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CPF System review : It still does not address the basic issues of................

lifeafter41

Alfrescian (Inf)
Asset
1. Increase the interest payable, but increase the minimum sum of 3% annually from 2017 to 2020
2. Choice of withdrawing the full sum comes 55.........

1The CPF Advisory Panel is recommending that members set aside a Basic Retirement Sum at 55, so that they can draw on a payout of S$650 to S$700 per month when they retire a decade on. It also proposed lump-sum withdrawals of up to 20 per cent.


The CPF advisory panel releasing their recommendations. (Photo: Imelda Saad Aziz)


SINGAPORE: The Central Provident Fund (CPF) Advisory Panel, chaired by Professor Tan Chorh Chuan, on Wednesday (Feb 3) submitted its first batch of recommendations to the Government on ways to enhance the CPF system to better meet the needs of Singaporeans in their retirement years.

There were a total of nine recommendations submitted, including the introduction of a Basic Retirement Sum, an additional lump sum withdrawal point when the member is 65 years old, and allowing members to defer their payout starting age.

Channel NewsAsia breaks down the key recommendations, and the implications on CPF members and their retirement planning.


RECOMMENDATION: Members who retire in 10 years’ time should set aside CPF savings to provide for a monthly payout of S$650 to S$700, or Basic Payout. To receive this Basic Payout, members have to set aside a Basic Retirement Sum. This is with the assumption that the member owns a home and does not need to pay rent.

What it means: CPF members who turn 55 in 2016 can receive the monthly Basic Payout of S$650 to S$700 for their lifetime from age 65, if they set aside the Basic Retirement Sum of S$80,500, as a premium for CPF LIFE.

Those unable to meet the Basic Retirement Sum, but who have signed up for CPF LIFE, will still receive monthly payouts, but these amounts would be correspondingly lower than the Basic Payout mooted. They do not have to top up their Retirement Accounts with cash in order to be part of CPF LIFE.

For those who meet the Basic Retirement Sum and wish to withdraw savings on top of the S$80,500 set aside, they may do so subject to making a property pledge. This pledge is basically a commitment by the member to put back the amount withdrawn from the proceeds after the property is sold.

For those who have bought their homes using CPF, there is already a CPF charge on that property, so there is no need to make a property pledge. CPF will be able to tell from past transactions on their systems whether the member is eligible for a CPF charge.

But for others with no or insufficient CPF charge on their property, the property pledge rules still apply.

“It is expected that among the cohort of CPF members turning 55 in 2020, about 7 in 10 active members will be able to accumulate enough CPF savings to meet their Basic Retirement Sum,” the advisory panel said.

RECOMMENDATION: Those who do not own a home, or do not wish to pledge it, should set aside a retirement sum double the Basic Retirement Sum - also known as the Full Retirement Sum.

What it means: People who do not have homes to their name, or who do not want to pledge their property, will have to set aside S$161,000 in order to receive monthly payouts of between S$1,200 and S$1,300 from age 65.

RECOMMENDATION: Give the option to members with higher CPF balances to commit more of their savings into the CPF LIFE scheme, so they receive higher monthly payouts.

What it means: These members would be able to voluntarily top up their CPF LIFE to an Enhanced Retirement Sum, which is capped at three times the Basic Retirement Sum. In other words, those who turn 55 in 2016 can choose to top up their CPF LIFE amount up to the limit of S$241,500 to get higher monthly payouts.

This was previously impossible, as the Minimum Sum was also the ceiling with which members could annuitise - or convert into fixed monthly payments - their savings.

RECOMMENDATION: Give members the option to defer their payout start age, up to 70, for permanently higher monthly payouts.

What it means: According to the Ministry of Manpower’s Labour Force Survey in 2014, about 40 per cent of Singapore Residents between 65 and 70 continue to receive an income from work. Some members may not need their payouts to start at their Payout Eligibility Age (previously known as “Draw Down Age”).

Thus, the panel is proposing to incentivise these members to voluntarily defer their payouts in exchange for higher payouts. For every year the payment start age is deferred, monthly payouts permanently increase by 6 to 7 per cent. This will help more members with low CPF balances receive higher monthly payouts.

RECOMMENDATION: Give members the option to withdraw up to 20 per cent of their Retirement Account at the Payout Eligibility Age.

What it means: This option applies only to CPF members who turn 55 from 2013 onwards, since older cohorts had more liberal withdrawal rules at this stage. Those who turned 55 in 2008, for example, could withdraw up to 50 per cent of their combined Ordinary and Special Accounts.

Under this proposal, members will be able to withdraw up to 20 per cent of their Retirement Accounts, inclusive of the S$5,000 that can already be withdrawn unconditionally from age 55.

However, there is an impact on the monthly payouts if the member decides to withdraw the full 20 per cent at this stage. For example, if the member decides to not make the lump sum withdrawal at the Payout Eligibility Age of 65, and assuming there is S$80,500 in the Retirement Account, he or she will get to receive S$680 per month. Those who choose to withdraw the lump sum will have an estimated monthly payout of S$580.

“The panel proposes that the Government consider providing incentives to encourage CPF members, particularly those with low balances, to leave their retirement savings in the CPF if they have no urgent need to make a withdrawal,” it said.

ACCESS AND ASSURANCE

This first batch of recommendations addressed two of the four areas the panel members were charged to study:

•How the Minimum Sum should be adjusted after 2015, in order to meet the objective of delivering a basic monthly retirement payout for life


•How to enable CPF member to withdraw more as a lump sum upon retirement, and the circumstances for their doing so, taking into consideration the impact on retirement adequacy for different groups



Since its formation in September 2014, the panel met with more than 400 Singaporeans of various ages and different walks of life at its Focus Group Discussions.

“We noted the desire for more assurance over future adjustments to the Minimum Sum, and for there to be more choices in the CPF system for members,” Prof Tan, who is also President of the National University of Singapore (NUS), said in a letter to Manpower Minister Tan Chuan-Jin.

On the issue of lump sum withdrawal, he added: “We took into the account the desire expressed by many Singaporeans to have access to a portion of their savings for various uses, but were also mindful about keeping to the primary intent of the CPF system: To help provide retirement adequacy for the majority of Singaporeans.”

The panel is working on the second batch of recommendations, which they said will be submitted "later this year".

Said Professor Tan: "The key shift is that the most relevant sum or the base line for the majority of members will become the Basic Retirement Sum. This is because the majority of members own a property, and with this property they are able to take out sums above the basic retirement sum so long as they have a charge on their property.

“So let me explain what this charge is - when CPF members use their funds to buy a property, there's a charge on it. Which means when you sell that property, that amount is returned back to your CPF to ensure that you have adequate payouts in the future. This situation applies to the majority of CPF members."
 

winnipegjets

Alfrescian (Inf)
Asset
Invest $10k annually for 30 years in SPY (ETF for S&P), you get $1.3 million at the end.
Same investment in CPF gives you $450k.

Here's the problem ...government is robbing you of your returns.
 

AhMeng

Alfrescian (Inf- Comp)
Asset
RETURN OUR CPF AT 55.

So complicated for FUCK! Stop confusing everyone laymen! :oIo:
 

johnny333

Alfrescian (Inf)
Asset
Invest $10k annually for 30 years in SPY (ETF for S&P), you get $1.3 million at the end.
Same investment in CPF gives you $450k.

Here's the problem ...government is robbing you of your returns.


Yes, the PAP has already robbed the pioneer generation. They don't have another 30 years, They just want whatever is left of their CPF:(
 

theDoors

Alfrescian
Loyal
CPF Life, the more money you put in, the more you lugi

Screenshot%2B-%2B2_4_2015%2B%2C%2B8_36_15%2BPM.jpg


For $80.5k you get range $650 to $700
Shouldn't you get $1300 to $1400 for $161k you put in?
And $1950 to $2100 for $241.5k you put in?

The more money you put in cpf life, the more you lugi
 

laksaboy

Alfrescian (Inf)
Asset
Basically, this 'CPF review' thingy is nothing more than a pre-election, Roy-induced panicky session to placate the angry electorate. Remember not too long ago, some dark skinned PAP minion held town hall meetings telling his residents how awesome the CPF system was? :rolleyes:

I say: ignore their half-hearted and/or shambolic gestures of generosity... instead look out for the other ways in which they'll extract more wealth from you, usually in a sneaky, roundabout way that is 'good for you'. :wink:
 

johnny333

Alfrescian (Inf)
Asset
Basically, this 'CPF review' thingy is nothing more than a pre-election, Roy-induced panicky session to placate the angry electorate. Remember not too long ago, some dark skinned PAP minion held town hall meetings telling his residents how awesome the CPF system was? :rolleyes:

I say: ignore their half-hearted and/or shambolic gestures of generosity... instead look out for the other ways in which they'll extract more wealth from you, usually in a sneaky, roundabout way that is 'good for you'. :wink:


The CPF issue is only one of the issues, but to many poor Sporeans it is the most important. The other "issues" would require an independent investigation & that's not going to happen as long as the PAP is in power:wink:
 

Sinkie

Alfrescian (Inf)
Asset
RECOMMENDATION: Give members the option to withdraw up to 20 per cent of their Retirement Account at the Payout Eligibility Age.

What it means: This option applies only to CPF members who turn 55 from 2013 onwards, since older cohorts had more liberal withdrawal rules at this stage. Those who turned 55 in 2008, for example, could withdraw up to 50 per cent of their combined Ordinary and Special Accounts.

Under this proposal, members will be able to withdraw up to 20 per cent of their Retirement Accounts, inclusive of the S$5,000 that can already be withdrawn unconditionally from age 55.

Is the year 2013 a mistake or typo? If true, this means it is applied retrospectively, correct? Since now is already 2015.

Anyhow, I get it..........now it's up to me to feedback to them. Ok, I'll let them know through the most direct way I know. Through the ballot box. To all those Opposition chobolans, don't play me out!!
 

Sinkie

Alfrescian (Inf)
Asset
Re: CPF Life, the more money you put in, the more you lugi

Screenshot%2B-%2B2_4_2015%2B%2C%2B8_36_15%2BPM.jpg


For $80.5k you get range $650 to $700
Shouldn't you get $1300 to $1400 for $161k you put in?
And $1950 to $2100 for $241.5k you put in?

The more money you put in cpf life, the more you lugi


Told you.....it's worse than now.........for those reaching 55 this year 2015......the payout for CPF life is $1,030 and $980, depending if you want to leave for your benefactors or less. Now, for those reaching 55 next year........it's worse..........

Arrghh.........I'm right. The more you tell them to solve the problem, the more you get humtum.......

It's OVER.
 

laksaboy

Alfrescian (Inf)
Asset
Re: CPF Life, the more money you put in, the more you lugi

How can anyone expect the SOURCE of the problem to also be the SOLUTION to the problem? :rolleyes:
 

winnipegjets

Alfrescian (Inf)
Asset
Re: CPF Life, the more money you put in, the more you lugi

They makan you of your returns all these years and now they want to take more. Greedy PAP!
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Juggling numbers is not going to resolve the most fundamental of problems which is the sinkie habit of spending everything they earn.

Solving this retirement savings conundrum is very simple. Save a bit every month and compound what you save. My mother taught me that when I was 6 years old.
 

theDoors

Alfrescian
Loyal
Re: CPF Life, the more money you put in, the more you lugi

cpf-life-plans-at-a-glance.jpg


In 2009, the Life Income plan with the least bequest, for $117,000 draw down $1045-$1149 a month

Now for $155k, the default CPF Life plan with the least bequest, draw down only $1200 a month


Screenshot%2B-%2B2_4_2015%2B%2C%2B8_57_33%2BPM.jpg


Now You put in $38,000 more, you only draw down $50 more a month niah
 

blissquek

Alfrescian
Loyal
Invest $10k annually for 30 years in SPY (ETF for S&P), you get $1.3 million at the end.
Same investment in CPF gives you $450k.

Here's the problem ...government is robbing you of your returns.

This is the issue the Prof should address n not to add it more and more tweats that even the Phd students will get muddle up.

If we have a forthright intention, just lay the facts simple and fair..we will respect u more.

I just use a illustration from our nearest neighbour...Malaysia

THEY PAY A HIGHER RATE OF INTEREST TO THEIR PEOPLE FOR THEIR RETIREMENT FUND.

THEY HONOUR THEIR WITHDRAWAL AGE COMMITMENT.


Their govt does not short-changed their own people. Any deficiencies or shortfall, they look to help those that fall through the cracks.

So their retirement plan is short and simple and forthright and the people are happy because their Government honour their words and commitment.
 

phouse3

Alfrescian
Loyal
1. Has anything changed?

All along, Minimum Sum as the name suggests is a floor or a basic scheme.

All along, Singaporeans who can't meet the Minimum Sum have been getting much less.

All along, Singaporeans have been allowed to pledge their properties for half of the Minimum Sum. Anyone should know that a pledge of property is non-cash generating. Singaporeans have all along been nonchalant about it. All along, the government has not been highlighting it for political reasons.

All along the Minimum Sum has been effectively half the official amount for many Singaporeans.


2. Has anything changed?

People who talk as if CPF starts from 65 are nuts. CPF starts from the day you start work, not on the day you have a tiny whiff of your coffin money.

The new scheme has not said anything on the accumulation phase from 16 to 55 (a whopping 40 years) which is the base for all solutions as well as problems.

The new scheme failed to address the period between 55 and 65 (another whopping 10 years) which is so crucial for some people.

Actually, it says a lot. It is so clear that the panel is all caught up on managing expectations and withholding as much CPF as possible without incurring the people's wrath. The panel is trying to dovetail the scheme to the intent.

The new scheme is so incomplete that it is disappointing. Especially so when a big proportion of Singaporeans do not live until 65. Especially so when a quarter of Singaporeans do not have an income at 55.

3. Has anything changed?

Why is the lump sum withdrawal at 55 still unchanged at $5,000?

This small figure sticks out like a sore thumb.

All these while the MIW harassed us about inflation and the need to raise Minimum Sum. So why is the lumpsum withdrawal of $5,000 at 55 still the same? How long can $5,000 last? How much is a dental-treatment or a new pair of glasses today? How much is a plate of chicken rice?

4. Has anything changed?

Has the new scheme address how to build up CPF through the monetisation of properties?

For goodness' sake, the population has soared and with it the cost of living! The old and new Singapore are like two different countries with 2 different economic structures.

Monetisation of flats at 55 is the most responsible thing to do and not irresponsible. For goodness' sake, monetisation of flats is PUTTING MONEY BACK INTO THE CPF ACCOUNT, NOT TAKING MONEY OUT.

Monetisation is belt-tightening. Monetisation is switching investment in a non-productive asset to productive assets.
Monetisation is addressing over-consumption in housing. Monetisation is building up CPF. The sooner you do it the better. Contrary to all commonsense, the MIW raised the age for monetisation of HDB flats.

Opportunity cost like paying ourselves 2.5% interest rate on CPF withdrawn is also non-cash generating. Putting money back in the CPF to earn 4 or 5% interest rates is. All along, the MIW treats HDB property as an investment. So what is the use of an investment if you don't realise it?

The joke about not mortgaging our children's future is stale. Lowering over-consumption of property should be across the board, you can't say you want to start anew and just encourage the young not to over-consume and at the same time allow the old to get stuck with over-consumption. If you do that, many older Singaporeans would be in trouble.
 

winnipegjets

Alfrescian (Inf)
Asset
Juggling numbers is not going to resolve the most fundamental of problems which is the sinkie habit of spending everything they earn.

Solving this retirement savings conundrum is very simple. Save a bit every month and compound what you save. My mother taught me that when I was 6 years old.

What talking you lah? Sinkees are saving in their CPF; the problem is that those money could generate sufficient returns to ensure a comfortable retirement but for the fact that the PAP government steals the bulk of the returns from us.
 

shittypore

Alfrescian
Loyal
How to address tis CPF problem when the cash is in the hands of the PAP, its considered theirs and if they want to ret it to you consider it as bonus, hard truth which Sinkies as to accept for trusting em.
 

po2wq

Alfrescian (Inf)
Asset
ah loon n his jingang shud stop wasting taxpayers moni further by cumming out wif so many irrelevan patterns on cpf ...

juz return all cpf 2 peasants @ age 55! ...
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
What talking you lah? Sinkees are saving in their CPF; the problem is that those money could generate sufficient returns to ensure a comfortable retirement but for the fact that the PAP government steals the bulk of the returns from us.

CPF is for housing and healthcare. It is a wonderful scheme in that it takes cash of all the cashflow required to pay off ones mortgage without affecting take home pay.

This means that sinkies can then channel their take home pay into worthwhile investments without having to worry about paying for a roof over their heads.

I honestly believe that CPF is one of the best schemes ever. I made a profit of more than $500,000 in the early 90s thanks to CPF. Without CPF, I'd be a lot poorer today.
 

Ash007

Alfrescian
Loyal
Re: CPF Life, the more money you put in, the more you lugi

The way I see this, is that they are turning CPF into a state pension system where you are only doled out $X per month, with the caveat that when it runs out you won't receive any payments. At least with the traditional pension system, you still get it as long as you are alive!
 
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