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by JackYoustra 392 days ago
(a) There's an argument that people should save more for retirement, but I haven't heard anything more than that about why domestic savings as a whole has to increase. If anything, this is quite a good place to naturally run a deficit! Good rule of law and investment opportunities, as well as future earnings from migrants.

(b) Targeting the fiscal deficit usually works well, especially because it's particularly yawning right now. Forced savings (sing-style CPF) work ok too though, although only Singaporeans wouldn't consider that a tax.
1 comments
_t9ow 392 days ago
> only Singaporeans wouldn't consider that a tax

Both forced savings and taxes are legally mandated by the government, but that does not mean that forced savings are taxes. Implementation details matter.

Your money in your own CPF account accumulates interest (at decent/attractive interest rates that generally exceed inflation rates), and is then paid out tax-free to you after retirement.

Additionally CPF funds are managed separately from the government's consolidated revenue. They are administered by the CPF Board and are not used for government expenses in its yearly budget.

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JackYoustra 391 days ago
Sure sure, my point is stuff like British national insurance and American social security are considered taxes, even though much of the money in expectation goes right back to you in retirement / health spending.

In Singapore, the flows are similar, even though the accounts are broken out individually and the top-ups are explicitly done.

In my view, the key is the government telling you what to spend your money on that gives it the shade of taxation. Whether they do so with labeled accounts or not seems more of an implementation detail.

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_t9ow 391 days ago
> Whether they do so with labeled accounts or not seems more of an implementation detail.

I think this is an implementation detail of huge significance.

In the CPF system, your current contributions pay for your own future retirement. In the Social Security system, your current contributions pay for current retirees' retirement.

The CPF system is sustainable, because it truly is a savings scheme. The U.S. Social Security system is not, because it relies on having a tax base that never diminishes.

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