Saturday, October 6, 2007

Dollars and sense


I may have been a little late in my posting regarding this issue, but I simply couldn't hold my horses with my fingers itching to hit the keyboard. Of late, the media was abuzz with a plethora of response to recent changes to the CPF policy. One of the changes is that the CPF minimum sum will be raised gradually from SGD$80,000 to SGD$120,000 in 2013. The other ubiquitous change is the introduction of compulsory annuities. For those who cannot afford to purchase annuities, they may use their minimum sum for the annuity. In addition, the age for CPF withdrawal has been raised from 55 to 65. Of late, the government is finding ways and means to help our senior brethren to seek employment. One could be forgiven for having the impression that the government is making it more difficult for one to withdraw his CPF.

With the mechanics of the CPF changes in place, one also cannot ignore the costs of living. The passing years have seen rises in costs of necessities such as healthcare, transport and utilities. One would dare to make a safe bet that even beyond 2010, the inflation in costs of the aforementioned necessities will continue.

Of late, the government was alarmed by the fact that a number of Singaporeans are uprooting themselves and planting their roots else where. The thrust of this discussion is not so much the social basis and implication for migration, but rather the "dollars and sense" of migration. The rising costs of necessities is already a push factor for many a retiree. A welfare state that takes care of senior citizens or one with a lower cost of living would be more attractive to a retiree. It doesn't come as a surprise that Singaporeans have settled down in neighboring countries like Thailand, Malaysia and China, other than the popular destinations of US, UK and Canada.

Migration is also the key to the lock of the CPF safe. If one renounces his Singapore citizenship and has become the citizen of another country, he will be entitled to withdraw his CPF savings. The choice of withdrawing CPF monies and settling down in a destination with a lower cost of living would seem like an attractive option. I would surmise in the foreseeable future migration figures will sky-rocket despite the recent changes to the CPF policy. This could be a worrying sign for the investment arm of the Singapore government who use the CPF monies for investments.