CPF reform

[lzydata]

For something that always stirs up heated arguments when mentioned, it's strange that nobody has seen fit to bring up the panel's recently announced recommendations. They all have a good chance of becoming policy.

Recommendation 1: The Panel assessed that it would be prudent for a member who retires in 10 years’ time to set aside CPF savings to provide for a payout of about $650 to $700 per month. ["Basic Payout", "Basic Retirement Sum"]

Recommendation 2: The Basic Retirement Sum would apply to members who own a property, and should continue to be subject to a charge/pledge on the value of the property. At age 55, such members would be able to withdraw their CPF savings in excess of the Basic Retirement Sum.

Members who do not own their homes or do not wish to pledge it, should set aside a retirement sum that is double the Basic Retirement Sum. We propose to name this sum, the “Full Retirement Sum”.

Recommendation 3: Encourage each CPF member to have his/her own CPF LIFE plan, with incentives to top up the CPF accounts of lower-balance or non-working family members.

Recommendation 4: Allow members the option to defer their payout start age, up to age 70, for permanently higher monthly payouts.

Recommendation 5: Allow members who desire higher payouts to top up their CPF LIFE premiums with their CPF savings or cash, subject to a cap. [“Enhanced Retirement Sum”, set at three times the Basic Retirement Sum]

Recommendation 6: Adjust the retirement sums after Calendar Year 2016 to account for both inflation and increases in the standard of living.

Recommendation 7: The Panel recommends that from 2017 to 2020, each cohort of members turning 55 in a calendar year should have its Basic Retirement Sum increased by 3% from the cohort in the preceding year.

Recommendation 8: The Panel recommends allowing members the option to withdraw up to 20% of their Retirement Account Savings at the Payout Eligibility Age.

Recommendation 9: Provide appropriate and timely information, and financial counselling, to help members make informed choices.

Executive Summary: http://www.mom.gov.sg/Documents/employment-practices/cpf-advisory-panel-report-executive-summary.pdf
Infographic: http://www.mom.gov.sg/Documents/employment-practices/cpf-advisory-panel-infographics.pdf

 

[Alpha_Hippo]

For something that always stirs up heated arguments when mentioned, it's strange that nobody has seen fit to bring up the panel's recently announced recommendations. They all have a good chance of becoming policy.

Recommendation 1: The Panel assessed that it would be prudent for a member who retires in 10 years’ time to set aside CPF savings to provide for a payout of about $650 to $700 per month. ["Basic Payout", "Basic Retirement Sum"]

Recommendation 2: The Basic Retirement Sum would apply to members who own a property, and should continue to be subject to a charge/pledge on the value of the property. At age 55, such members would be able to withdraw their CPF savings in excess of the Basic Retirement Sum.

Members who do not own their homes or do not wish to pledge it, should set aside a retirement sum that is double the Basic Retirement Sum. We propose to name this sum, the “Full Retirement Sum”.

Recommendation 3: Encourage each CPF member to have his/her own CPF LIFE plan, with incentives to top up the CPF accounts of lower-balance or non-working family members.

Recommendation 4: Allow members the option to defer their payout start age, up to age 70, for permanently higher monthly payouts.

Recommendation 5: Allow members who desire higher payouts to top up their CPF LIFE premiums with their CPF savings or cash, subject to a cap. [“Enhanced Retirement Sum”, set at three times the Basic Retirement Sum]

Recommendation 6: Adjust the retirement sums after Calendar Year 2016 to account for both inflation and increases in the standard of living.

Recommendation 7: The Panel recommends that from 2017 to 2020, each cohort of members turning 55 in a calendar year should have its Basic Retirement Sum increased by 3% from the cohort in the preceding year.

Recommendation 8: The Panel recommends allowing members the option to withdraw up to 20% of their Retirement Account Savings at the Payout Eligibility Age.

Recommendation 9: Provide appropriate and timely information, and financial counselling, to help members make informed choices.

Executive Summary: http://www.mom.gov.sg/Documents/employment-practices/cpf-advisory-panel-report-executive-summary.pdf
Infographic: http://www.mom.gov.sg/Documents/employment-practices/cpf-advisory-panel-infographics.pdf

I No hdb no cpf pledge with simi *******?

 

[havetheveryfun]

For something that always stirs up heated arguments when mentioned, it's strange that nobody has seen fit to bring up the panel's recently announced recommendations. They all have a good chance of becoming policy.

bcoz here is not EDMW.

Most ppl here agree that CPF is a necessity just that CPF life needs to be changed

and the recommendations are so cheem and so much details that who would bother to read? Pls make the CPF something more simpler for the elderly to understand....

 

[Guojing88]

Why the enhanced sum is 3X basic sum but the monthly payout is less than 3X basic monthly payout? Still lack transparency on how they compute the yield

 

[tiny]

Why the enhanced sum is 3X basic sum but the monthly payout is less than 3X basic monthly payout? Still lack transparency on how they compute the yield

Could be law of large numbers and diminishing returns?

 

[highsulphur]

Could be law of large numbers and diminishing returns?

Then the plan is doomed from the start

 

[lzydata]

Why the enhanced sum is 3X basic sum but the monthly payout is less than 3X basic monthly payout? Still lack transparency on how they compute the yield

Footnote 16:

(a) Monthly payouts for life from age 65 are estimates based on the CPF LIFE Standard Plan parameters today. Payouts do not increase proportionately with the retirement sums required because of the greater impact of Extra Interest on lower balances. The Panel notes that the Extra Interest helps lower balance members grow their savings faster, and provides a higher payout per dollar set aside for lower balance members.

 

[dork32]

more black boxes. totally not transparent

 

[peacefulday]

killed my many brain cells after reading all these so-called flexible recommendations. Why can't just they give a choice to leave 20% or 100% in cpf with a small print out 'at your own risk, that's your choice and it's your money'.

is this a final reform?
if every 5,10years keep reform, I will only bother the reform when my time is up.

 

[anfielder]

Why the enhanced sum is 3X basic sum but the monthly payout is less than 3X basic monthly payout? Still lack transparency on how they compute the yield

Easy. Additional 1% interest only applies for the first 60k.

 

[Perisher]

Ya, worry about the cpf only when you are about 5-10 years from withdrawing. Before that, worry for your parent's cpf, assuming they have much.

SG gov should seriously simplified CPF and make it flexible, like allowing one to take out 20%-40% at age 65, others just lump into whatever account gov wants, giving out monthly payout. That's about it or something similar. Something like that would give old folks a peace of mind.

Other things can go on a case by case basis.
Don't confuse the old folks who need to keep up with the changes every other elections.

 

[havetheveryfun]

Ya, worry about the cpf only when you are about 5-10 years from withdrawing. Before that, worry for your parent's cpf, assuming they have much.

SG gov should seriously simplified CPF and make it flexible, like allowing one to take out 20%-40% at age 65, others just lump into whatever account gov wants, giving out monthly payout. That's about it or something similar. Something like that would give old folks a peace of mind.

Other things can go on a case by case basis.
Don't confuse the old folks who need to keep up with the changes every other elections.

all these ding ding dong dong only serves to help ppl to make more noise about the CPF again... maybe the govt is really doing something else with the CPF monies

 

[kazejin]

I support cpf but I thought they were going to simplify it.
feels more complicated with the recommendations.

 

[Shiny Things]

For something that always stirs up heated arguments when mentioned, it's strange that nobody has seen fit to bring up the panel's recently announced recommendations. They all have a good chance of becoming policy.

Recommendation 1: The Panel assessed that it would be prudent for a member who retires in 10 years’ time to set aside CPF savings to provide for a payout of about $650 to $700 per month. ["Basic Payout", "Basic Retirement Sum"]

I dunno, I feel like most of these are pretty anodyne and sensible recommendations; it's hard to get too fired up over them. (Though that said, $700 a month, even inflation-adjusted really doesn't seem like enough.)

Not sure about the whole "pledging your home if you don't want to fund the Full Retirement Sum" thing, though. Does that mean the government can force you to mortgage your house if you don't have enough retirement savings?

 

[Sunnydae]

I dunno, I feel like most of these are pretty anodyne and sensible recommendations; it's hard to get too fired up over them. (Though that said, $700 a month, even inflation-adjusted really doesn't seem like enough.)

Not sure about the whole "pledging your home if you don't want to fund the Full Retirement Sum" thing, though. Does that mean the government can force you to mortgage your house if you don't have enough retirement savings?

Some pple tend to be fired up simply because they think they can do better with their own money and want to withdraw it as much as possible.

If I understand correctly, basically you can withdraw 1/2 the retirement sum if you have a house on the basis that you can supplement your cpf mthly payout with rental income and the condition is that if you sell the house, you top up the cpf back to the original retirement sum.

 

[w1rbelw1nd]

I am glad that there may be changes to the policy after dialogue with the puhlic.

I still got a good 40 years before I retire, the main takeaway I have from these issues is that to maximise all the benefits that the government plans have, its probably good to have enough cash savings to participate jn some of their top-up plans.

 

[RM2SSG]

I dunno, I feel like most of these are pretty anodyne and sensible recommendations; it's hard to get too fired up over them. (Though that said, $700 a month, even inflation-adjusted really doesn't seem like enough.)

Not sure about the whole "pledging your home if you don't want to fund the Full Retirement Sum" thing, though. Does that mean the government can force you to mortgage your house if you don't have enough retirement savings?

The thinking is that if you own a home, you do not need to pay for rental during retirement, hence a basic amount of $700 should give you a very basic life style.

Plus, if you want, you could rent out a room if there is a spare one. Though imo it is wrong to expect rental market is always there.

 

[WindBoi]

I generally think these are good tweaks. Many folks, that is, including folks who are savvy in investing and growing their money do not realize that they have not explore the problem when it comes to wealth de-accumulation or wealth distribution.

the problem is that you are doing a reverse dollar cost average and you faced much market risk. this is for the savvy folks.

the folks not savvy do not see the main problem that is longevity risk, where they outlive their savings. it is a ok problem if its 10% of the people but imaging 50-70% of the cohort face this problem. you have a country issue and everyone will then be saying the government is incompetent and should have thought about this.

a forced annuity scheme established an income floor for a very very long duration. why did annuity get a lot of the bad name is because typically insurance company sell them at a high cost.

my discovery of wealth distribution is that a two prong strategy works best: an income floor annuity based for the minimum substenance and an equity portfolio for a controlled value add to life.

more of what i think about the suggestions here > More flexibility proposed by CPF Advisory Panel. Why I think they are good. | Investment Moats - Stock Market Investing

 

[WindBoi]

I support cpf but I thought they were going to simplify it.
feels more complicated with the recommendations.

it is very political. the CPF have become a free for all in shifting their political ideas. it should never be so complicated and even my acquiantance who have been planning in there feels its strange to come up with workarounds or improvements based on something so complicated.

then again i pose another view: look across other countries, we are not the only one facing these things. be glad compare to the usa where they have 403, 529 plans, roth ira, traditional ira, roth 401k and traditional 401. if you are not savvy tax wise u are going to be in a lot of hurt.

 

[w1rbelw1nd]

it is very political. the CPF have become a free for all in shifting their political ideas. it should never be so complicated and even my acquiantance who have been planning in there feels its strange to come up with workarounds or improvements based on something so complicated.

then again i pose another view: look across other countries, we are not the only one facing these things. be glad compare to the usa where they have 403, 529 plans, roth ira, traditional ira, roth 401k and traditional 401. if you are not savvy tax wise u are going to be in a lot of hurt.

Find it strange that no one is selling courses on how to optimise savings/investments with CPF/ government policies. Maybe its a good gap that some bros in e forum may want to exploit? Haha