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14-04-2014, 09:40 PM
An honorable member of the Coffee Shop Has Just Posted the Following:
Instead of owning an insurance policy, Mdm Tan owns her CPF Retirement Account savings. Her CPF savings earns a tidy 4% risk free interest in CPF and she can draw it down at 65 (can you think of a bank that offer a better risk free rate?
But what if she has the ability to withdraw it earlier? Similar to the viatical scenario, where Mr Smith can cash in his insurance policy at a discount early, if Mdm Tan can cash in her CPF savings by foregoing the compounding 4% interest rate the CPF pays, she will withdraw a much smaller amount.
Mr Smith risks having nothing for the family he left behind when he dies.
Mdm Tan risks having nothing to support her old age.
So when some Singaporeans want to withdraw their CPF retirement savings earlier and not when they reach 65, it can put the Government in a moral dilemma.
The Government actually saves money by allowing early withdrawal, because it is costly to pay 4% on the CPF
savings. And saving money leads to some Singaporeans having no income nor savings in their old age, and living with little dignity.
- http://www.fivestarsandamoon.com/via...e-cpf-dilemma/ (http://www.fivestarsandamoon.com/viaticle-settlement-and-the-cpf-dilemma/)
Click here to view the whole thread at www.sammyboy.com (http://sammyboy.com/showthread.php?179455-Viaticle-settlement-and-the-CPF-dilemma&goto=newpost).
Instead of owning an insurance policy, Mdm Tan owns her CPF Retirement Account savings. Her CPF savings earns a tidy 4% risk free interest in CPF and she can draw it down at 65 (can you think of a bank that offer a better risk free rate?
But what if she has the ability to withdraw it earlier? Similar to the viatical scenario, where Mr Smith can cash in his insurance policy at a discount early, if Mdm Tan can cash in her CPF savings by foregoing the compounding 4% interest rate the CPF pays, she will withdraw a much smaller amount.
Mr Smith risks having nothing for the family he left behind when he dies.
Mdm Tan risks having nothing to support her old age.
So when some Singaporeans want to withdraw their CPF retirement savings earlier and not when they reach 65, it can put the Government in a moral dilemma.
The Government actually saves money by allowing early withdrawal, because it is costly to pay 4% on the CPF
savings. And saving money leads to some Singaporeans having no income nor savings in their old age, and living with little dignity.
- http://www.fivestarsandamoon.com/via...e-cpf-dilemma/ (http://www.fivestarsandamoon.com/viaticle-settlement-and-the-cpf-dilemma/)
Click here to view the whole thread at www.sammyboy.com (http://sammyboy.com/showthread.php?179455-Viaticle-settlement-and-the-CPF-dilemma&goto=newpost).