... whose identities are best unmentioned. They are those that receive the full pension of half their last paycheck every month until death. Idle curiosity while making some other calculations on the good ole HP12c led me to work out the Net Present Value (NPV) of their pensions. I assumed 3.00% p.a. as the discount as this is approximately the historical long term inflation rate for Singapore and that this would apply for the future. I also assumed they would receive a monthly pension of $41,666.67, viz. $500,000.00 p.a. divided by 12 months. Here are the results:
If drawn over 25 years, the NPV is $8,786,518,89. This is the sum that, when invested for a return of 3.00%p.a. and drawn down at $41,666.67 monthly will last for 25 years.
Let's compare this with the salary paid over three terms of the great and the good. Since general elections are never called at the end of the statutory five-year limit, I'm going to use 13 years as the service period. I'm also assuming that the great and the good receive 80% of the full million over the 13 years as they may not be fully great and good for the first few years of service. Plus they get the 13th month Annual Wage Supplement (AWS). Other bonuses are excluded as these are secret. Using the same discount rate:
If serving for 13 years, the NPV of their salary is $9,319,946.11 Think about it. the NPV of their pension is more than 94% of their basic pay!
Of course, this astonishing reward comes working for only 13 years and drawing a pension for 25 years. How did I get the 25 years? Well, retire at about 60 and live till 85, which is reasonable since the great and the good know how to take care of themselves and have the means to do it. Plus they get free health care and checkups and tests and investigations, which BTW, I didn't calculate as part of their pension package.
No wonder that civil servants had to serve for more than 31 years before receiving the full pension of half the last-drawn pay! Ah, well, we must make exceptions for the great and the good, mustn't we?
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Hi,
You've nice blog. Numerous persons nowadays don't know whether they're obtaining appropriate wage for their profession. To be clear one can check on-line salary comparison websites to know what other corporations provide for the same position. For instance to compare wage of an analyst one can just type analyst salary in a salary comparison website like Whatsalary.com
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