CPF Good or Bad Scheme?

We sometimes read articles such as the one below from journalists in other countries praising our CPF system. There is a tendency to do this because many countries are facing fiscal issues and have to either raise taxes or cut entitlements such as pensions. Whatever system is designed and in place has to be properly funded and countries giving state pensions do not necessarily face fiscal problems if the system is properly designed and adjusted over time.

The Japan Times

Singapore's paternalistic government is unappealing to many Americans — media restrictions, one-party rule, harsh penalties for gum-chewing. But Singapore's retirement system is a model of honesty and transparency compared with U.S. Medicare and Social Security. In 1984, then-Prime Minister Lee Kuan Yew redesigned his country's retirement system to, as he later wrote, "avoid placing the burden of the present generation's welfare costs onto the next generation." Singapore makes no promises but instead requires all citizens to save up to 36 percent of their income for their own retirement and health care. The government invests the savings in stocks and bonds; the money is not used for current expenditures. The result? Singaporeans have comfortable retirements. Their health care system delivers better outcomes while costing 80 percent less than America's, according to 2010 findings from the World Health Organization, and all of it is financed without imposing debt on the next generation. Singapore even reported an uptick in medical tourism last year.

source : http://www.japantimes.co.jp/text/eo20120821a1.html 

Because some countries face funding issues with their pension schemes, they tend to see our system in which the full retirement responsibility rests on individuals with a favourable bias. However, they forget that their own schemes have been such as the US Social Security (started by Roosevelt in 1930s) has been in place longer than the existence of Singapore! Because they face funding issues in recent times and have to overcome them, they look to Singapore believing that we have a more sustainable and better system in place. This is a fallacy!!!!!!!

The CPF system under the current rules is in place for only 30-40 yrs. People place fully under this system started to retire in larger numbers only 10ys ago...that is when we start to see the emergence of working eldrly who can't retire. More than 50% of CPF members will not have enough minimum sum and are likely going to be forced to work without retirement or have a poor quality of retirement. Under the CPF scheme sibgapore will have the biggest proportion of "unable to retire people" among all developed countries....this is why so many of our elderly have to work. This is a failing scheme...the onky thing good is it keep taxes very low for the rich but it is extremely painful for the poor. The PAP created the most unequal economic system among developed countries then force the poor to save for their retirement...this is a bad system..

A retirement scheme that only has one good attribute that it does not burden the govt finances and keep taxes low but does not ensure that everyone can retire comfortably can't be good. It extends the harmful effects of our super high income inequality to the retirement phase of one's life has a divisive effect on our society. We cannot be so arrogant to believe this scheme is good and sustainable when it is around for only a few decades and the people under this scheme is only beginning to retire in large nunbers. We are in fact observing the signs of failure of this scheme as a growing number of Singaporeans are working into old age unable to retire at the same age as people in other countries.  How can a retirement scheme be good when it does not ensure people can retire?!