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Thread: New CPF rules

  1. #21

    Default Re: New CPF rules

    Quote Originally Posted by eyes View Post
    Fixed deposit interest rates in Singapore are very weak compared to our neighbours in Australia and New Zealand and that can be an option for those who are jittery over investment in stocks and hedge funds. (www.savingsaccounts.com.au / www.interest.co.nz)

    There are many other investment vehicles in the market that are appropriate to the different types of investors such as stocks, foreign exchange, bonds, blue chips as well as government securities- not to mention the sub-categories of these.

    Insurance and Life Planners are not specialised in in-depth investment analysis and recommendations compared to professional brokers and money managers and hence cannot represent the profession as specialisation differs.

    Assuming that indeed 20% of the population are unthinking people who will squander their pension monies and therefore there is a need for the top brass to monopolise the pension money markets, are we saying that we have to penalise the 80% of the majority investors for the unthinking minority?
    In my point of view, yes. 20% in the street begging for food is no joking matter. With 20% hungry voters, the govt will be hold ransom to implement a welfare system.

    Quote Originally Posted by eyes View Post
    We all know that centrally control markets are usually unproductive and generates poor yields. Russia, Old China, North Korea are examples of mid to long term effects caused by central market control policies.

    Unfortunately, there are pension funds investing in private investments suffering lost too.

    As an investor, my money should make more money and that's the basis for investment calls. Even if the monies in CPF are non substantial against my current investment pools, I would rather use it in investment than to see it being devalued in an institution that I have absolutely no control over.
    I would rather have control over my money too. But looking at the big picture, there is no choice.

    Quote Originally Posted by eyes View Post
    As this country do not support welfarism, those who squander their monies will eventually be forced into working far into their retirement age. Hence the concern of those who cannot manage their monies is on the facilitation back into the workforce rather than long term full fledge support. That said, the cost of facilitation is nowhere substantial to full fledge financial support and given the rise of many NGOs in the recent decade, there is no evidence to be suggest that the current model for the facilitation back into the workforce will fail in the long run.

    The problem is people may not realize that the savings is insufficient until much later in life. With poor health, outdated skills and long break from work, it will not an easy task finding them a job.

    All in all, CPF should come up with full options for private investments and keep its policies open. A lukewarm approach will not do as proven in the previous years that when CPF dictates with the narrow scope of approved stocks and unit trust. Future policy review should focus in creating a transparent and open use of CPF funds for private investments rather than to restrict it to limited offers in the market or forbid entirely on private investments.
    Again, that is coming from an individual point of view. We will still have many intelligent investors who will invest in dubious products eg. those link to Lehmann's.

    I do not disagree with you that there are better investment choices that gives higher return out there. I agree that private investments generate better returns than the CPF although at a higher risk. I agree that there are individuals who can manage their money properly.

    But on the whole, I feel that those richer (and more capable ones) have to sacrifice a bit of their monies to be locked up in the CPF for the sake of those who does not have the skills to look after their own money. For the sake of some social stability, for the sake that the country do not go into welfarism...

  2. #22

    Default Re: New CPF rules

    the batam mistress and china mistress thingey is some overhyped/over-rated excuse. after all, if people want mistresses, its up to them to live and enjoy their lives.
    pedantic.

  3. #23

    Default Re: New CPF rules

    Quote Originally Posted by night86mare View Post
    i think while that example is probably pushing it too hard, there are more vices than just women in life. one also has drugs, alcohol, gambling, or just plain ol' consumerism rearing its ugly head. i am seeing a lot of my current generation or younger, being pampered to the point that they have adopted the attitude that an iphone is a necessity, along with a psp, branded goods, the ability to purchase clothing every week or so without restraint. and all this before they have even gotten a job.

    i even know of some people who have started working, and their older parents nearer the stage where they should be retiring.. are giving them pocket money still, because they have no knowledge of how to spend within their means.

    it is easy to say from an armchair critic's point of view that we should let them do what they want, and destroy their own lives... but when it comes to the end result, society will only be looking at a 60 year old man and his sob story involving a life of picking up litter to sell to make ends meet.. no one will see the build up of events that led to this plight. and no one should.
    even with CPF LIFE or Dead schemes, many elderly, will still end up picking litter from the streets.
    pedantic.

  4. #24

    Default Re: New CPF rules

    sorry to interrupt, as a ignorant young singaporean... i'm not very sure why are talking about investment when the topic is about CPF and the money cannot be withdraw (at some circumstances)?? pls correct if i'm wrong

    my parents are now more than 50years old, currently me and my sis is studying in a tertairy education... with school fees near $7000 per semester (combine)... i dun understand why we can't use our CPF money to pay necessity stuff like education or housing.. i know that i can't do much to change the policy... but this policy just doesn't make sense to me... its not like we are taking it out to anyhow spend, we don't even get to touch the cash if we are paying directly to sch or HDB

    nowaday couple get married at a even older age as compared to my parents generation, i won't be confident to say at 55years old my children will be working already
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  5. #25

    Default Re: New CPF rules

    Quote Originally Posted by night86mare View Post
    so what is the reason?
    fundamentally flawed system and concept.
    pedantic.

  6. #26

    Default Re: New CPF rules

    Quote Originally Posted by skyguy View Post
    sorry to interrupt, as a ignorant young singaporean... i'm not very sure why are talking about investment when the topic is about CPF and the money cannot be withdraw (at some circumstances)?? pls correct if i'm wrong
    yes, you can use cpf monies to invest. read here :

    http://mycpf.cpf.gov.sg/CPF/my-cpf/make-invest/MI.htm
    Objection !!!

  7. #27

    Default Re: New CPF rules

    Quote Originally Posted by night86mare View Post
    obviously, but you are not answering the question, other than a generic catch-all answer, if you do notice..

    what are the fundamental flaws?
    CPF, should evolve from its aged old focus on retirement, given that retirement ages are also increasing over the years. it should readjust its focus, with a part on retirement, and a huge integral part on contributing to social security which is sorely lacking now, resulting in lower birth rates and many other related issues. i.e. in times of unemployment, access to CPF for short term sustanance would help, at times of heavier financial burdens, i.e. having children, financing their upbringing etc.

    but anyway :

    1) its not inflation proof. many things arent. that could mean that money in hand at any moment now, its worth would be more than that similar numerical sum, in the near future.

    no perfect retirement scheme, so need scholars like you whom study at LSE to come up with better ideas than my civil engineering cousin who was part of the policy making for CPF life.

    2) triangulation of CPF-HDB etc. very smart move, hats off to the guy who thought of it earlier on, using a cheap to build high rise 99 year lease pigeon hole as a CPF draining mechanism. where do these money go? used to be for EDB use to bring jobs to singaporeans.. nowadays *shakes head*

    3) compulsory CPF contribution from employers and employees (singaporean citizen and PR), on employer's point of view, higher labour costs, and lower competivity

    4) based on using high HDB prices to drain CPF, and portraying the eventual 30year old HDB flat as an asset, would mean that for the profits to be reaped, the flat has to be sold. time for parents to move into kid's home again, and for kid to buy a flat of his own, so parents can sell. the in-laws should move in too so they too can sell their flat to re-populate their CPF accounts. how nice. with current average salaries and "AFFORDABLE" housing prices, the 30 year loans and the prevailing interest rates for this duration... many of this generation will have pretty much a bare CPF account unless there are continually sufficient jobs with higher payscales for people to be promoted to regularly to keep up on building their CPF.

    5) with or without CPF, upon retirement, expect definite lifestyle changes of the same order.

    6) CPF life, between the basic plan and the higher monthly payout plan, one's risking leaving nothing for his or her kids, and the monthly payout between these options would probably differ by a hundred measly dollars plus or so.. worth taking this option and risk?

    7) retirees in countries without CPF or such "retirement" plans, are these retirees worst off than the singaporean retirees with CPF?
    pedantic.

  8. #28
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    Default Re: New CPF rules

    this is my opinion, for singapore a country doesn't support individual welfare, CPF system is good. But locking up money policies of min $117 for a relatively long period is too much! How long do u take to save up that much cash??!!!

    lets say I save $100 per month, 1 yr = $1,200
    10 yrs = $12,000
    i start working at 25 yrs, 30 yrs later i only have $36,000
    and assume i have only $117 and beiing locked up.... tough to live for a while till i get 1st small portion of payout.
    HOW TO LIVE?????!!!!!

  9. #29

    Default Re: New CPF rules

    Quote Originally Posted by night86mare View Post
    quoted
    lets put it this way, in the lack of financial and job security, kids and family, and settling down in marriage would be of lower priority. career mindedness takes over. its still my opinion, that if people are more financially capable, they could probably consider settling down younger, and maybe make more kids. may vary from others.. especially some whom i've known had gone forth and multiplied.

    i still feel there should be an "opt-out" or "exemption" option for CPF, or perhaps a later "opt-in" choice if needed for some.

    saving and planning for retirement should be done when one's career has taken flight, and that by then one should have achieved enough working experience etc to have taken on better paying jobs and positions.

    at a younger age, with job insecurity, the need to build up work experiences and skills, and the lower pay received, mandatory CPF contribution will make these people less employable in terms of cost, and could also lead to a lower propensity for them to pick up the necessary working experiences. at 32%, a few hundred dollars would mean more to someone drawing a take home salary of 2k+ to 3k, as compared to someone drawing 5-6k..
    pedantic.

  10. #30

    Default Re: New CPF rules

    Quote Originally Posted by proteonXPR View Post
    the batam mistress and china mistress thingey is some overhyped/over-rated excuse. after all, if people want mistresses, its up to them to live and enjoy their lives.
    It is easy to say the last sentence if it doesn't happen to you. I've seen such cases before. The husband withdraw every cents and disappear for 2 yrs and then reappear empty handed. From then on, it is the family who has to bear the the burden. I've also seen cases where children ask the parents for money after they had collected the payout. Yes, these are social problems and CPF isn't the way to solve them. But the key thing is it will still be your money and nobody can take them away from you. You still get them at a controlled rate.

  11. #31

    Default Re: New CPF rules

    Quote Originally Posted by proteonXPR View Post
    7) retirees in countries without CPF or such "retirement" plans, are these retirees worst off than the singaporean retirees with CPF?
    There are many better than us but most have an unfair advantage. For places like australia, they can keep on digging and digging. Places like France is crippled with debt and living on borrowed money. Now they have difficulty convincing the unions to work longer. Pensions in USA are failing to deliver as promised. All in all, I am quite satisfied with our current system.

  12. #32

    Default Re: New CPF rules

    Quote Originally Posted by shorty View Post
    this is my opinion, for singapore a country doesn't support individual welfare, CPF system is good. But locking up money policies of min $117 for a relatively long period is too much! How long do u take to save up that much cash??!!!

    lets say I save $100 per month, 1 yr = $1,200
    10 yrs = $12,000
    i start working at 25 yrs, 30 yrs later i only have $36,000
    and assume i have only $117 and beiing locked up.... tough to live for a while till i get 1st small portion of payout.
    HOW TO LIVE?????!!!!!
    You mean if you are out of job at 55? With 36k to last for 7 years, your monthly allowance is $430. After that, if you start withdrawing the 117k regularly until 80, your monthly allowance is $540. If you want to have more to spend, start saving more.

  13. #33
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    Default Re: New CPF rules

    I think there should be a clear line being drawn between CPF and HDB. Utilisation of retirement funds to buy a HDB flat may tentamount to a musical chair scenario where net gains in asset may actually be negative. Although HDB prices is projected to continually rise based on past performances, owners with 1 roof over their heads will still need to buy another flat after disposing his previous. Market price point will also be high enough to effectively wipe out any nett gains unless there is a rare deal available. Nett gains may even be negative shall the replacement flat be offered higher than his previous disposal price.

    Some will suggest that if the current market offering the same type of flat is priced the same or higher than the one that had just being disposed, sellers should then downgrade to a smaller flat and cash in; inccidentally this is commonly termed as "cherry picking" by the locals.

    However, this is not real cherry picking. When sellers sell their flats and end up with the replacement of the exact being priced equal or higher than his previous sales, where would his nett gains be? Wouldn't that be a zero sum investment or negative gains?

    Therefore selling to downgrade and thus cashing in is not reaping on positive investments. The cash that sellers receive upon downgrade is the actual savings accumulated within the lifetime of flat financing rather than real investment gains.

    There may be suggestions that without utilising CPF for flat purchases, majority of Singaporeans could not afford it. However, pondering on this point, if public housing is unaffordable by the majority without utilising their retirement funds, can we still call it public housing?

    CPF may be perceived as a highly inflexible fund leading to the trend that many Singaporeans opted to use it for flat purchases. What adds to the potential negative investment gains while doing so is that instead of CPF paying you interest rates for your monies sitting in their hoard, you have to pay them interest rates when you use your CPF funds to purchase a HDB flat- this is because CPF considers such facilitation as a loan rather than alternative investments options.

    Buyers of HDB flat should be directed to utilise a bank loan for their public housing instead of taking a loan from their retirement funds. As buyers need a flat to stay without being rejected from over ambitious or speculative loan applications and banks being pressured not to over-extend loans, HDB prices will then reflect more accurately its true value at market price point.

    CPF should not be used in HDB flat purchases as it can distort market prices for public housing and that public housing is not a real investment. CPF should hence be open for alternative investment options with those who are less investment savvy be appointed reputed money managers.
    Tum podem extulit horridulum...日出東方﹐唯我不敗。

  14. #34

    Default Re: New CPF rules

    Quote Originally Posted by theonlyone View Post
    As nightmare has pointed out, 600k to 1m is the higher end. That is why I say you have to re-assess your lifestyle. I got mine at zero COV at ulu location low level which many ppl would not even give it a glance. There are options. Get a cheaper flat, buy from HDB for first timer, stay with parents, let go of the car, stop smoking, simple wedding etc.

    So you haven't answer my question about how much 117k can last you. If you don't have any savings and entirely dependent on CPF, why does it matter if that minimum amount gets locked up in the CPF. Does being able to withdraw it any earlier help? Yes, it helps you to live like a king for the first few years.

    The CPF is the people's money. But if they spend it on china mistress and beg on the streets after that, it is the society's problem. It just takes a minor

    And you are correct that minimum sum and withdrawal age will increase. Why? Inflation, life expectancy will increase and working adults to tax on will decrease (if the population doesn't increase). So start PLANNING NOW!
    Pardon me, i forgot to add to the category of "higher end" flats, they belong to 5rm & bigger. The 4rm range from 350k+ to 500k+.

    The "higher end" HDB r not really that prime, they r juz along the MRT tacks, which makes them "hi end", not like they r located at district 9. Last i heard Pioneer Rd flats have appreciated a lot since the station opened. Of cos everyone has a choice where they choose to live. I had experienced with ulu places & my definition of convenience turns out to be a need. YMMV of cos. I was having hi fever then, staying at my bro's hse, need to walk out 12mins juz to get a clinic in the central. I can choose to take a fiddle bus but the waitign time is much longer than if i walk. My mum staying with me now & few mths ago, her leg was swollen to the extend of not able to walk, but the clinic is juz 3mins away, took me 40mins to reach helping her with the limping. Imagine if i lived in my bro's flat & need to bring my mum to the clinic, how long is it going to take? Juz becos the flats r along the train tracks does it make them worth that much premium? Back to ulu flats, not cheap also. Pasir Ris 4rm near the Tibetan temple is 350k+ 3 yrs ago. Baffles me, why HDB gave the approval chop for valuation prices at 500k to 900k range. (not referring to new fancy HDBs at 500k range) They r practicing double standards. Market value & internal HDB value. When they want to take back ur flat, u see what they return u.

    Get new flats... well, have u track the prev balloting ex? 2k+ flats available & 20k+ applied. I heard half actually do not qualified due to exceeding the min combined income. That leaves 10k+, thats still "5x oversubscribe" 1st timer easy to get? Personal experience is... , my sis in law juz gotten their flat in Sengkang during last yr Oct ballot, thats their 3rd try & they r 100% 1st timer, their baby is 2yrs old this yr, so may be they used the "children priority" scheme & got it? I seriously dun know. I also want to get a bigger flat due to family members expansion, what's my chances? Tried 4x liao, got nothing, cos i took the grant even thou current flat was from open market & now branded as 2nd timer.

    As night86mare pointed out, yes, u can shorten the loan period as & when u had more money. I estimated if the hse is 300k+, for average joe, its doable. But when the flat costing is above 400k+, i think very slim chance unless the salary has a big jump. I only half agree with his point of salary won't stay stagnant over the yrs. If it only goes up, there's no issue, but salary fluctuates. Another eg, my bro in law was making 5 fig juz a few yrs back, then came the retrenchment, took a few mths to get a job in a semi govt place, pay was $4k+. He's in his 40s & i consider $4k+ good salary in today's time, but not many people will be as lucky, why? Becos he has a 1st class honors in Comp Sc to begin with. I do feel his quality degree made that diff, otherwise there wudn't be so many retrenched people having difficulties in getting another job in the same field. Imagine if he committed to that 700k flat, & now salary 4k+, how to shorten the loan? How to repay in 30 yrs? How to meet that min sum by 55yrs old?

    How much will 117k last me? Thats a tough one. Obviously it depends on the variables right? If i need to do a heart bypass in 2023, today's cost bout 80k, so may not be able to afford it in 2023. What about dialysis? That can stretch 117k a little longer. But if my kids r very capable & turn out to be hi flyers? I practically need not touch a single cent of the min sum. So it really depends on factors i can't predict. That sum can last a day or can last a long time. I'm only interested in needs & not wants, so lets keep this to a more sensible discussion. Inflation of cos will come into play as well, how much will the $4 noodle cost in 2023? How much wud our utilities go up by then? Public transport? Etc.

    Will withdrawing the CPF earlier helps? When u r out & dry, that is the miracle u want. If u noticed, the employability of people in their 40s decline sharply, if u have sickness, worse. At 53 w/o job, with fix costs need paying every mth, or same situation but at age 60, even after 1st payout, next payout in 5yrs time (yr 2023), how to live? If unlucky kid/s still schooling, super jialat.

    Society problem will be here, with or w/o splurging min sum. Thats a reality we need to acknowledge. Problems come from everywhere. Night86mare has given very good egs on how other factors contribute to the society problems. Spending the min sum fast is only one of them.

    Night86mare:- I'm not worry that such threads becoming heated. Civilised discussion can still be had when everyone is respectful of each other's opinions & keep an open mind. So far so good

  15. #35

    Default Re: New CPF rules

    Quote Originally Posted by theonlyone View Post
    There are many better than us but most have an unfair advantage. For places like australia, they can keep on digging and digging. Places like France is crippled with debt and living on borrowed money. Now they have difficulty convincing the unions to work longer. Pensions in USA are failing to deliver as promised. All in all, I am quite satisfied with our current system.
    US also has their 401k investment, similar to our CPF, not doing good either.

  16. #36

    Default Re: New CPF rules

    Quote Originally Posted by eyes View Post
    ......
    These r very good pointers

    Regarding neg return on housing & CPF, i've yet another sad case.

    The cleaner lady's 3rm flat from my ex company got en bloc-ed. HDB gave her a new one as a 1-to-1 exchange. Becos at that time ('02), HDB didn't make any 3rm, she has to take a 4rm. Out of the blue, she incurred 100k+ loan overnight. She told me she makes only $400/mth cos that job was part time. Why 100k+? Becos HDB valued her 3rm based on their int market price vs their premium selling price. She turned & asked me "How to pay?" Min sum... where to find?

    Fortunately or unfortunately, the loan was "passed down" to her only daughter, who happened to juz finished her poly studies.

  17. #37
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    Default Re: New CPF rules

    Quote Originally Posted by theonlyone View Post
    You mean if you are out of job at 55? With 36k to last for 7 years, your monthly allowance is $430. After that, if you start withdrawing the 117k regularly until 80, your monthly allowance is $540. If you want to have more to spend, start saving more.
    I would like to save more... but if i had 3 kids to feed, to school, to medicare, to public transport, 1 small HDB unit to pay and basic needs expenses to pay, saving $100 a month without fail for 30 years is kind of great achievement morally! i wanted to provide more for my kids, for their better future, but i had limits. limits caused by worrying future and limits caused by worrying about my insecure income source... what about you?

  18. #38

    Default Re: New CPF rules

    housing is amongst the biggest financial liabilities most people face. there should be a need to stop floating public housing to market rates, and stem the CPF drainage to HDB.

    with that, there will be more retirement funds, that is probably when CPF as a retirement scheme have better success.

    the other option, is to raise wages, so that one can cope with both the standard of living, and be able to build up their CPF accounts, however employability will suffer.

    my priorities : maintaining employability > coping with standard of living > building retirement funds
    pedantic.

  19. #39
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    Default Re: New CPF rules

    My previous post was to debunk the myth for those who only had 1 roof over their heads who thinks that HDB flats are a form of investment vehicle. The myth is extremely dangerous as it has a potential to cause homeless issues if sellers make blunt moves to capitalise on their existing flats.

    It is also meant to debunk another myth that escalating HDB prices automatically means a "windfall" for existing HDB flat owners.

    I'm actually surprise when I talk to folks in Singapore to hear from them that this and that HDB flats are good investments when technically from the monetary point of view it is not- at least for the majority. But this is what is happening today. All facet of the society, from the top brass to property agencies to media, they seem to present HDB flats as an "investment" rather than a product of necessity.

    (http://www.asiaone.com/Business/My%2...27-212663.html / http://www.propertyguru.com.sg/listi...-3a-cantonment)

    For those who has only 1 roof over their heads, HDB is not a real investment. The only time that home properties and HDB flats are investment vehicles are when owners already have a roof over their heads other than the one they intend to capitalise or that they do not intend to stay in Singapore after the sales.

    As HDB flats are not investment vehicles for the majority of the people, there is little investment sense to lock in their retirement funds in lieu of paying up for the flats. As mentioned in my previous post, using retirement funds to pay up HDB flats effectively reverse the role of the interest paying party from CPF Board to the CPF member. Since HDB flats do not effectively attract revenue (unless you rent it out) what can be said is that the entire transaction is of a hire purchase nature rather than real investments.

    This is perturbing because instead of letting the retirement funds to attract interests, (paid out by CPF board or) using them to invest in other instruments, CPF owners actually took a loan whereby interest is payable further from his capital to hire purchase a product as in this case a HDB flat.

    Therefore, it is only good that CPF should be used to invest in other things rather than to fund the hire purchase of a HDB flat.

    Although banks can determine interest rates, it is also true that banks do not charge high interests on collateral or secured loans such as housing loans. Given that many banks in Singapore do offer housing loans, competition for the market may actually drive interest rates down and hence benefiting home buyers.

    From a corporate governance point of view, it is easier for the government to impose and regulate banks than attempting to regulate buyers' speculation.

    Unlike CPF board which cannot be pressured to out perform investment goals that it sets for itself, money managers can be pressured to deliver superior results based on goals set by the investors themselves.

    This is the huge contrast. Poor performing money mangers will be replaced by others and investors have the option of engaging more than 1 money managers for their investment funds.

    The appointment of money managers can be a collaborative effort between CPF board and its members with CPF board approving only those money managers with strong track records and CPF members able to choose their managers based on their investment interests, risk tolerance as well as potential yields.

    Hence I propose that CPF should not be locked-in with HDB flat purchase but rather be used for private investments.
    Last edited by eyes; 13th May 2010 at 05:27 PM.
    Tum podem extulit horridulum...日出東方﹐唯我不敗。

  20. #40

    Default Re: New CPF rules

    How about giving the people the option of using their cpf money for housing or other investment? As of now, there are approved funds which we can invest in. Maybe we should just expand the selection?

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