[philwelch]

> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%).

Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.

[InkCanon]

The main difference is SS bonds are bought at market rates. CPF bonds are not.

[zozbot234]

Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.

[drdec]

The trust fund is funded by the overage of collected Social Security taxes compared to Social Security payouts. It is not "tacked on" and does not use "separate government funding".

Currently there are more payouts than taxes so the trust fund is being used to make up the difference.

When the trust fund is depleted (barring any changes, this happens at some point in the next decade if I'm not mistaken) then there will be a reckoning. If no action is taken by Congress the result is that payouts will be cut by the necessary percentage to match the taxes.

[zozbot234]

> does not use "separate government funding".

Yes, it does. The Obama administration explicitly appropriated general government funds to try and make up a developing shortfall in the 'fund'. There is no money being accumulated because there are more payouts than taxes - but even if that wasn't the case, these are not actual "bonds" that have been bought on any market, they're just non-market government obligations.