henrylbh
Arch-Supremacy Member
- Joined
- Mar 9, 2004
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is enough ma... BUT...
How is it enough? His yearly total CPFcontribution increased by $1,404 while min sums increased by $11k
is enough ma... BUT...
How is it enough? His yearly total CPFcontribution increased by $1,404 while min sums increased by $11k
I am not faulting his explanation on the increase in MS or the benefits. But he mentioned that "there is no plan to increase the MS every year indefinitely. It will stop in 2015. So why apply a compound rate like that when it doesn't work like that? Why imagine things and stress yourself out, when there are so many other things you can worry about?"
How could there be no plan to increase? "It will stop in 2015" You believe that? The other writer pointed out it has been increasing every year since 1987.
"Why apply a compound rate like that when it doesn't work like that?" Who cares how it works. Based on historical numbers, the other writer has shown that the MS has increased from $30k to $148k and the compound rate is 6.1% based on nominal amount.
The other writer is not imagining things. It was a fact that MS has been increasing for 26 years and it's only fair to say that it will continue to increase at "some" compound rate than to imagine that "it will stop in2015".
lzydata responded with "So will you be happier with a MS of $30k, or even $80k in today's dollars? Do you think that will benefit you financially in your older years? Maybe you've forgotten the point of having a MS. Believe it or not, it is not to torture you. It is to finance your pension at age 65 and after"
That's where I can't see the points.
you must be a poor loser if you can't meet this low minimum .
you must be a poor loser if you can't meet this low minimum .
can SIC your balance?you must be a poor loser if you can't meet this low minimum .
In 30years time ms may reach closer to 1 milI target to have 250k in SA when I reach 60 years old.
Standard of living & inflation is really high these days.
If these minimum sums keep increasing EVERY year (as history has shown), those starting work even at $5k per month is never going to catch up!!!
When was I upset? But many are and the system in my opinion is very high handed and callous.
Anyway where did you get info that I contributed $27k into my CPF accounts. I top up 7k to increase my min sum and another 5k to my medisave to claim tax deductions.
I wanted to contribute 7k to my father's RA and claim tax but since the contribution will not be returned to me if he leave the world, I decided against the contribution. Previously, the top-up will be returned to the contributor when the recipient pass away.
Just dropped envelope into CPF branch containing 20k VC to OA, SA and MA, 7k to SA/RA (tax deductible)and 5k to MA (tax deductible). Decided to give SRS a miss.
Why is the MS being adjusted upwards yearly and when it will stop? Here's a short version of the story.
In 2003 the MS was $80,000. The government decided that because people were living longer, this amount needed to rise to $120,000 in real terms. Then they decided they would adjust it upwards year by year so that by 2013 it will reach $120,000 in 2003 dollars. Due to the high inflation rate in recent years, they extended the deadline to 2015.
I agree the calculations are unnecessarily complicated, but the concept is simple. As the analysts in a Business Times article say, by 2015 the MS should be about $160,000 and this 10+-year adjustment will cease. Of course this doesn't mean there will never be any more increases, but after 2015, it will depend on the actuaries. We just need enough to sustain a healthy real payout for CPF LIFE members.
Here's an important point from the article, by economist and Singapore Management University adjunct faculty member Larry Haverkam:
"The biggest tip would be to consider pledging property, which can bring the minimum sum down to as low as $0 for a couple with at least $148,000 of equity in their home."
Up to 50% of the MS can be in the form of pledged property. For example, a few years down the road, there is a couple whose MSes are $160,000. They own a 3-room flat worth $320,000 and they have fully paid off the mortgage. They do not have plans to sell their property. Then they can pledge up to 50% x $160k = $80,000 as their MS, which they can easily do since their equity is each double that.
Therefore, although their MS is $160,000, they only need to have "cash" of $80,000 in their SA to meet the MS. At 4% interest, this would be equal to a monthly SA contribution of $218 over 20 years, or $115 over 30 years. The contribution rates and ratios change depending on age, but this is achievable for someone earning roughly $3,000 per month for 20 years, or $1,600 per month for 30 years.
CPF Minimum Sum at $148,000 from July
CPF Board - How Much Is The Minimum Sum? - my CPF 2
Property pledge (up to 50% MSS) is only allowed when the combined balance in your OA and SA account is less than the MSS. You cannot use property pledge to reduce the MSS if your combined OA and SA account is more than the MSS.
Example : If MSS is $160k, and your total in OA and SA is $170k when you reach 55. You can only withdraw $10k. Property pledge will not come into play since you have enough in the OA and SA account to meet the MS.
Of course, if you sell the property, you do not need to return any money back to CPF since there is no property pledge for the MSS.