theonlinecitizen

a community of singaporeans

3rd World Savings, 1st World Cost of Living

Posted by theonlinecitizen on September 4, 2007

This is a letter from Jason, one of our readers.

It has been argued strongly that elderly Singaporeans are not saving enough, despite the CPF scheme. This is hardly surprising.

The CPF was introduced in 1955 when Singapore was a Third World colony. Our per capita GDP (at current market prices) in 1960 was S$1,306. This figure rose significantly to S$13,725 in 1983 and to S$35,552 in 1996. Today Singapore is a First World nation and this is well backed by our 2006 per capita GDP figure of S$46,832.

The transformation of our country has led to rapid increase in the cost of living as suggested by historical Consumer Price Index (CPI) data. Using 2004 as the base year (=100.0), the CPI was 31.9 in 1961 (1960 figure not available), 74.7 in 1983, 94.3 in 1996 and 101.4 in 2006. (Source for statistics: http://www.singstat.gov.sg/)

The cost of retirement

Senior Singaporeans played individual minor, but fundamental roles in driving this economic miracle. Back in the 1960s, through the 1990s, they probably could not have imagined, how with hindsight, their salaries, by the same token their CPF savings, will appear so meagre today. Likewise they would not have expected the cost of retirement to be so expensive.

It appears that the pioneer generations of Singaporeans have become victims of their own hard work and success. Having earned Third World wages and made Third World savings in their younger days, they suddenly find themselves living, and dying, under the weight of First World costs.

Over the years Singapore has accumulated substantial wealth, including those made through investments worth millions by the GIC and Temasek Holdings. No one guarantees workers above 62 will find good paying jobs and the proposed compulsory annuity’s payout of $250 to $300 is a drop in the ocean by today’s costs of living. While we applaud our government’s initiatives to stretch our retirement savings, it is high time we tap on our riches to help those with inadequate CPF monies to overcome the disparity of Third World savings, First World costs.

It is increasingly urgent for the government to lower the cost of living for retired Singaporeans. This could be done by co-paying for their essential expenses, such as medical, healthcare and public transport. This should not be viewed as pouring resources into a bottomless pit. Just as government investments into the economy through mega-projects like the IRs and hosting of F1 are now rewarding handsomely, investments into such schemes will generate the economy and the welfare of our people.

The CPF Board website states “CPF ensured that workers could support themselves with dignity in retirement”. Would the government play its part to fulfill this?

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3 Responses to “3rd World Savings, 1st World Cost of Living”

  1. shoestring said

    How Do We Deal With The Ageing Population? – A Singaporean Conundrum

  2. CPF is sending letters to Workfare benefits holders getting them to top up medisave for WIS government top up.
    So poor Singaporeans got money on 1st May, now CPF want to get back some money, in order for medisave top up from the CPF. This is cash that the poor need badly.

    For those earning less than S$1000 without CPF contribution from employers or self employed, this is like sucking money from them.
    No doubt the extra medisave can be helpful in time of illness, but what most poor Singaporeans want is cash for daily expenses, not medisave which they cannot touch to feed themselves.

    If they do not participate in this scheme, next year they cannot have Workfare payment?

    This is blunder that government has no compassion for the poor.

  3. Seeking Salvation said

    does the cpf stands for canned people’s fund or con people’s fund or cheat people’s fund if the purpose of the fund is to allow the people to leave the retirement with dignity they r paying pathetic interest viz a viz a comparison with acu deposit such as the australian dollar or nzd no doubt there a risk in rates exchange fluctuation I rather take the risk than having such board jerk me off with my money by giving a return way below the inflation rate.

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