Asset rich Singaporeans should stop badgering the government for handouts and donations.

[cherry6]

With Reverse Mortgage facilities dime a dozen, Asset-rich Singaporeans should stop badgering the government for handouts and free gifts.
References as appended:
- Reverse mortgage - Wikipedia, the free encyclopedia
- List of banks in Singapore - Wikipedia, the free encyclopedia
- ST,05Dec2013: 'A question of fairness'
Pls note that there are "at present, 111 commercial banks" in Singapore, so commercial banks can handle the reverse mortgage of private properties and the CPF can handle the reverse mortgage of HDB properties (all sizes); only when the per capita home equity of a person should fall below say SGD50K should a person be granted be granted full medifund subsidies (sans congenital illness that is)- this of course is just a ball park suggestion, other suggestions should equally be considered.

Living in a private residential property in Singapore is undeniably a luxury, and now that the government budget is short "..to pay for the slew of healthcare, housing and infrastructure initiatives announced by Prime Minister Lee... A more probable ... for us to increase GST from the current 7 per cent to 10 per cent." ('GST hike ‘more likely’ if Govt needs to raise revenue for new initiatives'), we all know that GST is a regressive tax since it hits the poor more than the rich, so asset rich Singaporeans shouldn't expect the government to subsidize their necessities just so that they can enjoy their daily extravagance(big landed properties in land scarce Singapore).

[IMG URL][Full Text URL]

[22Aug2013: 'GST hike ‘more likely’ if Govt needs to raise revenue for new initiatives']

Reverse mortgage
A reverse mortgage, also referred to as a Home Equity Conversion Loan, is a financial instrument that allows seniors to access the equity in their home without income or credit qualifications. Seniors must be a minimum age (country-specific), live in their own home, and have equity in it. The important distinction between a reverse mortgage and a conventional mortgage is that there are no principal or interest payments required on the home while the borrower occupies the property. In the case of two borrowers being on title, should one permanently leave the property due to a death or hospitalization, the other borrower continues to remain in the home. Repayment is only required if the borrower sells the home, or moves out of the property for more than 365 consecutive days.
In a conventional mortgage, the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases by the amount of the principal included in the payment, and when the mortgage has been paid in full, the property is released from the mortgage. In a reverse mortgage, the home owner is under no obligation to make payments, but is free to do so with no pre-payment penalties. The line of credit portion operates like arevolving credit line, so a payment in reduction of a line of credit increases the available credit by the same amount. Interest that accrues is added to the mortgage balance. ... ...
Reverse mortgage - Wikipedia, the free encyclopedia

List of banks in Singapore
This is a list of banks with operations in Singapore. Location of incorporation is provided in brackets for foreign banks. There are, at present, 111commercial banks, 49 merchant banks, and 45 banks with representative offices in Singapore.
List of banks in Singapore - Wikipedia, the free encyclopedia

The Straits Times, Published on Dec 05, 2013
A question of fairness
I AM a 66-year-old retiree living in a condominium unit worth about $1.35 million. I have never forgotten that the appreciation in value of my home was possible only because of good government policies and planning.
If I should need cash one day, I will sell my condo unit and downgrade to a three-room HDB flat.
Some retirees living in private landed properties worth millions of dollars are expecting the Government to give them financial assistance so they can continue living in their homes, which they intend to leave to their children when they die.
Is it fair for them to have their cake and eat it, too? Do they not know that they are the envy of thousands of retirees living in rented one- and two-room flats?
Is it fair or even wise of them to vote irresponsibly because they are envious of the help given to these asset-poor, cash-poor retirees, who have also contributed to the success of Singapore and deserve much more help?
Lee Hong Leong
Copyright © 2013 Singapore Press Holdings. All rights reserved.
A question of fairness

Tags:
Retirement, Annuity, assets, equity, Singapore, financial, banking, mortgage, prudence, welfare, GST, CPF, reverse,poverty, gini, governance, planning,

 

[sunzoner]

The was a thread on this in the EDMW yesterday:
http://forums.hardwarezone.com.sg/e...ich-cash-poor-retirees-not-fault-4486501.html

My message there and here is the same:
http://forums.hardwarezone.com.sg/81687473-post8.html

This conclusion is not entirely correct. Those who bought HDB flats before the rapid increase in prices would have enjoyed a lower rate for their flats. So how does it translate to retirement saving locked in housing? If anything, anyone who bought flats before the spike, would have some money in retirement accounts. So why are they still cash poor?

The conclusion must be the high inflation rate and low CPF/saving rate has leads to erosion of savings.

Is the MSM having problems identifying the source of the problem?

 

[pyu]

Inflation rate is twice as high as the mandate CPF growth rate of 3% while it sucks 35% of most people's annual income into it. Monies flow into the sovereign wealth funds and 3% is the measly return that the funds get. And meanwhile, PAP policies over the years mean that CPF is so highly leveraged upon since it is for public housing, healthcare, and even future retirement until the cows come home.

This is the 10,000 tonne pink elephant sitting in the room. CPF is not a good deal for normal citizens at all unless you have a place to stay and guarantee you will never get sick. Overall, it is a very poor deal for Singaporeans since the supernormal returns enjoyed by the sovereign wealth funds stay with the state.

 

[sunzoner]

...Overall, it is a very poor deal for Singaporeans since the supernormal returns enjoyed by the sovereign wealth funds stay with the state.

The claims of "supernormal" returns are not proven or audit result shared.

 

[Inix]

Where do we draw the line? $1M?, $500K? Like what sunzoner says, anyone who bought the home at an earlier time, will have made a sizable paper profit. Heck, even I made a sizable paper profit from my house. But it does not take away the fact that anyone will need a place to stay.

 

[cherry6]

Start reverse mortgage scheme to help seniors

Start reverse mortgage scheme to help seniors

The was a thread on this in the EDMW yesterday:
http://forums.hardwarezone.com.sg/e...ich-cash-poor-retirees-not-fault-4486501.html
My message there and here is the same:
http://forums.hardwarezone.com.sg/81687473-post8.html
This conclusion is not entirely correct. Those who bought HDB flats before the rapid increase in prices would have enjoyed a lower rate for their flats. So how does it translate to retirement saving locked in housing? If anything, anyone who bought flats before the spike, would have some money in retirement accounts. So why are they still cash poor?
The conclusion must be the high inflation rate and low CPF/saving rate has leads to erosion of savings.
Is the MSM having problems identifying the source of the problem?

Hi Sun, thanks for the heads up,
Agree that its an oddity that public housing is so expensive in Singapore, as such, private housing is indeed an uber luxury...

In anycase, it has been said that the CPF rate isn't exactly low, being I understand, 35.5% according to the link thread U just quoted. Problem is that the govt allowed just too much of the CPF money to be put into housing in Singapore that too many Singaporeans have decided to be property investors in Singapore... however, many of these retires, having earned much from property investment have become greedy and instead of reverse mortgaging their respective properties or downgrading, have decided to play up on their 'predicament/ sentimentality' hoping that the government will subsidize them for their daily necessities- just so that they could proudly not just REMAIN in their luxury private housing, but also hand down a proud inheritance to their descendents... this is certainly UNACCEPTABLE when the government is pondering extending the regressive GST taxes from 7% to 10%.

Point is that for government assistance to be ever given, a person should declare how much per-capita equity he has: e.g. someone staying with 7 other Singaporeans in a 5 room HDB (say valued at=S$500K) with a mortgage outstanding of $200K would have a per capita net property equity value of 300K/8people: S$37.5K/ person, such a person might be eligible for assistance compared to someone staying alone in the same 5-rm fully paid up apartment- for which the nett equity per person would be S$500K, a vast difference from $37.5K, we have of course not yet considered other properties such as cars, businesses properties, stock/ shares etc... complicated as it is, I do not see why private property owners cannot draw on their properties for urgent cash, as long as they do not scrape rock bottom, they can keep these properties (descendents will take over mortgage and the property)-- these private property retirees should count themselves lucky cos in other parts of the world, medical costs could reduce one to bankruptcy, in Singapore, HDB rental apartment users are entitled to healthcare, if not heavily subsidised, then totally free...


And I'm not the first one to suggest that a reverse mortgage scheme for asset-rich retirees is appropriate for asset-rich Singapore (not that I agree with all the intricacies of his plan/ govt guarantees etc)...

The Straits Times, Published on Feb 21, 2013
Start reverse mortgage scheme to help seniors
THE Population White Paper has touched on our ageing population, which is a ticking time bomb. The main concern of retirees is whether they will have sufficient savings for their old age. Despite having Central Provident Fund Medisave and Retirement accounts, many retirees will not have enough.
But Singapore is in a unique situation of having high home ownership. Many senior citizens own fully paid-up properties.
The best way of unlocking their savings is to introduce a reverse mortgage scheme.
To be truly attractive, such a scheme must provide an annuity that will last throughout the lifetimes of the joint owners and allow them to live in the mortgaged property for life. Any shortfall in sales proceeds of the property should be underwritten by the Government.
There should be a line of credit available for lump sum drawdowns for repairs and also to augment the owners' Medisave funds.
There must also be periodic reviews to increase the annuities if property prices rise.
Governments have had to underwrite the major risks for most reverse mortgage schemes. The Hong Kong government, for example, introduced a pilot scheme two years ago and underwrites the risks.
In Singapore, the Government has a responsibility to underwrite the major risks because of its encouragement of home ownership, and our concentration of wealth and savings in property.
The costs need not be prohibitive as there is a property backing the scheme, and its value is influenced greatly by the Government.
If the scheme is successful, we will require fewer new studio units. There will also be reduced cash and other transfers to seniors, whose incomes will be augmented by the scheme.
Retirees will maintain their dignity and self-respect as they will not be a burden on their families, or be reliant on government handouts. They will also not be forced to move from their neighbourhoods into smaller units.
For those citizens fortunate enough to have long lives, why should we begrudge them the added financial costs? Surely, the way we take care of our aged is the hallmark of a caring and civilised society.
It will take time to familiarise people with the benefits of a reverse mortgage scheme and for it to gain acceptance. But the Government needs to be serious about starting one now. Kuo How Nam
Copyright © 2013 Singapore Press Holdings. All rights reserved.
Start reverse mortgage scheme to help seniors

 

[cherry6]

this is a thread about asset-rich retirees unlocking their savings in property (through reverse mort

this is a thread about asset-rich retirees unlocking their savings in property (through reverse mortgage)

Inflation rate is twice as high as the mandate CPF growth rate of 3% while it sucks 35% of most people's annual income into it. Monies flow into the sovereign wealth funds and 3% is the measly return that the funds get. And meanwhile, PAP policies over the years mean that CPF is so highly leveraged upon since it is for public housing, healthcare, and even future retirement until the cows come home.

This is the 10,000 tonne pink elephant sitting in the room. CPF is not a good deal for normal citizens at all unless you have a place to stay and guarantee you will never get sick. Overall, it is a very poor deal for Singaporeans since the supernormal returns enjoyed by the sovereign wealth funds stay with the state.

Hi pyu, er, this is a thread about asset-rich retirees unlocking their savings in property (through reverse mortgage) to tackle inflation or other necessary costs- which the poor cannot and so need government help to.

Please note that any government help provided is subject to recovery from various tax sources, income, GST, property being some of them. Higher govt revenue will certainly imply increase costs of living further as taxes suck money out of people's pockets, thus for those able to care for themselves, let the government budget remain untouched,
for a separate debate as to the causes and remedies for high inflation rates or the appropriate return for CPF monies retained, kindly start another thread about it.

Many thanks for your kind understanding and cooperation.

 

[cherry6]

OCBC Wealth Management: Reverse mortgages help supplement your retirement income

OCBC Wealth Management: Reverse mortgages help supplement your retirement income

Where do we draw the line? $1M?, $500K? Like what sunzoner says, anyone who bought the home at an earlier time, will have made a sizable paper profit. Heck, even I made a sizable paper profit from my house. But it does not take away the fact that anyone will need a place to stay.

Nobody is taking away anybody's home, just putting a lien on it... won't be too bad for the rich, as long as they remain as frugal as they were before... hey, life could be great too if they'd downgrade, this is life on earth, U cannot have your cake and eat it too...

OCBC gives handouts (at a price of a loan of course), people rich enough to stay in private property should go to OCBC for their respective handouts (don't ask for too much if U want to stay on that is)...

Different strokes for different folks, for the asset-rich, there's 'OCBC Wealth Management', its waiting for them...

OCBC Wealth Management: Reverse mortgages help supplement your retirement income
October 2006

OCBC Wealth Management: Reverse mortgages help supplement your retirement income
October 2006
A reverse mortgage allows senior citizens to unlock the value of their property and turn it into a steady stream of cash. It allows you, the homeowner, to borrow against your property and receive a monthly cash payout from your lender, while remaining resident in your home. Also, the loan does not have to be repaid until you pass on, or when you sell your home. Does this sound too good to be true? How exactly can a reverse mortgage help homeowners who are “asset-rich but cash-poor” pay their bills without being forced to make significant changes to their lifestyle?...
OCBC Wealth Management: Reverse mortgages help supplement your retirement income

OCBC Wealth Management: Reverse mortgages help supplement your retirement income

 

[sunzoner]

OCBC Wealth Management: Reverse mortgages help supplement your retirement income


Nobody is taking away anybody's home, just putting a lien on it... won't be too bad for the rich, as long as they remain as frugal as they were before... hey, life could be great too if they'd downgrade, this is life on earth, U cannot have your cake and eat it too...
...

even if they have been frugal in the past, the high inflation rate will erode their savings... So what make you so sure that by being "frugal" in the future the reverse mortgage will be enough?

 

[koxinga]

even if they have been frugal in the past, the high inflation rate will erode their savings... So what make you so sure that by being "frugal" in the future the reverse mortgage will be enough?

No one knows. But at least a reverse mortgage on a landed asset will yield a higher amount than let's say, HDB right? If he can't manage this money well enough, then what to do? Does that mean a HDB dweller will be even more worse off?

 

[tangent314]

even if they have been frugal in the past, the high inflation rate will erode their savings... So what make you so sure that by being "frugal" in the future the reverse mortgage will be enough?

If *everyone* has problems with retirement income despite being frugal, then perhaps high inflation rate would be a serious problem. From what I see, this problem only affects a small minority of people, so I think it's more likely that the problem is with these particular people over-stretching their CPF and cash.

That's not to say that high inflation rate isn't a problem, but bringing this up is really a red herring, and does not justify why government aid should be given to people that are short of cash but still have assets.

Help should be given to people in genuinely need, not to people that are still have the means to help themselves. Otherwise we are simply taking money away from people that live within their means and giving them to people that overindulge.

 

[sunzoner]

If *everyone* has problems with retirement income despite being frugal, then perhaps high inflation rate would be a serious problem. From what I see, this problem only affects a small minority of people, so I think it's more likely that the problem is with these particular people over-stretching their CPF and cash.

That's not to say that high inflation rate isn't a problem, but bringing this up is really a red herring, and does not justify why government aid should be given to people that are short of cash but still have assets.

Help should be given to people in genuinely need, not to people that are still have the means to help themselves. Otherwise we are simply taking money away from people that live within their means and giving them to people that overindulge.

Most CPF members cant retire and dun have the min sum. So is the high inflation a problem? yes.

What sort of help should be given is the big question.

Is singapore really so poor that we cannot afford to give basic healthcare free or at nominal fee? Or do you think mean testing is a good way measure whether people should get healthcare support?

"live within their means"? That is why I said that the savings are eroded by high inflation. Now i could lead a simple life just eat, work and sleep, saving the bulk of my money. But if inflation has eaten away the value of my saving, I dun qualify for help just because of a house that I bought when it is cheap?

"overindulge"? What about the uncle who sold his property and spend it on women or gambling? Now that he is penniless, his bout of "overindulge" is forgiven?

To really find out the truth, we need to look at each case properly rather than just claiming those who owns property have "overindulge" and should just sell their houses.

 

[sunzoner]

No one knows. But at least a reverse mortgage on a landed asset will yield a higher amount than let's say, HDB right? If he can't manage this money well enough, then what to do?

Even if he takes out a reverse mortgage would that solve the problem? Not if the problem is high inflation.

He now have a sum of money coming in (lump sum or periodically). But if inflation remains high, he loses the value in the "money" from the reverse mortgage and his "home". Sooner or later, he will run out of money and a home. So whats going to happen?

Its just kicking the can down the road. Eventually, they will still have to come to the State for help. Of cos, the State may be hoping that enough of these people dies before they reach that state.

Does that mean a HDB dweller will be even more worse off?

Thats the other part not mentioned in the article. By only talking about the "asset rich", people forgot about the "asset poor".

 

[tangent314]

Most CPF members cant retire and dun have the min sum. So is the high inflation a problem? yes.

Did you get your figures from thehearttruth article? The article's conclusion has already been debunked as a result of poor interpretation of the figures given.

Is singapore really so poor that we cannot afford to give basic healthcare free or at nominal fee? Or do you think mean testing is a good way measure whether people should get healthcare support?

We already get basic healthcare for a nominal fee, in the form of Medishield.

"live within their means"? That is why I said that the savings are eroded by high inflation. Now i could lead a simple life just eat, work and sleep, saving the bulk of my money. But if inflation has eaten away the value of my saving, I dun qualify for help just because of a house that I bought when it is cheap?

If you have bought a house while it is cheap and have lived frugally, then you will generally still have sufficient retirement savings to live on. Sure, the value will be reduced by inflation, but it's not going to all disappear. It's the same for everyone.

"overindulge"? What about the uncle who sold his property and spend it on women or gambling? Now that he is penniless, his bout of "overindulge" is forgiven?

When this uncle sells away the property, the money goes back into his CPF account. He can indulge away whatever he can draw in one lump sum, but after that he will still have his minimum sum left in CPF to draw down from.

To really find out the truth, we need to look at each case properly rather than just claiming those who owns property have "overindulge" and should just sell their houses.

Sure, we can look at each case individually. I'd be surprise if more than 1% of the cases where someone with little cash and has a property asset should be getting help.


I understand your concerns about high inflation rate. However, high inflation is not fixed by giving handouts to cover for inflation loss. You will end up just increasing the inflation further.

 

[canopus88]

Reverse mortgage was not something new. I recalled reading a newspaper article that an old couple did that many years ago and then the house was foreclosed when the valuation of the price dropped below the reverse mortgage amount. Reverse Mortgage is good when your property price remains high, however, when the property starts to devalue (don't tell me property won't devalue in Singapore), the payout starts to get lesser. It is better to rent out a room or two than to go Reverse Mortgage route.

 

[Inix]

Reverse mortgage was not something new. I recalled reading a newspaper article that an old couple did that many years ago and then the house was foreclosed when the valuation of the price dropped below the reverse mortgage amount. Reverse Mortgage is good when your property price remains high, however, when the property starts to devalue (don't tell me property won't devalue in Singapore), the payout starts to get lesser. It is better to rent out a room or two than to go Reverse Mortgage route.

And that is just 1 couple. And there were other stories which after "downgrading" the couple in question actually lost alot of money.

 

[cherry6]

The reverse mortgage facility of the property should preferably be reserved for the cover of unpred

The reverse mortgage facility of the property should preferably be reserved for the cover of unpredictable emergencies only.

Reverse mortgage was not something new. I recalled reading a newspaper article that an old couple did that many years ago and then the house was foreclosed when the valuation of the price dropped below the reverse mortgage amount. Reverse Mortgage is good when your property price remains high, however, when the property starts to devalue (don't tell me property won't devalue in Singapore), the payout starts to get lesser. It is better to rent out a room or two than to go Reverse Mortgage route.

The elite 10% who can afford to own/ live in private landed properties ought to own other inflation proof assets such as precious metals and equity besides a reasonable stash of cash for a rainy day not forgetting an annuity or two and a healthcare policy at least one step better than medishield. The reverse mortgage facility of the property should preferably be for the purpose of cover for unpredictable emergencies only.

If the emergency is so bad that it is one that the subsidised healthcare cost is in excess of a fully paid up private property in SG, then please thank your lucky stars that you are not quite dead yet. Joking, but honestly, placing ALL of ones financial assets in one private residential property is not a prudent thing to do.

 

[Qubicfactor]

Think title is misleading. Could go out of topic and be misinterpreted as Singaporeans are ALL asset rich and should do reverse mortgage. Topic being discussed is a very specific case scenario.

 

[tequila_powered]

I agree with TS. Any Sgeans who are asset rich should not get government financial aid in any form.

Take it to a higher plane. Detach from the emotional aspect of "home". If I live in a small 2-bedroom HDB, and am old 70 yr old, and with almost zero savings, .....but....have millions in long-term fixed accounts and overseas property. What does that make me? We can argue the merits and disadvantages of each methods (of liquidification), the risks and rewards of each methods, but by jove asset-rich cash-poor folks should not get financial aids that would be better deployed to the out-and-out poor.

Government handouts should be for the poor and needy, not for those who need help in liquifying their assets. Welfare western states are already going down the tentative path (of removing not-poor folks from financial subsidy list). We should not johnny-come-lately do what others are already abandoning.

 

[Providence]

My future wife and I will be paying for our future house painfully like all the ordinary Singaporean couples.

Maybe this is a growing trend in Singapore for younger generations. The rich gets richer and the poor gets poorer.