It’s been quite awhile since I last read the news. In fact, it’s been like one and a half months. So I wasn’t even following one of the things that would impact my life when I get old: the tweaking of the CPF scheme. And if ignorance is bliss, not knowing even the surface of these tweaks definitely is one of those things that makes this statement false.

One of these tweaks is that an additional 1% of interest will be paid for the first $60000 in CPF members’ combined accounts. The 1% will be placed in the Special Account and not the Ordinary Account. Above which, my understanding is that the combined $60000 in your ordinary (OA), Special (SA) and Medisave Accounts can’t be used for anything.

So what does this really imply? This means – if I understands it correctly – a whole group of young Singaporeans will not be able to use any of their CPF to pay for their own health insurance or that of their parents or to do their own investments, be it in stock and shares or even managed products like unit trusts! (And am I glad that this ‘extra’ 1% didn’t also affect the loan interest rate of my existing HDB loans!)

So, if you earn about $3000 a month, you get approximately a total of $1000 of CPF a month from the deduction from your own pay and the contribution from your employer. That will take you 60 months (5 years) to get it up to $60000. And that is only true when you are not paying out of your CPF OA for a new flat. If you are, it probably takes away at least half of that (i.e. $500) from your OA, depending on the size of the flat you bought. That simply means it will take you even longer, roughly 10 years to get that up to $60000. And the extra 1% is only good for 2 years because after that it will be a free floating rate which doesn’t guarantee you that extra 1%.

If what I understand about the $60,000 is true, that means for the first 10 years you can do nuts about your CPF for just that extra 1%, whereby friends I know are earning more money by investing their CPF monies in stocks and shares or unit trusts. (That is of course not considering some of the unfortunate ones who has lost money investing their CPF monies on their own.)

I wonder what impact will there be – in terms of the liquidity in the stock markets – in the future with a dearth in investors using their CPF monies to invest. Also, what impact will there be to the turnover and profits of companies offering managed investment products. Will it also mean all those financial consultants out there are going to find it harder to find new and ready investors?

Baby Lee and his goons may paint a rosy picture and try to sell this as something that is necessary for the future of Singapore and the good of you and I. But from the looks at it, it is more like keeping some of that ‘cheap money’ off the investment market. While it maybe true that the gover-min doesn’t need this ‘cheap money’ for its own investments – or if your believe the taxi drivers, to cover the losses suffered by Temasek because of Shin and some other crap – it certainly look to me there will be a group of people who won’t be thanking the Tali-PAP for a long time.