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30-05-2014, 09:00 PM
An honorable member of the Coffee Shop Has Just Posted the Following:
The following extract from the above article may arguably be the most illuminating enlightenment published by the Straits Times so far this year:
“Irrational to expect both low risk and high returns -
As the Government has been generating budget surpluses over the years, it is assumed by detractors that CPF funds end up with GIC and Temasek which then “exploit” Singaporeans by paying them meagre interest while earning higher returns.
Those who espouse such views clearly do not understand the basics of finance and how financial intermediation works.
CPF members’ savings in the Ordinary Account (OA) and Special Account (SA) are akin to deposits in banks.
Depositors who leave their savings in banks do not demand high returns. Instead, they are willing to settle for very low interest in exchange for security.
They cannot demand the returns earned by banks because they are not the ones putting capital at risk.”
Note: The writer (Benedict Koh) is professor of finance at the Singapore Management University.
http://leongszehian.com/?p=9038
=========================
From Comments Section
I am sure many of us will find that it is most disingenuous for this professor to say that CPF saving is the same as a bank account. CPF has a monopoly, it is compulsory, has rudimentary “investment options” paying interest rates that are not reflective of market conditions. Furthermore, even upon reaching the retirement age to be eligible to access the funds, you are still subjected to strict withdrawal rules because we were told we can’t be trusted up to the day we die.
If you look at other developed countries, many have super funds where you get to choose different portfolios with varying risks and rewards reflective of market conditions.
I’m sorry, but this government has treated us as morons, paying us peanuts regardless of market conditions that sometimes do not even cover inflation. To exploit all our savings by giving us such miserable returns while pumping our money into GIC and Temasek to generate returns which flow into the government coffers is in my opinion criminal.
I have never come across any government that treats the welfare of its people with such disdain.
Click here to view the whole thread at www.sammyboy.com (http://sammyboy.com/showthread.php?182858-Did-Prof-Benedict-Koh-really-say-this-really-dumb-statement-on-CPF&goto=newpost).
The following extract from the above article may arguably be the most illuminating enlightenment published by the Straits Times so far this year:
“Irrational to expect both low risk and high returns -
As the Government has been generating budget surpluses over the years, it is assumed by detractors that CPF funds end up with GIC and Temasek which then “exploit” Singaporeans by paying them meagre interest while earning higher returns.
Those who espouse such views clearly do not understand the basics of finance and how financial intermediation works.
CPF members’ savings in the Ordinary Account (OA) and Special Account (SA) are akin to deposits in banks.
Depositors who leave their savings in banks do not demand high returns. Instead, they are willing to settle for very low interest in exchange for security.
They cannot demand the returns earned by banks because they are not the ones putting capital at risk.”
Note: The writer (Benedict Koh) is professor of finance at the Singapore Management University.
http://leongszehian.com/?p=9038
=========================
From Comments Section
I am sure many of us will find that it is most disingenuous for this professor to say that CPF saving is the same as a bank account. CPF has a monopoly, it is compulsory, has rudimentary “investment options” paying interest rates that are not reflective of market conditions. Furthermore, even upon reaching the retirement age to be eligible to access the funds, you are still subjected to strict withdrawal rules because we were told we can’t be trusted up to the day we die.
If you look at other developed countries, many have super funds where you get to choose different portfolios with varying risks and rewards reflective of market conditions.
I’m sorry, but this government has treated us as morons, paying us peanuts regardless of market conditions that sometimes do not even cover inflation. To exploit all our savings by giving us such miserable returns while pumping our money into GIC and Temasek to generate returns which flow into the government coffers is in my opinion criminal.
I have never come across any government that treats the welfare of its people with such disdain.
Click here to view the whole thread at www.sammyboy.com (http://sammyboy.com/showthread.php?182858-Did-Prof-Benedict-Koh-really-say-this-really-dumb-statement-on-CPF&goto=newpost).