When you grey

There the government of Singapore goes again - trying to lock up my money because the other person can't keep his hands off his. That's the latest proposal to tweak the national savings scheme, the CPF. While the details have not been worked out yet, I can understand why our insurers are over the moon. Out of the blue, the government is giving them a sure-thing - money from all working people in Singapore in the form of an annuity scheme. What's so sweet about this is that it will be compulsory - i.e. every CPF account holder currently under 50 years of age must join this annuity programme - no matter that the details of this annuity hasn't been spelt out.

We, the CPF account holders, are apprehensive. The reason that we haven't invested in an annuity so far has been due to the poor returns. In spite of what the government says, we still don't expect to live many years beyond our 80s. The government may have had a say in a lot of what we must do with our salary up till now, but it has no control over when we die. The current lifespan of 80 is but an aggregate number that may not truly represent my situation. I may live longer than that, but I will make provisions such that my children will not be burdened financially. That is only prudent and wise.

I am not against annuities per se, and it does seem that the annuity that will be proposed by the government will not cost a lot. But the problem is that when my moneys are broken up into small investments, on aggregate, they will not give me better returns than if I had invested a larger chunk of it otherwise. For example, a local bank is offering interest at 1.5% for savings up to $50,000. Beyond this, the interest is 2%. Financial institutions will be able to find and make more money from more money than less money you make available to them. Thus these investment choices are taken away from me. This is one of the resentments against this latest paternalistic act of the government of Singapore.

True, the government is only being proactive, to think ahead for the good of the populace. I don't think there is anything sinister about locking up our money for longer periods because they cannot handle the volume of payouts in future when the baby-boomers cash out. But I'd just wish that they hadn't use the word 'compulsory'. That's like a father talking down to the son.

The danger in constructing all these safety nets is that people begin to feel that they do NOT need to plan for their old age themselves, outside of whatever governmental schemes there are. When that happens, and when people get old, as they must one day, and the returns on the annuity cannot keep pace with the cost of living, they will be begin to regret they trusted the government too much for their old age needs. Of course this will become a political issue, but I am sure no senior citizen want to be treated like political football when they should retire with a certain level comfort from the savings and investments they made over and above what is prescribed for them. Ironically, with all the social safety nets that are being erected, complacency will set in.

So far from securing the aged's future, it may come back to haunt and jeopardise them. I can hear now the government saying then that 'nobody owes you a living...'