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The Hard truth is CPF is based on a big fat lie! Here's why...

tonychat

Alfrescian (InfP)
Generous Asset
We are all capable of independent thought. I grew up in Singapore and was told that CPF would take care of my retirement and that a good degree would secure my future. I listened to this mantra but I knew that I needed to do the calculations myself.

All I had to do was to take out a simple financial calculator (HP used to make great products before the age of the PC) and do some basic math.

It showed me in a matter of minutes that the estimated $900,000 that I would accumulate in CPF based upon salary projections would not be enough for me to retire on without making significant sacrifices in my lifestyle.

I decided there and then that I needed to be self employed if I was to retire at 40. I then took small but regular steps towards achieving that goal. It took me a bit longer and I made it 4 years late. However late is better than never.

k2-_bb63d281-e6e5-410a-8e8d-7f8c5db2cdb3.v1.jpg

I don't think sinkies are capable of independent thought. They are trained since young not to have any individuality at all... That is why I stay away from sinkies.
 

Sinkie

Alfrescian (Inf)
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

When I was running my own business in Singapore, I contributed monthly to CPF simply by paying myself a monthly salary. All of Singapore's self employed do it that way if they want to grow their CPF accounts or didn't you know that?

When you pay yourself a monthly salary, you're not self employed, but a salaried employee, whether you're running your own business or not. The question to ask yourself is how you file your income tax return if you pay yourself, and how you manage your business, because business profits or loss fluctuates and it do not make a lot of sense to pay yourself if it is a sole proprietor or even a partnership, as it is tricky and you will potentially flag IRAS if you pay yourself inappropriately. Furthermore, contrary to what you say that 'all of Singapore's self employed do it that way', I'm doubtful, for it makes little business sense and also most self employed are freelancers, insurance agents and other commission agents and self-employed hawkers, besides sole proprietors. I find your answer pretty suspicious, because how do you pay your income tax then?

When I pointed out the irrelevant comparison between CPF and EPF, I am referring to the rate of return. Returns on currency deposits vary widely as can be seen in the link in my signature. Without going into the realm of currency values, inflation etc, the general rule of thumb is that the stronger the currency, the lower the interest rate and vice versa.

Then don't compare CPf with the NZ pension scheme. I raise the comparison with EPF of Malaysia to show you that members can withdraw 30% at age 50 and full withdrawal at age 55, even though Malaysia had adjusted its retirement age higher, because this is the way to manage long-term scheme, where the so-call maturity date or age cannot be a moving target that surprises everyone when it comes the time to withdraw, the date gets further and further down the road. Clearly, the Malaysian EPF is honorable and adheres to its promise of the EPF withdrawal age, even though the retirement age had changed, because the two ages are materially different and should be mutually exclusive as evidently it is for the Malaysian EPF, but not CPF, which uses bait and switch to hoard the member's CPF. How can one trust a scheme that keeps moving its goal posts as and when it feel like it. This is a form of deceit, not honorable.

The strength of the SGD is a tremendous advantage for Singaporeans. It ensures that the value of their SG assets is preserved on the international stage. A Singaporean can pretty much cash out and retire anywhere in Asia with money to spare. Not so for the Malaysians. They are stuck in their own backyard.

I fully agree that Malaysia is a cheap country but that's hardly a compliment for our neighbours. Less developed countries are invariably cheaper just as Mexico is cheaper than the USA and Americans flock there for cheap stuff too but how many people want to emigrate to Mexico? The Green Card is still document of choice the world over. The fact that Singapore is an expensive place proves that the PAP is doing an excellent job.

Ok, this point I do not like to comment further, because it is a distraction. In a nutshell, my opinion is the strength of the Singapore dollar is a double edged sword. MAS has been pulling on a tightrope all these years to ensure the Singapore dollar is competitive vis-a-vis its trading partners and other variables, like inflation, cost of living, cost of sales, currency hedge, etc, etc.

As for this CPF "promise" please show me which document promises that CPF rules are supposed to be cast in stone for all eternity. I'm curious.

As far as I know, "upon reaching the age of 55, members can withdraw the full amount of his CPF contributions and its accrued interests' is a promise cast in stone, so to speak. If it is not, then show me the document that says it isn't. Also, let me turn the question back to you. If it is not a promise, then what is it then? Also, please enlighten me where in which document that said the withdrawal age of 55 can be changed at a future date, when CPF was mooted years ago. Show us and we'll quietly fade away, with our balls squeezed but boh piang, cannot do anything because we've been stupid to trust so blindly.....can only Ren Min......LOL
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

When you pay yourself a monthly salary, you're not self employed, but a salaried employee, whether you're running your own business or not. The question to ask yourself is how you file your income tax return if you pay yourself, and how you manage your business, because business profits or loss fluctuates and it do not make a lot of sense to pay yourself if it is a sole proprietor or even a partnership, as it is tricky and you will potentially flag IRAS if you pay yourself inappropriately. Furthermore, contrary to what you say that 'all of Singapore's self employed do it that way', I'm doubtful, for it makes little business sense and also most self employed are freelancers, insurance agents and other commission agents and self-employed hawkers, besides sole proprietors. I find your answer pretty suspicious, because how do you pay your income tax then?

As far as I know, "upon reaching the age of 55, members can withdraw the full amount of his CPF contributions and its accrued interests' is a promise cast in stone, so to speak. If it is not, then show me the document that says it isn't. Also, let me turn the question back to you. If it is not a promise, then what is it then? Also, please enlighten me where in which document that said the withdrawal age of 55 can be changed at a future date, when CPF was mooted years ago. Show us and we'll quietly fade away, with our balls squeezed but boh piang, cannot do anything because we've been stupid to trust so blindly.....can only Ren Min......LOL


I can tell you that I am currently paying myself a salary in NZ too. A company is a separate legal entity in any jurisdiction.

There are 2 directors that own 50% each of the company.

For income tax purposes, both of us pay ourselves a salary which is determined by my accountant to be within industry norms. This reduces the tax burden because company tax is higher than personal tax in the tax bracket that I am in. This has been done for the last 7 years with no problems from the IRD because the salary is not off the scale.

At the end of the year, the company pays dividends to each of us.

Directors/owners paying themselves a salary is not unusual. It is done in every country I have lived in.

Now regarding the CPF "promise".... as far as I can see it wasn't a "promise" cast in stone. It was simply the CPF rule at the time the scheme was adopted by the PAP. Rules change with time and so they should because what was appropriate in the 60s is no longer feasible. It would be ridiculous to use the same rules that were drafted in the last century to manage today's retirement plans.

There used to be a rule that when you were driving, you had to stick your hand out of the window to signal turns and stops. I actually followed these rules in order to pass my driving test.

The rule has since been discarded for obvious reasons.
 

hofmann

Alfrescian
Loyal
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

I can tell you that I am currently paying myself a salary in NZ too. A company is a separate legal entity in any jurisdiction.

There are 2 directors that own 50% each of the company.

For income tax purposes, both of us pay ourselves a salary which is determined by my accountant to be within industry norms. This reduces the tax burden because company tax is higher than personal tax in the tax bracket that I am in. This has been done for the last 7 years with no problems from the IRD because the salary is not off the scale.

At the end of the year, the company pays dividends to each of us.

Directors/owners paying themselves a salary is not unusual. It is done in every country I have lived in.

Now regarding the CPF "promise".... as far as I can see it wasn't a "promise" cast in stone. It was simply the CPF rule at the time the scheme was adopted by the PAP. Rules change with time and so they should because what was appropriate in the 60s is no longer feasible. It would be ridiculous to use the same rules that were drafted in the last century to manage today's retirement plans.

There used to be a rule that when you were driving, you had to stick your hand out of the window to signal turns and stops. I actually followed these rules in order to pass my driving test.

The rule has since been discarded for obvious reasons.

round and round we go,
4 legs good, 2 legs bad,
3 legs and you win.

:o
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

Boss, have you not heard of the saying 'a bird in hand is worth two in the bush'?:biggrin:

The money is in my hands. It's no different from a term deposit. In fact it is better than a term deposit as far as interest rates go.
 

yinyang

Alfrescian (Inf)
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

A company is a separate legal entity in any jurisdiction.
both of us pay ourselves a salary which is determined by my accountant to be within industry norms. This reduces the tax burden because company tax is higher than personal tax in the tax bracket that I am in. This has been done for the last 7 years with no problems from the IRD
Directors/owners paying themselves a salary is not unusual. It is done in every country I have lived in.
Tax deduction on corporate tax, makes sense vs personal income tax hit. Salaried owners are a business cost, and what gives if yours is not out of whack (with others in the heap). Even with perks as in entertainment, travel and car (not for Singapore with fiscal constraints on cars)
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

Tax deduction on corporate tax, makes sense vs personal income tax hit. Salaried owners are a business cost, and what gives if yours is not out of whack (with others in the heap). Even with perks as in entertainment, travel and car (not for Singapore with fiscal constraints on cars)

It's easy to work things out nowadays. All tax accountants have spread sheets that can tell you within minutes how to structure your taxes.

In my case it made sound business sense to rent the premises that I own to the company while the company pays me a salary.
 

soIsee

Alfrescian
Loyal
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

My advice is not to leave. Singapore is the best place in the world.

Your advice is akin to a eye surgeon marketing and promoting that his patient undergo lasik surgery so that they can do away with their spectacles but he is wearing specs himself! LoL
 

soIsee

Alfrescian
Loyal
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

Now regarding the CPF "promise".... as far as I can see it wasn't a "promise" cast in stone. It was simply the CPF rule at the time the scheme was adopted by the PAP. Rules change with time and so they should because what was appropriate in the 60s is no longer feasible. It would be ridiculous to use the same rules that were drafted in the last century to manage today's retirement plans.

There used to be a rule that when you were driving, you had to stick your hand out of the window to signal turns and stops. I actually followed these rules in order to pass my driving test.

The rule has since been discarded for obvious reasons.

What was appropraiate in the 60s is where their hands are OFF the money and it should still apply today, shouldn't it?

You don't take someone's money, make lots of money from it, pay yourself a hefty 'service fee' for using that money, channeled whatever you deem excess back to your safe keeping and pay crumps back to those who actually are the owners of those money.

Of course, if those owners had willingly 'given permission ' for their money to be used ( like morons buying unit trusts) and in doing so reward these ppl with hefty service fee, then this is their own choice in doing so.

Make sense to you?
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

Your advice is akin to a eye surgeon marketing and promoting that his patient undergo lasik surgery so that they can do away with their spectacles but he is wearing specs himself! LoL

If you go to an eye specialist, chances are you'll find that is indeed the case. :p That's why I haven't done Lasik.
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

You don't take someone's money, make lots of money from it, pay yourself a hefty 'service fee' for using that money, channeled whatever you deem excess back to your safe keeping and pay crumps back to those who actually are the owners of those money.

It's not an ideal situation but if you compare it to welfare states that rob you dry of your hard earned money so you never see it again, it's the lesser of two evils.
 

Sinkie

Alfrescian (Inf)
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

I can tell you that I am currently paying myself a salary in NZ too. A company is a separate legal entity in any jurisdiction.

There are 2 directors that own 50% each of the company.

For income tax purposes, both of us pay ourselves a salary which is determined by my accountant to be within industry norms. This reduces the tax burden because company tax is higher than personal tax in the tax bracket that I am in. This has been done for the last 7 years with no problems from the IRD because the salary is not off the scale.

At the end of the year, the company pays dividends to each of us.

Directors/owners paying themselves a salary is not unusual. It is done in every country I have lived in.

Again, you're digressing. As I said, if you're paid a monthly salary, you're a salaried employee in the eyes of CPF and not a self-employed. Since you now let us know your business entity is a company and not a sole trader or partnership, then the company is taken as a separate legal entity, as if it was a person in the eyes of the law, especially IRAS. When you receive dividends, you've to declare as income and be taxed on an individual level. Usually, if the business entity is a company, then it is possible to give yourself a salary, but usually, most business owners will draw a small salary only (to avoid IRAS' query on its appropriateness) and the rest as dividends, because a company needs operating costs. Singapore's company tax is not low and IRAS is not so stupid to close one eye if it has evidence to show you're shifting profits to convert them to costs, like drawing a high salary.

If you're drawing a small salary, then I don't know how you can end up having so much in your CPF account and more importantly, why you lock yourself into a scheme that pays 2% interest thereabout and mind you, back in the 70's, the fix deposit rate is hovering at 6% to 8%, unlike what is this decade or more, at 1% thereabout, making the scheme attractive compared to fix deposit.....but still not attractive if you invest your dividends in equity instruments, for example and not having the absurdity of having to pay for medisave, which when it started, is not possible to will the reminder to your beneficiary when you die....and it is highly suspect for a 'shrewd' business owner like you not to take advantage of the equity bull-runs in the 90's and 00's, instead of leaving your money in CPF earning paltry sums and even if you had invested, your choice of funds are limited and you can only buy gold in limited quantities, etc, etc. So, I'm calling your bluff here!

Now regarding the CPF "promise".... as far as I can see it wasn't a "promise" cast in stone. It was simply the CPF rule at the time the scheme was adopted by the PAP. Rules change with time and so they should because what was appropriate in the 60s is no longer feasible. It would be ridiculous to use the same rules that were drafted in the last century to manage today's retirement plans.

There used to be a rule that when you were driving, you had to stick your hand out of the window to signal turns and stops. I actually followed these rules in order to pass my driving test.

The rule has since been discarded for obvious reasons.

What do you mean by rule? It is a law and laws are cast in stone and can only be amended through parliament. You're trying to say that rules can change with times, but you must not forget that rules are in fact laws and laws cannot be changed easily. For this CPF withdrawal age of 55, this is the law, liken to someone signing a contract that mentions the completion of a project by a certain number of years and such salient determinants like completion date cannot be change unilaterally because everyone buys in with such an expectation of the date of completion and if there're changes that any one party does not accept, the contract laws cannot be changed to suit one party alone.

It's the same as a marriage contract. You marry because of love or whatever, but finally, when you want to divorce for whatever reasons, you cannot just walk out or follow sharia law, just repeat 3 or 4 times to your wife and you're divorced, without your wife having to consent to it, just like that. One needs to honor the terms of the contract and not give excuses like times have changed. Nothing change until and unless all parties agree to the change.
 
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Sinkie

Alfrescian (Inf)
Asset
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

The peoples' feedback about this CPF shenanigan will be submitted @ the ballot box......
 

gunaraj33

New Member
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

hi there...im a singapore pr [malaysian from johor] and 29 years old. recently i have attained sarawak pr status and wish to withdraw my cpf after renounce my singapore pr status. can anyone advice me regarding this thing and is it possible for me to withdraw my cpf? thank you
 

busybee1688

Alfrescian
Loyal
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

So Leongsam should have cash out minus the min sum.... CPF...upon age 55....$600k but can't transfer to NZ as will kanna tax...hmm....... if you so have faith with sg... u should have bought a business or property in sg.
my 2 cousins passed away at age 54.....life is shorter than it seems to be..
CPF have it pros and cons....
 

jw5

Moderator
Moderator
Loyal
Re: PAP Should Stop CPF Wayang, Just Return OUR CPF

There is another saying: "Two birds in her hand is worth one in her bush". :biggrin:

Boss, have you not heard of the saying 'a bird in hand is worth two in the bush'?:biggrin:
 
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