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Sunday, Mar 08, 2015 - 20:50 SGT
Posted By: Gilbert

Topic Mashup

They say that if you stick around long enough, you'll realise that it's always the same old story dressed up in new togs. One certainly gets that impression, with ministers (of S$8 heart bypass fame) and MPs adamant that the latest Budget is "very generous" and (hint) possibly unsustainable (or even measurable). Oh, and the MRT's going down again (and guess who's not gonna hara-kiri like the good old days?)

[N.B. If there's one thing that past MRT fixes have taught me, it's that cable ties are very useful (in this case, pulling the molex connectors inwards to maintain a connection. Shame about the SATA ports on my motherboard, however)]

And on the CPF issue, which seems to have found a surprisingly lasting resonance at large despite the reduced activity of the former instigator-in-chief (very possibly because many are actually quietly pressed for cash) - well, recall when nobody quite knew what happened to it, only that it was not managed by the GIC, before someone bothered to do some checking and discovered that oops, the GIC was handling it? On that, recall not too long ago, when a minister declared that he felt rich looking at his CPF statement?


How many distinct colours can you make out?
Count and check if you have a fourth type of visual cone!
(Source: linkedin.com)


Well, he may have to rethink the feeling, seeing as how it was suggested (and, more importantly, backed from the top), that actually, erm, you see, how do I put it, uh, let's just say it's like this, um, maybe - just maybe, you see - not that it's set in stone or anything, your CPF may not be your money.

Then again, given that they have by all accounts lost track of it until recently, I'm just relieved that it's still there... somewhere.


How the fund was managed, from available evidence
(Source: reddit.com; optimized by gfycat)


One thing I've never quite gotten the hang of is the expectation of... gratitude? responsibility? - because the CPF is "co-paid" by employers. Basically, it seems as if while the employee's contribution of 20% (using figures for below 50s) is considered as "his own" savings towards his retirement (but more usually, his hefty housing instalments), the employer's 16% is somehow considered as something of an "undeserved extra" that one should thank the boss/govt for.

Going a little more in-depth here, consider:
  • Current setup (20% employee/16% employer):
    - Employee's salary: S$2000
    - Employee's contribution: S$400
    - Employer's contribution: S$320
    - Total contribution: $720
    - Cost to employer: S$2320

  • Alternative setup (31% employee/0% employer):
    - Employee's salary: S$2320
    - Employee's contribution: S$720
    - Employer's contribution: S$0
    - Total contribution: $720
    - Cost to employer: S$2320

Note that in both setups, the outcomes for both employee and employer are exactly the same. Now, one could argue that this system allows CPF contributions to be cut during recessions (e.g. in 1986, where the employer contribution was reduced from 25% to 10%), but this does not change the fact that the same effect could be achieved with the alternative setup, by slashing the employee contribution (and ah, cut still means cut, the money's still gone for good)

There is another effect, in that a lower "official" salary possibly keeps employees in a lower income tax bracket (and hence, lower tax), but as again, one could instead just readjust the income tax brackers numbers to fit the alternative setup, rather than use separate contributions.

In short, I don't really see a good reason for splitting the contribution into employee and employer portions (since it is recognized that the burden falls on the employee no matter how it is assigned), unless there is a separate voluntary private pension/matching funds program. For some reason though, this employee/employer split appears a fairly widespread practice over various countries.

All things considered, these past couple of years have done little to dissuade me that the elephant in the room is largely unrealistic demographics, which other afflicted nations are at least trying to arrest creatively. Not that we're that bad on imagination either, seeing as how the past few decades' influx of low-cost foreign labour has transitioned into wonderment as to where all the productivity went, and continued hints that study hard no use already (this after whacking kids with cheemer and cheemer problems, until cannot whack liao)


You know what they say, no stork woodpecker oso can.
(Source: huffingtonpost.com)
[N.B. It seems that our dear Minister for Social and Family Development's objections have had no impact on HuffPo's editorial policy]


But! Have no fear! A State's Times-approved poll has shown that workers value skills upgrading more than pay increases (consider obvious response), a short few months after trumpeting that older workers want to work for less pay. Methinks we have a valuable untapped export resource here: get a few of these incredible pollsters out into the wider world, and we'd soon be living in a paradise (well, some did try...)!



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