GERRY: I am writing this to expose some of the hypocrisies of the so-called CPF rules changes to improve retirement inadequacies.
I have provided here a copy of a letter reply from CPF board regarding questions I have on my mother’s retirement account.
The key observations/fallacies from this letter (I have made available the last 2 pages of the reply) are:
MRA/Minimum medical sum has no fixed number according to cohort. It increases as and when CPF board thinks it should be increased under the pre-text that medical inflation is higher than inflation.
Would it not been simpler to ask the contributors to buy a commercial medical insurance policy?
Also, this ever increasing MRA/minimum medical sum would negate efforts to increase the amount in the retirement account as demonstrated in my mother’s example. She has been making further contributions to the retirement account for the last five years. In fact, she has been taking on more work assignments in 2012 to 2014 than from 2009 to 2011. But transfers from the earlier period was a lot more than the later period. This is because the effort she made in the later period has been used to contribute to the medical account instead of the retirement account due to further non-fixed increases in the medical minimum sum or MRA.
So, as this example shows, even if my mother did follow the government advice and work beyond 55, it is still possible that her retirement account won’t increase from the contributions she made because the contributions were channelled into the medical account. I am sure this scenario is applicable to all workers who didn’t meet the minimum sum at 55 (which is a lot based on Leong Sze Hian’s earlier estimation).
Based on the government’s logic on retirement account, if the retirement account doesn’t increase from more work contributions, then how would retirement adequacy be improved?
All this is happening in spite of LHL’s increasing talk to ask people to work longer.
If you read the response from CPF on the 3rd page, are you not surprise that the principal is separated from the interest received from the CPF?
I thought the 2 streams are her monies but why the way to use the account that holds the monies from the 2 streams need to be differentiated as if one of them is made of monies type A and the other monies type B?
This letter was written by Gerry.
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