Feb 26 2018, 12:53 AM
QUOTE(limeuu @ Feb 25 2018, 04:40 AM)
Even if it is managed properly, it can enter into trouble....once retirees outnumber new contributors.... because it means negative equity and shrinking fund....if caught in a recession, or in Japan's case, prolonged period of low growth, the liquidation of assets to fund the negative equity may be inadequate to cover excess withdrawals....and collapse of the fund becomes a real possibility....
At this point, EPF is quite conservatively managed...albeit needing to perform "national service" at times.... but it's a very sweet pot of honey, politicians always will be tempted to help themselves to the pot....
You're confused between two types of pension system. Defined contribution vs defined benefits. At this point, EPF is quite conservatively managed...albeit needing to perform "national service" at times.... but it's a very sweet pot of honey, politicians always will be tempted to help themselves to the pot....
Defined benefits such as government pensions is unsustainable, as you're guaranteed to get a certain amount of money until you die. And even after that, your spouse would get it. This type of system requires more and more contributor to support it. It's good for the pensioners, but bad for the system provider aka government.
Defined contributions, such as EPF (Malaysia) and CPF (Singapore) is sustainable. Because you'd only get the money the you put in the pot, plus interests.
Go and read more about pension system. Uncle google can help you a lot.
Quote
0.0365sec
0.32
7 queries
GZIP Disabled