CPF raises Minimum Sum for withdrawal
The state media is reporting that CPF has raised its minimum sum for withdrawal toS$117,000, up from S$106,000 for those aged 55 years and below. The cited reason is ostensibly an “adjustment for inflation”:
Singapore: The prevailing CPF Minimum Sum (MS) will be raised from July 1 for those aged 55 years. The new amount will be S$117,000, up from S$106,000.
The move, which includes an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement.
It is also in line with the Ministry of Manpower’s announcement in August 2003 that the CPF Minimum Sum will be raised gradually to reach S$120,000 (in 2003 dollars) by 2013.
Reading the above, one has to wonder: Does CPF bother to read MAS’ monthly inflation reports? If it did it would have come across this in the latest one released (for Mar):
For the whole of 2009, headline CPI inflation will average between -1% and 0%. The MAS underlying measure will be slightly higher, as it excludes prices of petrol and cars which are likely to fall this year.
You read that correctly. Inflation rate is projected to be slightly negative this year but the Minimum Sum would be revised upwards.
More importantly CPF isn’t being consistent with its concerns for inflation if that is the supposed purpose in raising the minimum sum for withdrawal. Does it make sense for CPF to raise the minimum sum because of expected inflation whilst leaving interest rates unchanged? For goodness sake, the CPF interest rates are not adjusted for inflation, but somehow the Minimum Sum is?
Can someone explain this twisted logic to me? Wayang Party has a good attempt to do so here.