CPF reform

[edwinttt1978]

The assumption is SA interest rate remains as 4% for the next 20 years?

P.S. Let's remove the extra 1% bonus for the first $40k for ease of communication.

SA rate has been 4% since 1999, with a few years hovering between a low of 2.5%pa to a high of 6.5%pa prior to 1999. While 4%pa for the next 20years is not guaranteed, it looks highly likely this rate will stay.

 

[Bedokian]

It is always better to combine both the payouts from CPF with passive income from investments vested during the lifetime with one's disposable income.

Something which we are trying to achieve.

 

[djchris]

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

The only thing I'm trying to understand here is why do I have to pledge my flat for Basic Retirement Sum.

For the Basic Retirement Sum, the amount in the Retirement Account is half and naturally the payout is half, compared to Full Retirement Sum.

Why do they require us to pledge our flat when we are not getting a payout similar to Full Retirement Sum?

 

[littlegreenmen]

The only thing I'm trying to understand here is why do I have to pledge my flat for Basic Retirement Sum.

For the Basic Retirement Sum, the amount in the Retirement Account is half and naturally the payout is half, compared to Full Retirement Sum.

Why do they require us to pledge our flat when we are not getting a payout similar to Full Retirement Sum?

I'm also wondering.

Then how about those who don't own a home and can't meet the $80k basic sum?

Force them to top with cash?
Hold their CPF till lorryup?
Monthly payout to be pro rated 30(?) years?

 

[lzydata]

I'm also wondering.

Then how about those who don't own a home and can't meet the $80k basic sum?

Force them to top with cash?
Hold their CPF till lorryup?
Monthly payout to be pro rated 30(?) years?

The treatment will be the same as currently with CPF LIFE.

(1) There is no need to do a cash top up to fulfill either the basic or the full sum. It is just that the payouts will be lesser. Also everyone is entitled to withdraw $5k no matter what.
(2) Same as CPF LIFE, the basic/full sum is used to purchase a life annuity.
(3) Monthly payouts are for life, not 20 or 30 years.

 

[knightdreamer]

The treatment will be the same as currently with CPF LIFE.

(1) There is no need to do a cash top up to fulfill either the basic or the full sum. It is just that the payouts will be lesser. Also everyone is entitled to withdraw $5k no matter what.
(2) Same as CPF LIFE, the basic/full sum is used to purchase a life annuity.
(3) Monthly payouts are for life, not 20 or 30 years.

wow
didnt look into it yet. but what if there is still money ie. i die at the age 68? and there still money in the cpf. Can take out?? or kup po by ...

 

[dork32]

The only thing I'm trying to understand here is why do I have to pledge my flat for Basic Retirement Sum.

For the Basic Retirement Sum, the amount in the Retirement Account is half and naturally the payout is half, compared to Full Retirement Sum.

Why do they require us to pledge our flat when we are not getting a payout similar to Full Retirement Sum?

i feel this part of the cpf is fair.

you have house, you dont have to pay rent, so you dont need so much money. 600 a month is enough.

if you have decided to sell the house, you will need another 500 to 600 per month. so the money go back to cpf so that you have another 500 to 600 a month. just nice to pay your room rental.

 

[anfielder]

wow
didnt look into it yet. but what if there is still money ie. i die at the age 68? and there still money in the cpf. Can take out?? or kup po by ...

there will be an amount bequeathed to your next-of-kin.

but you know how annuities go right.. if you die young, the payout + what your NOK get will be less than what was put in.

conversely if you live long, you tan dio alr because payouts are for life.

 

[hwmook]

Up to 35% in OA can be used to buy shares. Specifically, CPF-approved shares la.

The rest can be use to buy CPF approved mutual funds. You can use all the OA except first $20k for investment. My investment using OA have never fail to beat 4% PA so i am never going to transfer my OA to SA.

 

[hwmook]

you dont need any hindsight. A new 4room in punggol cost 240k. A resale in 4room in punggol is about 400k. if it is your first home, you will earn 160k just like that.

Please don't misled people, a new 4rm in punggol cost >$300k. Look at recent BTO launch, HDB is quoting that BTO is 10-20% cheaper than same size resales. Its ain't that great a deal for that 4 years waiting time. Buy a resales and rent out for 4 years at a 6% rental yield and you will be getting back the price gap and more.

 

[dork32]

Please don't misled people, a new 4rm in punggol cost >$300k. Look at recent BTO launch, HDB is quoting that BTO is 10-20% cheaper than same size resales. Its ain't that great a deal for that 4 years waiting time. Buy a resales and rent out for 4 years at a 6% rental yield and you will be getting back the price gap and more.

the recent bto for seng kang is from 232k. is it wrong if i say punggol is 240k? they are not too far from each other
http://esales.hdb.gov.sg/hdbvsf/eampu11p.nsf/0/14NOVBTO_page_8877/$file/about0.htm#

up to the collection of fees, you only have to put down downpayment (20+K). though the waiting period is long, opportunity cost is not very high.

sorry bto prices are about 30-40% lower than resale units of the same class. in the area. also the lease of a new bto unit is longer than that of the resale unit.

yes, the new units are of the smaller area compared to the old units in mature estates. but the newer units are going at a much higher price. Eg, a 40 year old 4ng 90+m2 at bedok goes for about 420k. a 10 year old 4A 84 m2 goes for 550k.

you are also trying to mislead people. true the rental returns of hdb is about 6% for 4 room. but you have a mop. you are not allowed to rent out your resale for the first 5 years as well.

 

[dork32]

though i am not a supporter of the govt, i have to admit that the hdb bto offers a good scheme to help young people own flats.

 

[dork32]

average price of hdb bto 5 room in tampines is 380k (recent launch). average price for a 20yr 5 room in tampines is 550k. this is about 30% cheaper.

also if the new bto is to come onto the market, it is going to cost 20% more than the old flat resale because it is much newer.

can you please show some numbers to show that it is more worth it to buy a resale?

if bto is such a bad deal and resale is such a good deal, should the govt not let foreigners and pr come into the bto scheme as well?

 

[cybercom8]

The rest can be use to buy CPF approved mutual funds. You can use all the OA except first $20k for investment. My investment using OA have never fail to beat 4% PA so i am never going to transfer my OA to SA.

wow, mutual funds also can exceed 4% consistently? crap, time to revisit my investments

 

[edwinttt1978]

wow, mutual funds also can exceed 4% consistently? crap, time to revisit my investments

Many funds tried to exceed; most funds have failed miserably.

 

[knightdreamer]

there will be an amount bequeathed to your next-of-kin.

but you know how annuities go right.. if you die young, the payout + what your NOK get will be less than what was put in.

conversely if you live long, you tan dio alr because payouts are for life.

i see. using cpf life payout estimator using $80500, from age 65 monthly payout ~448-474. means this amount ~last for 14 years

if i live till 80++ means tan dio so good meh

 

[tatose]

On first look, annuities look like super bo hua.

 

[dork32]

i see. using cpf life payout estimator using $80500, from age 65 monthly payout ~448-474. means this amount ~last for 14 years

if i live till 80++ means tan dio so good meh

sorry. you must live till 88 then break even.

 

[cybercom8]

On first look, annuities look like super bo hua.

yes, looks wu hua at first glance.

initially i thought can dump in $2.4M to get $17k-19k per month till i die but it seems like there is a cap of 200+k for this cpf life

 

[highsulphur]

yes, looks wu hua at first glance.

initially i thought can dump in $2.4M to get $17k-19k per month till i die but it seems like there is a cap of 200+k for this cpf life

With the new recommendations, it seems like they may be removing the ceiling...