into minimalism as a kid (though obviously it's nuanced) but also out of laziness, lol.

As someone who used to save too much, I agree.

Numeracy questions are on page 20 here https://www.rand.org/content/dam/rand/pubs/working_papers/WR...

People who score well on probability numeracy are likely better educated and better paid and have more in automatic savings plans. So if someone is maxing out their 401k they don’t feel they need to save more.

The article shows that in the US there is a 25 point gap between high and low income on savings regret, and a 14 point gap between high and low numeracy scores.

In Singapore where savings are more automatic numeracy is a more powerful predictor.

Forced savings like done in Quebec, Canada is likely the best model for most people even though I dont like it as an individual that knows how to manage its portfolio. It also has the benefit of creating a sovereign wealth fund that can invest locally and be an economic driver but independent from the government.

I actually like the forced saving of Québec. I also have a defined benefit pension plan, a TFSA and RRSP but I am happy to be forced to contribute the RRQ for the general welfare of the province even though I know how manage my portfolio.

Considering that they also have to consider economic development in their investment decisions, the RRQ funds are well managed by the CDPQ.

"Saving regret" ought to also refer to when you have saved too much. The shocks in that case would be things like "inflation ate away all my savings before I got to use them" or "the government confiscated my savings via wealth taxes" or just generally "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."

> "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."

This is a particularly funny one tbh. A nation's kids _are_ the retirement plan. It doesn't matter how many numbers you put in spreadsheets dated for 20-40 years into the future, if in said future, there isn't actually anyone to accept those numbers in exchange for labor.

Raising kids in a society where people hate their community and don't want to contribute through things like taxes generally isn't a society that is good for kids and their development.

That seems like it causes a different category of problems than "I wish I had saved more but I didn't and now I have nothing"

This article seem to be confounding external impact with internal motivation.

Yes the jobloss impact caused the people to be unable to save and in turn they wished they have saved more.. but ignored is whether they could to begin with.

Of course external impact had little to do with internal procrastination.

It's not confounding at all. It's making the point that internal motivation, according to the study, has no major factor in savings regret.

It says that understanding risk (as operationalized by understanding probability) has a larger effect.

But it is also saying that the more external impact someone has, the more they regret saving more -- in the United States but not Singapore.

The study is explicitly saying that internal motivation does not seem to matter. And the article is arguing the reason why.

Maybe I read the article too fast but I didn’t get that takeaway at all?

It’s basically just saying that the uninsured catastrophic event risk in America magnifies shock events.

E.g., if you have a major hospital visit in America you’re way more likely to regret not saving enough, but in Singapore there’s basically no effect since hospital stays don’t drain your savings account.

That’s what I also got from this article

Not just healthcare stuff, but also apparently Singaporeans tend to have a lower unemployment rate, so they be able to recover from stuff faster

Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore (maybe even disproportionately so since there can be a long wait to get in, you are older and more settled at that point). Immigrants that get milked dry and go broke and jobless during a shock are booted from the country before they can be polled.

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Vs say US, where immigrants and those funding public housing are generally better off than the people getting subsidized housing. Public housing is more a progressive than regressive tax in the US, so quite dissimilar. Immigrants in US are on average far better off than those on public housing. Asking "but how is this any different" (after I already answered it, lol) over and over doesn't negate this, nor the fact that immigrants are like half of workers in Singapore vs only 10% in the US so the funding dynamic and dependency is far different.

>Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore

It's similar in Vienna where only native Viennese are immediately eligible for social housing, but outsiders will end up paying into the system without being eligible.

> outsiders will end up paying into the system

By definition, outsiders don't have to pay into the system since they already have a gov't somewhere else that is dedicated to them, just like the Viennese do.

>By definition, outsiders don't have to pay into the system

They absolutely do pay into the system when they move to and work in Vienna. By outsiders in this context I meant foreign workers. I assumed that was clear from the context of the discussion.

I think you can buy if youre PR and married (or old enough). If you are lucky you can receive your PR in 1 year.

The Singapore PR system is purposefully racist. If you are white, your probability of getting a PR and citizenship is way lower than someone of the Chinese race. The government does not want significant changes to the country’s racial composition.

How is that different from the US? Immigrants also get booted here if they lose their job. They also pay social security, Medicare, and other taxes but usually don't get the benefits unless they stay here for long enough and get a green card.

The difference is the number. Workers on temporary visas make up ~1% of the labor force in the US. And a large chunk of them will eventually get citizenship or permanent residency and qualify for benefits later in life.

Countries like Singapore and all of the Middle East meanwhile rely on a revolving door of cheap immigrant labor. In the extreme cases like Qatar 95% of the working population are on short term visas. Most of these countries don't have a pathway to citizenship at all for this worker class. You could live there, work and pay taxes for 10 or 20 or 50 years, but the day you "retire" you need to pack up and leave.

The US also has a huge pool of undocumented immigrants who don't get any benefits, don't pay into the social security system, and can be paid below minimum wage (because officially they don't exist). Any time this labor supply is threatened, the construction and agriculture industries rise up (and probably sponsor all those massive protests you see in the news).

No one is paying protesters, people like us in Minneapolis actually do organically hate the current regime and its apologists (you?) that much.

And undocumented immigrants pay around 25 billion dollars annually into social security

> probably sponsor all those massive protests you see in the news

Most Americans do not need to be paid to dislike fascism.

That sounds quite similar to the US.

"In Singapore, people who report never putting off difficult things are more likely to express saving regret than those who sometimes do."

That seems like what they should have been looking at re procrastination--conscientiousness.

I am not at all surprised that people who Take Care of Business lament not doing a better job (saving) and people who YOLO don't as much.

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>They’re failing to save because the world is rough, and their institutions don’t do enough to help them weather it.

Well, America is rough. It turned on hardcore capitalism mode for itself because a significant portion of its population wants to try and solo socioeconomic hardships and hates any one who doesn't want the same challenge.

But not to just blame the voter, lots of money is spent for setting up systems to be amenable to acquiring more money. The very richest have correctly made a bet that uprisings to displace the wealthy and politicians just don't occur here these days, and therefore there is no real threat or need to change the way things have been going for the last 25 years or so.

Isn't it more a cultural issue though? As a European, I think many Americans take pride and love to succeed "on their own" and accept they could "die trying" (exaggerating a bit, hence the quotes, but the feeling holds).

Yes, the systems are amenable to acquiring more money, but I would claim that all that the richest need to do is to push the idea that "anyone can make it" - which was probably (more) true 50 years ago, but is probably an illusion today (some comments at: https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...).

Edit: I do not claim one model is better than the other; just that the culture influences the outcome more than other aspects.

Most Americans I know in my middling years are counting on the government to support them in their old age, quite the opposite that you’re exposed to via online manipulation hitpeices.

I was talking mostly about Americans I met. What might be true though is that probably I met the well off ones and between 30 and 40, which might like the idea of "we are great because we made it". But they all seemed (to me) that they were extremely focused on work (like: no particular hobbies, no knowledge of fields outside their work).

Some of my impression seems to be confirmed by data, for example (did not check in detail but I have seen similar ideas): "Even so, the average 40-hour-per-week employee in the U.S. is working 400 more hours annually — the equivalent of 10 more weeks — than employees in Germany." https://money.com/americans-work-hours-vs-europe-china/

Depends on which cohort of Americans you're talking about, but it's less that they see it as the government supporting them and more that they see it as the government "giving back what they owe." Social Security and Medicare have always been framed as something you pay into now and get back later in life, like you're lending money to the government. That's why most Americans don't view it as government support in the way Europeans do, and why they see no hypocrisy in spitting venom at "government handouts" while cashing their Social Security check and Medicare coverage.

And the government will - sortof. It is enough to eat and keep the heat on. However if you want anything other than a basic simple life (travel, hobbies...) it is easy to run out of money.

if by "culture" you mean rampant corporate propagandized media then yes. the US has historically been pretty close to europe over the last 100 years on many aspects. In the 70s there was legitimate debate about college being free. Now the debate is how much debt someone should take on. The overton window has shifted significantly since the 80s. We're now more like Russia with an entrenched oligarchy.

> Isn't it more a cultural issue though?

No. Culture is downstream of institutions.

A large part of it is originally rooted in racism if you look how the US implemented its welfare state. Many benefits were skewed towards white americans (GI Bill, right to claim land, redlining and social security). I'm sure most Americans aren't nearly as racist right now as back then but the being 'on their own' is linked to the 'don't want 'lazy' african americans to get benefits'.

How were Social Security and the GI Bill skewed towards white Americans, exactly? I haven't heard that before.

Like half of our budget goes to welfare (Social Security, Medicare, Medicaid, Income Security, etc). https://www.usaspending.gov/explorer/budget_function

Yes, the US spends by far the most on healthcare per capita, and still gets the worst outcomes. It's not about throwing money at problems. You have to actually solve them (and want to solve them).

Social Security is a separate tax in a separate fund (invested in T-bonds). If you split that out of the budget, the budget looks even worse. The boomers retiring is just going to be bonds maturing without the holder (social security) reinvesting the money.

Boomers are getting way more than they ever put in.

What annoys me the most about this is I'm like 80% sure none of those programs will exist by the time I retire.

The programs will exist, the purchasing power (or quantity/quality of the benefits) will not.

And yet that GINI keeps rising and cost of living outpaces inflation over the past 40 years in housing, healthcare, and education. If you are bottom quintile, maybe bottom 2, you are poorer now than 40 years ago on average. Recent policy changes seek to drop the third quintile as well.

America is designed for rich people

The bottom quintile gets everything handed to them and it's still not enough. We all live at the mercy of them and their dysfunction.

Seeing an actual "Lucky Ducky!" in the wild is always a trip.