Tuesday, September 11, 2007

Ok i have a tonne of shit to do and i'm trying to get started on my readings for TAX PLANNING about indirect vs direct taxes but i could not resist posting about this.

I'm sure some of you have heard of the new CPF annuity scheme. Suck out some money from your CPF minimum sum (which is already pretty ridiculous in the first place - having a minimum sum but thats not the point of the debate today), use it to buy an annuity once you're past 50 and this annuity will pay out when you reach 85. Yes that's right, EIGHTY-FIVE YEARS OLD. It'll pay out about $300 a month until you die.

First of all, how much can you do with $300 a month?!?!?!?! It barely pays for anything. And considering our GST rates (looking set to raise to about 15% by the time I'm 85, hurhur) and inflation, that's barely enough money to tide us by. If that's the case, then why bother with this annuity in the first place? This pittance isn't going to save us.

Second, and I think most importantly, HOW many Singaporeans live till the age of 85. Yes we do have an ageing population. But, lets just take some data from the monthly census that singstat carries out. As of end June 2006, the number of Singaporeans 85 and older are a grand whooping total of 24,600. That's like, 0.55% of our population. Now I wonder how many lucky people can get to live to that age. I seriously doubt, even with the increased lifespan and all that, that most of us are even lucky enough to reach 85.

Even with so-called "better healthcare", how much longer do you think humans are built to live? 100? 120? 150? We're not machines, we wear and tear. we were never built to live that long. And living that long does not also equate to a high quality long life. Going by how hospital beds are shortaging and healthcare costs rising, I don't see myself at 85 living a healthy life taken care by my polyclinic doctor. I wonder how many of that 24,600 old people about age of 85 are actually healthy elderly citizens living their lives fully. Most probably, a lot are in old folks home, ridden with illness. My grandma herself, at one year short of 80, has had 2 major surgeries and complains of various aches and pains. And mind you, she is considered starking fit compared to her peers her age.

More likely, 99.4% of us will si kiao kiao by the time we reach 85. So I wonder, where does that $300 per month payout go to when that happens? Who actually benefits from this annuity?

Mrs Brightside at 11:22 pm

{xoxo}