The Evil CPF System

Time really flew and before I realised, I haven’t written for a whole month! But there are people and things to take care of, and also Dirty Shoes has been entertaining all of you for the past month, so that hasn’t been such a long wait I hope. Also, I saw Dixon complaining about how old my posts were =\

Anyhow, this recent trip back to Singapore threw light on a lot of things. For the longest time, I’ve read about how evil the CPF is. Granted, I do see a number of “weird” rules about it that I don’t like, but I’ve never really thought it evil. For one, having to put back 2.5% p.a. of accrued interests if you used it to buy your home and then decide to sell it some many years later is really odd to me. But if the rule is already in place, it makes it even odder that people would want to pay for their houses by CPF. The simple reason is that, you are not really losing the 2.5% accrued interest; you are losing 5% interest. The 2.5% you didn’t earn + the 2.5% you have to pay back.

Honestly, perhaps it’s because I didn’t understand the details enough that I find it a reasonable system all in all. But what happened to Dad recently made me realise, perhaps it isn’t such an evil system as what people described after all.

Dad is a fishmonger. He is his own employer, so no employer puts his salary into CPF and no one to contribute an additional 16% or so to his CPF either. But the law makes it that it is mandatory for the self employed to contribute to the Medisave. In the CPF Board’s words:

As a Self-Employed Person, you do not receive regular Medisave contributions from employers. It is therefore important to contribute regularly and make sure you have sufficient Medisave savings for your future healthcare needs. This is especially important during old age, when you may have stopped working.

Extracted from

As Dad also doesn’t make a lot of money, he contributes minimal amount to his Medisave regularly as stipulated by law. And perhaps for people like him who doesn’t make much money, contributing to Medisave is a bother because if I already don’t have a lot of money, why do you still want to take my money and lock it up?

Now, Dad doesn’t have insurance. I learned that he got it cancelled only very recently just before he was diagnosed with cancer, so that was a big slap to the “insurance is a waste of money” face. Frankly, I didn’t know about Dad’s Medisave contribution nor Medishield coverage either until recently, when I was prepared to dig out my savings to pay for his treatment that I learned his Medisave amount and Medishield coverage was enough to cover his entire treatment (minus the medicines and consultation since there is a limit to the coverage).

Yes, he’s probably got next to nothing in his OA and SA accounts, but thanks to the government’s stipulated mandatory contribution to Medisave and coverage of Medishield, his treatment is well taken care of.

Sure, not being able to work during treatment (and probably after) still poses challenges to the family financially. But having saved some 20- to 30-thousand dollars for the treatment is a huge relief for us. And guess what? If he had made himself contribute what little amount he had to his OA and SA, the past 40-50 over years of contribution would likely definitely have placed him in a better position (no matter how little) than where he is now.

Perhaps it’s only when you are in deep shit that you realise how the CPF is beneficial. For those complaining about it, be thankful you are in a financially ok position to talk shit about it. But when the storm comes, I hope you have yourself covered.


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