CPF: trust issue

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When CPF LIFe was introduced and made mandataory for Singapore citizens and PRs, I was still working in Singapore as a PR. There were two or three options then of which one left nothing to beneficiaries, thereby maximising the monthly payout. That was the only option I wanted.

However, after a year, CPF Board scrapped that option, citing the reason that few people took that option. I have a few issues with this decision.

(1) The only people who could choose within that one year were those aged 55 and above. Any competent statistician would know that that is an insignificant sample size to draw any conclusion.

(2) Any changes in CPF rules should have been grandfathered i.e.do not affect those are already CPF members and affect only new members. For Singaporeans, this matters because of voluntary top-up, transfer from OA to SA and usage of OA to purchase property and other uses. For foreigners, rules governing CPF benefits matters when considering whether to be PR or not. Imagine signing a contract that requires you to pay regularly for a promised benefit decades down the road and then later rules are changed withouth being grandfathered. Isn't this a breach of contract?

(3) What's the harm of leaving that option available? Cost much to upkeep? CPF never address this.

The third point above may be the real reason behind this move. I suspect that CPF Board wants to retain as monies for as long as it can and so requiring retirees to set aside bequeath achives this. We may never know the real reason.

From then onward, I have trust issue with CPF Board specifically and any government-mandated retirement scheme generally because of regulatory risk.

As a former Singapore PR who now permanently resides in West Malaysia, I have the option to close my CPF account as early as when I turn 50. The alternative is to opt for their Retirement Sum Scheme ("RSS") which draws down the monies to pay out a montly sum for 20 years starting as early as at age 65. RSS earns a base interest rate of 4% p.a.

The interest rate is great, especially one offered by a Singapore statutory board. However, will regulatory risk rears its bad head again? Will CPF Board change the rules adversely again? I have to consider this carefully.

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