Wednesday, February 09, 2011

Brilliant con artists or intelligent morons

Let me share this simply story.

A certain Peter allowed Paul to safe keep his money. When Peter requested it back, Paul not only returned his money, Paul slapped Peter with an interest.

Does this make any sense to you? Does Paul need to charge Peter any interest when it first belonged to Peter? In addition Paul had the luxury to use the money to invest and reap the profits. In fact I'd reckon Paul should pay profit dividends to Peter for using the money.

That is how the stocks of a company work for me and pay me dividends.


As simple as this analogy, I fail to understand how REACH has the decency to propose the ridiculous Individual Unemployment Credits scheme? Labour economist Tan Khee Giap even has the audacity to think it is welfarism! How does that constitute giving welfare, you tell me?

The CPF is our blood-earned money. How can it be used as a loan to us when it belonged to us in the first place? Let's be rational - Today Online should not even publish such a laughable article.

I am no economist or financial guru but I immediately caught the sheer stupidity of it all. Using my money to loan back to me and charge me an interest. What a farce! The poor will be made even poorer. How smart is that for the Associate Professor? Either Tan Khee Giap and the REACH workgroup are brilliant con artists, or intelligent morons.

But... but there is no such thing as an intelligent moron. Exactly. That leaves us with only one choice. I'm sure you are smart enough to figure it out.

From Today Online:
Calls for leeway in use of CPF
Better support programmes needed for the involuntarily jobless: REACH
by Teo Xuanwei
SINGAPORE - It is a long-held position of the Government: Central Provident Fund (CPF) savings are mainly one's retirement nest eggs.
This has, however, not stopped one group from persisting with calls for some leeway in using CPF monies - in the form of short-term loans - because of what it sees as a pressing need: Involuntary unemployment.
This, as older workers, particularly those on low wages, await the impact new re-employment laws kicking in next year - mandating companies to allow eligible employees to continue working till age 65 - will have on them.
To this end, a workgroup set up by the Government feedback portal, REACH, has called for better support programmes for those who involuntarily end up jobless. 
The workgroup was one of three formed last year to look into selected key policy concerns. The other two groups focused on promoting better integration between Singaporeans and new immigrants, and providing better support for single and low-income caregivers taking care of the elderly.
One of its proposals, termed Individual Unemployment Credits scheme, allows workers to take a loan (based on a percentage of their last-drawn salary with a cap) from their CPF accounts for three months after they become involuntarily unemployed. The loan has to be paid back upon employment.
Workers will have to contribute 1 per cent of their monthly income, up to a cap, to this scheme, with equivalent co-funding by the Government.
Another proposal, Wage Insurance Scheme, caters to those who take on a lower-paying new job after being involuntarily unemployed, by subsidising 50 per cent of the salary difference between the two jobs. The scheme is also funded via a 1 per cent co-payment by workers and the Government.
A third proposal is to give out a "modest monthly stipend", in the range of $200 and $300, to individuals aged 65 and above to help them meet their basic consumption needs.
Means-testing, based on income level and asset ownership, can be used to determine eligibility, proposed the workgroup, chaired by NTUC Learning Hub chief executive Zee Yoong Kang.
But it noted that this basic retirement grant is intended to be only one component of retirement adequacy. Other components like part-time work, personal savings, the Workfare Income Supplement (WIS) and CPF savings should make up the rest.
The Manpower Ministry said the Government is committed to helping older and low-wage workers and will study the proposals. But it added that the budgetary implications of any proposal must also be carefully considered, so that any schemes that are rolled out are sustainable. 
Labour economist Tan Khee Giap agreed and cautioned against jumping into these "popular suggestions", saying they bordered on welfarism.
"Until you work out the details, such as how much it will cost over time and whether the State is able to pay, one should be very cautious about taking up these recommendations," said Associate Professor Tan of the Lee Kuan Yew School of Public Policy.
He felt that tweaks to the WIS would be "more viable and sustainable".
"Higher cash payouts that are tied to certain conditions, such as making the worker go for productivity courses or skills training, is a simpler, more clean-cut way to help this group of workers," said Assoc Prof Tan.
The WIS scheme tops up the incomes of older, low-income workers who earn $1,700 a month or less with cash and contributions to their CPF accounts.
Unionist Lim Kuang Beng, general secretary of the Singapore Industrial & Services Employees' Union, felt that the retirement grant was the only feasible proposal. He said: "Taking loans from CPF accounts will mean the individual has even less money to draw on when he retires (if he can't find a new job). And those on low wages may not have the money to co-pay for the insurance scheme."

9 comments:

Anonymous said...

Hahaha...........

Tan Khee Giap, the Man that knows everything and MAY even possesses the knowledge to solve all the financial matters in the World.

The finance ministers in the World must come and learn from this Man and all the economic, financial and fiscal problems of their countries will not be issues anymore.

Anonymous said...

People like Tan Khee Giap, in trying to act smart to support Govt's line of thinking, actually
ended up showing his idiocy for the world to see.
If I were him, I would have done
an ostrich

defennder said...

Withdrawal of CPF is going from becoming a right to a privilege. Not quite surprising if things like these are happening.

Anonymous said...

Right now you CANNOT use CPF to help pay for expenses when you are out of a job. These people are proposing to allow you to do so. Isn't that an improvement?

If this was proposed by somebody other than REACH you would be saying good things about it.

defennder said...

Anonymous 10pm:

Please note that people don't like the part where it says you have to pay back CPF + interest. Getting oneself into debt, owed to a creditor which is yourself is stupid since there's no option to write it off.

Kaffein said...

@Anon10:00PM,
Anon> Right now you CANNOT use CPF to help pay for expenses when you are out of a job. These people are proposing to allow you to do so.

Kaffein> Exactly! Thanks for supporting my argument. I'm glad you can see the sheer stupidity of it all.

If they cannot even pay for any expenses because they do not have a job, why do we need to have a dumb law to only allow CPF to be drawn after retirement in the first place?

Most people on the street are already bemoaning about the inability to withdraw CPF donkey years ago. Let's not have some orgasmic feeling that Prof Tan Khee Giap and REACH came up with something new.

Anon> Isn't that an improvement?

Kaffein> You call that an improvement? I call it bullsh*t because the person can't wait until retirement. He'd probably be starving dead by then. Unless you call sleeping in a coffin an improvement.

Anon> If this was proposed by somebody other than REACH you would be saying good things about it.

Kaffein> Maybe because the way the newspapers reported it was as if REACH struck gold. Wow... when did REACH suddenly take the credit?

In fact the proposal to have CPF withdrawn out was raised many times by opposition parties and feedback by many common folks on the street. It was the PAP who rejected the calls and turned a deaf ear to them.

So suddenly REACH because superstars and saviours? Pfft...

Anyway, I do not reject for the sake of opposing just because it is REACH. Have a good read here.

Kaffein

Anonymous said...

Tan K G better than Bernanke ?

Anonymous said...

TKG is a STUPID MORON!
There, I feel better now.

What're we talking about, a <1% of the population that are in dire needs to do so? The interest" they want to collect from these poor folks would have easily been paid for by the top 1% of the working elites who are contributor to the CPF. Besides, when GIC are consistently making 9% (or more) annual returns on our pension funds, the gahmen have only been paying us a pittance of 2.5% & 4% into the OSMR a/c. And they still want to take more from the poor & have-nots?

I mean we are after subsidizing a very expensive welfarism" in the form of million dollar salary to our Minister from the taxpapers monies anyway.. Gosh...this economist must be FIRED & JoLLY HANGED.

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