“By wisdom a house is built, and by understanding it is established; and by knowledge the rooms are filled with all precious and pleasant riches.” (Proverbs 24:3-4)
The public sector workers in Britain went on a ‘one-day walkout’ on 30th November, to protest on the government’s proposal to work longer till 66, and to increase their pension contribution payments. They also faced the possibility, if the proposals went through, a lower pension payout which is based on their average salary instead of the final salary they draw.
The gap between the public sector pensions and payouts in U.K. has been widening over the years, and ordinary taxpayers have been asked to contribute to this shortfall. This is obviously not acceptable in the long run given the country already running at 80% debt to GDP. As the population aged, we begin to see many ‘downsides’ of such pension scheme. The pool of economically active population has been shrinking. This coupled with extremely generous medical benefits for the pensioners, making such scheme untenable over time. I can understand these people’s fear as they faced great uncertainty what they would be getting when they retired if the scheme is subject to changes from time to time. Our government is wise enough to stop such scheme in the 80s to save itself from the financial nightmare as I see the huge medical cost some of my friends who are pensioners choked up.
In this aspect, our CPF scheme seems to be more transparent and equitable as the contributor knows the ‘ins’ and ‘outs’ of his account. In this sense, he does has a say on how to use it wisely within the guidelines. This scheme highly favours those young workers as they do not have to pay high taxes in return for pension payouts. They are therefore in a better position to accumulate their wealth at a faster pace. Many are able to own their houses instead of renting by tapping into the funds.
However, it looks like people are using too much of their funds in housing , such that they are asset rich but cash poor when they retired, and the idea of ‘reverse-mortgage’ is still frown upon by many. May be more should be set aside for the Special account and Medisave account. The scheme has now become too complicated with too many usages for the funds. Has our scheme also run into ‘problems’ that we do not know? The fact that the retirement age keeps pushing back makes me uncomfortable.
The public sector workers in Britain went on a ‘one-day walkout’ on 30th November, to protest on the government’s proposal to work longer till 66, and to increase their pension contribution payments. They also faced the possibility, if the proposals went through, a lower pension payout which is based on their average salary instead of the final salary they draw.
The gap between the public sector pensions and payouts in U.K. has been widening over the years, and ordinary taxpayers have been asked to contribute to this shortfall. This is obviously not acceptable in the long run given the country already running at 80% debt to GDP. As the population aged, we begin to see many ‘downsides’ of such pension scheme. The pool of economically active population has been shrinking. This coupled with extremely generous medical benefits for the pensioners, making such scheme untenable over time. I can understand these people’s fear as they faced great uncertainty what they would be getting when they retired if the scheme is subject to changes from time to time. Our government is wise enough to stop such scheme in the 80s to save itself from the financial nightmare as I see the huge medical cost some of my friends who are pensioners choked up.
In this aspect, our CPF scheme seems to be more transparent and equitable as the contributor knows the ‘ins’ and ‘outs’ of his account. In this sense, he does has a say on how to use it wisely within the guidelines. This scheme highly favours those young workers as they do not have to pay high taxes in return for pension payouts. They are therefore in a better position to accumulate their wealth at a faster pace. Many are able to own their houses instead of renting by tapping into the funds.
However, it looks like people are using too much of their funds in housing , such that they are asset rich but cash poor when they retired, and the idea of ‘reverse-mortgage’ is still frown upon by many. May be more should be set aside for the Special account and Medisave account. The scheme has now become too complicated with too many usages for the funds. Has our scheme also run into ‘problems’ that we do not know? The fact that the retirement age keeps pushing back makes me uncomfortable.
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