The CPF Minimum Sum has been raised again, this time to $139,000. The reasons given by the government were rising life expectancy and inflation.
I am of the view that the CPF Board needs to find additional ways of dealing with the inflation problem. Minimally, there should be changes to the CPFIS rules to allow members more freedom to pursue investment goals that are consistent with higher rates of inflation.
For example, since inflation is a problem and since we have a negative real interest rate environment, why is the maximum gold allocation only 10%? How is that going to protect the other 90% effectively?
I would contend that the current rules effectively drive people into real estate, and serves to prop up prices in that market. Such policies which encourages a misallocation of capital should be stopped. Otherwise we will see a retirement crisis in the not-too-distant future, as I had previously warned of.
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