"CPF cut means fatter pay packets, too"

It is summarised up very clearly that people who focus on negative impacts of the cut in CPF have ignored net wealth effect from cash in hand. With the lowering of the CPF salary ceiling, there will be additional money going into the workers' pockets.

When the salary ceiling takes effect next January, an employee earning $6000 will have an additional $100 a month to take home and by Jan 1, 2006, it will be even more.

Psychologically, workers will feel richer because of the net wealth effect, even though there is lesser for the CPF. People could then be more willing to buy a new pair of shoes or to splurge on a holiday or even pick up a new property. (sounds familiar right??... then the multiplier effect will set in... haha...)

"We hardly see our CPF money unless we use it to pay for a house, so the extra money in hand is more than welcome."

More money in workers' hands would definitely spur consumption and investment and this would provide a much-needed boost to the listless economy. (How smart can the government get manz??)

Property values will increase too(so people... start buying houses and investing in them...) because they are linked to the business cycle, and if the business do well, so will property prices.

*CAUTION!! However, the extra disposable income arising from the lowering of the CPF salary ceiling could push individuals to the next higher tax bracket, which may actually lead to higher tax payments.