Unravelling the MATHS of CPF Life.

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An honorable member of the Coffee Shop Has Just Posted the Following:

Last week MP Gerald Giam brought up an important observation
abt Medishield in the last 10 yrs the scheme only pay out 66cents for every dollar collected worst than all public medical insurance in the world. Without front loading designed in medishield the risk pooling is within each age group so the payout should be close to the premium collected. In Parliament some pap MPs tried to explain that this is to take care of inflation of the future...but medishiled premiums are adjusted every yrr for inflation and age. ...so this is a bogus logic.

It tells us that every scheme designed by the pap
have to be examined as they has a tendency to overburden the populace in order to.build reserves and surplus.
On the surface pretending to be generous and.kind citizens.even as they implement detrimental policies that burden the people badly.

If they are burdening the sick.with.high.premiums and.low payouts let's.look at what they doing.to those who.are retiring.
cpf.life.png

I will now unravel the structure of CPF Life....using the amount at age 55 of 150-155K based on the above data.

Assume the inflation rate of 3% which is the inflation rate of past yrs
(this is highly conservative as prolonged use of QE and low interest risk spurring
elevated inflation.in the coming years)

Assume a nearly incompetent manager is hired to manage the funds and he generates zero real.return only manage 3% to match inflation.

The trick is the 10 yrs lockup of $155K during which it earns nothing.

The $155K after.10 yrs grows to.$208K@3% return.

After that they pay abt 9.5K a yr on the standard scheme.

Per annum $208K will generate abt $6K.

This means your.principal.decrease by $3.5K on the first yr
....you repeat this calculation for 21 yrs until age 86.

At age 86, there is about $100K-120k or so from your.original. sum. If you drop.dead
, your beneficiaries get $0 at age 86.

The CPF Life.scheme makes $100K or more surplus per person on a super conservative assumption of 3% returns on funds.
It can go up much higher if returns are higher above inflation.

The govt can again use its old trick of lending this money cheaply to GIC and in effectively transfer this surplus to GIC.

Based on the above CPF Life becomes another reserve/surplus building exercise for the PAP.

Most of the pple who suffer are middle and lower income groups whose main savings is in CPF.

Financial analysts who look at this has recommended
Pple to sign up for the basic scheme insead of the standard scheme to minimize their loss
Attached Images

• cpf.life.png (73.6 KB)

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