New Cpf Life Calculation

[dork32]

dork also advised one guy to top up sa to siam tax.

first dork tell this guy that he must forego the brs option. he fully understands this and is willing to go for it
this guy is close to frs in his sa. if he tops up sa, ma go to oa instead of sa. by doing so he is effectively topping his oa and siaming tax. we are all very strong advocates of oa because oa can use to buy properties.

 

[dork32]

now who is the one that feels that he is invincible and can be different from everyone else.

at least when dork says he does not need cpf life, dork knows that there will be like minded people out there. dork agrees that bbc does not need cpf life. dork also does not need it. but dork will not say everyone needs cpf life except dork.

well there is a non zero chance that whatever annuity that bbc is receiving may go bust and bbc is going to become a destitute tomorrow if bbc does not have cpf life.

 

[dork32]

How is it not realistic? Unhwi doesn't mean ultra high spending.

Warren buffett is well known to be frugal. Anyway even if you don't like the assumption, for $20k a month my case still stands.

maybe he should not use the term uhnwi. he should use the term ultra high expense individual.

 

[dork32]

There are individuals wealthy enough, confident enough, and savvy enough to take a calculated risk to meet their wealth planning purposes. It is the same thing with the 110/100 - age = stock % allocation assumption, I dont believe it applies to everyone's needs and goals.

you are so right man. why must the extra amount come from an annuity? why cant it come from other sources? you state stocks. you are right, stocks can be an alternative to annuity and cpf life.

but dont forget, there is non zero chance that your stocks are going to go bust and you are going to become a destitute tomorrow.

 

[rrr2015]

agree ... but am thinking as i grow older, instead of thinking how to BEAT the return, i will be more interested if I have ENOUGH to support my retirement.

for brs with property pledged ~ i read that once property is sold, we are required to return the amount "withdrawn" + interests. so it's seems more like a "loan" to me

I would certainly go for brs with property pledged if there is option for other half to remain in SA. It's quite a challenge to generate the same return on the other half that's withdrawn. Even if can't beat the return, the flexibility of money on hand is more tempting. If forced to take out the other half, one can still re-deposit it into OA and SA with flexibility to take it out anytime, assuming BHS has been met.

 

[henrylbh]

Great, you have your opinion and I have my opinion on this matter then. Dont understand why rich = spend more. Not like either of us can pull statistics on spending of the UHNWI, lol.

Any comments on the annuity part of my previous post then?

It's not a matter of opinion. You know what it means to be ultra rich (UHNW not HNW individuals)? Even the taxes they pay would far exceed the 5k a month outflow.

What annuity you referring to? No private annuity can beat CPF Life annuity and to the ultra rich, whatever in CPF Life is small change to be bothered with and unlikely they will touch or commence the payout unless forced by law (payout can only be deferred to age 70). Their millions will generate substantial passive income without need for annuity. And their wealth will keep growing if they don't squander. That's why I am against complete abolishment of estate duty.

 

[BBCWatcher]

if the alternative is so good, why isnt he advising people to put it there ?

Who said the alternative(s) is(are) better? I didn't. I only said that I have a lifetime joint/survivor annuity in the pipeline. That it exists, for me.

This principle is very simple. If $100 million of Swedish equities (for example) falls into your lap (whether somebody else purchased them for $200 million or $50 million), then it's reasonable and prudent to reevaluate whether you ought to hold more Swedish equities in your investment portfolio. Likewise, if you already have a lifetime annuity (whether it was an expensive annuity to buy or not -- that's "water under the bridge"), you ought to consider whether an additional annuity has merit and, if so, how much of that additional annuity.

Do you have any other lifetime annuities already committed to you, personally?

dork is also different from everyone else.

That appears to be true, for a variety of reasons not having to do with annuities. I only said I'm "unusual."

 

[w1rbelw1nd]

What are you talking? UHNWI is not ultra high income. It's ultra high net worth. And we are talking about annuity/ cpf life here. If that UHNWI is paying $5k a month worth of income tax, he sure as hell don't need cpf life.

Anyway we share views on estate duty though.

It's not a matter of opinion. You know what it means to be ultra rich (UHNW not HNW individuals)? Even the taxes they pay would far exceed the 5k a month outflow.

What annuity you referring to? No private annuity can beat CPF Life annuity and to the ultra rich, whatever in CPF Life is small change to be bothered with and unlikely they will touch or commence the payout unless forced by law (payout can only be deferred to age 70). Their millions will generate substantial passive income without need for annuity. And their wealth will keep growing if they don't squander. That's why I am against complete abolishment of estate duty.

 

[BBCWatcher]

You know what it means to be ultra rich (UHNW not HNW individuals)? Even the taxes they pay would far exceed the 5k a month outflow.

First of all, that's not consumption. We're talking about consumption here. Kaya toast for breakfast, the electric bill, a newspaper subscription, a bus pass, etc., etc.

Second, UHNW individuals (and their accountants) are the best in the business when it comes to avoiding and evading taxes.

Third, Singapore doesn't have very many taxes on wealth and on passive income. It's quite possible in Singapore to have a zero legal tax rate on wealth and passive income.

Fourth, very few countries have generalized wealth taxes.

Fifth, even in those countries that have taxes on wealth and/or passive income, the UHNW individual may be subject to withholding (on passive income), may take out secured loans on a tiny fraction of wealth to pay wealth taxes (as hedge fund managers routinely do), and/or may liquidate a tiny fraction of wealth to pay wealth tax owed. All the while consuming very little and living very modestly, "cowboy millionaire" style.

No private annuity can beat CPF Life annuity and to the ultra rich, whatever in CPF Life is small change to be bothered with and unlikely they will touch or commence the payout unless forced by law (payout can only be deferred to age 70).

No private annuity available to the general public. Certain wealthy individuals often receive hefty traditional defined benefit pensions. Marissa Mayer, the ex-CEO of Yahoo!, is only one recent example.

Their millions will generate substantial passive income without need for annuity.

No, that's not guaranteed. Why do you think Mayer (and so many other wealthy people) receive these "golden parachute" lifetime (and sometimes joint/survivor) pension deals? It's in part for tax optimization, but another reason is that they understand the insurance value of annuities. They want a "no matter what happens" failsafe.

And their wealth will keep growing if they don't squander.

Probably, but it's not guaranteed. There are liability and asset title risks, in particular.

Why do UHNW individuals set up lifetime trust funds with annuity payouts for their children and grandchildren, as another example?

If you want to look for annuity inspiration, you're looking at an interesting cohort.

That's why I am against complete abolishment of estate duty.

How about if Singapore introduces an estate tax?

 

[OngHuatHuat]

Actually their key argument is governemtn should maintain interest rate of 4 % + 900 additional interest. I think it is not a bad idea but I don't think governemnt will do so, so instead of keep harping on this, I just use another model to estimate the interest rate payable by government during the payout period.

You can keep arguing about the logic of high interest rate and request the government to reinstate the old interest rate or old scheme, but I personally think that was quite meaningless.

 

[henrylbh]

How about if Singapore introduces an estate tax?

Singapore had estate duty not too long ago. If you want my opinion, yes, it should be reinstated and not only that, stamp duty should also tightened in relation to estate duty.

 

[henrylbh]

Actually their key argument is governemtn should maintain interest rate of 4 % + 900 additional interest. I think it is not a bad idea but I don't think governemnt will do so, so instead of keep harping on this, I just use another model to estimate the interest rate payable by government during the payout period.

You can keep arguing about the logic of high interest rate and request the government to reinstate the old interest rate or old scheme, but I personally think that was quite meaningless.

Who is arguing that govt should give higher interest rate or reinstate the old interest rate or scheme? That's not realistic. As it is, the rates are good enough for tying your money in SA and RA. And if interest rate keeps remaining low for a long long time, a day will come when CPF interest rates will have to come down.

 

[elnewbie]

I disagree on reinstating the estate taxes. Why should people who work hard all their lives have to have a portion of their money taken away from them when they die ?

And what does the govt do with the money ? Increase ministers pay ??

Singapore had estate duty not too long ago. If you want my opinion, yes, it should be reinstated and not only that, stamp duty should also tightened in relation to estate duty.

 

[elnewbie]

CPF interest rates can't come down in an environment where interest rates are on the uptrend, which is where we are right now.

Who is arguing that govt should give higher interest rate or reinstate the old interest rate or scheme? That's not realistic. As it is, the rates are good enough for tying your money in SA and RA. And if interest rate keeps remaining low for a long long time, a day will come when CPF interest rates will have to come down.

 

[BBCWatcher]

Singapore had estate duty not too long ago.

Yes, for deaths through mid-Feburary, 2008.

If you want my opinion, yes, it should be reinstated....

We agree. I would set the threshold at something like S$10 million, indexed to inflation, worldwide assets (with full credit for other countries' estate taxes levied on foreign situated assets), progressive tax rates ranging from about 10% to 30% above the exemption, and no asset type discrimination. (The old system was biased against real property/biased in favor of financial assets.) Assets left to charity (properly defined) would not be taxed.

 

[BBCWatcher]

Why should people who work hard all their lives have to have a portion of their money taken away from them when they die ?

Most importantly, because it's a terrific source of revenue -- a much better source that what otherwise have to be higher taxes on living, working people. Dead people don't consume much.

Also, dynastic wealth is against the public interest for several reasons.

But OK, if you don't like the idea of taxing (dead) "people who work(ed) hard all their lives," then how about an inheritance and gift tax instead? That's a tax on people who didn't work at all for these windfalls, by definition. Set the inheritance tax at S$5 million per heir, indexed to inflation. Set the gift tax at S$200,000 per year per individual, indexed to inflation, with narrow exclusions (valid medical and educational expenses).

Right now there's a payroll tax (mandatory CPF contributions) of as much as 37%, including employer contributions. The personal income tax is as high as 22% (top marginal rate), the GST is 7%, and there are real estate taxes (stamp duties and property tax). I prefer taxing dead people -- or those who receive windfalls from dead people and big gifts from living people, if you prefer that approach. Then start with zeroing out the GST (except perhaps on goods and services foreign tourists predominantly consume, such as hotel rooms).

 

[OngHuatHuat]

You and dork.

Anyway, it is not so relevant for me. For me, I just estimate the interest rate during the payout period, if acceptable, I will put. That's all.

Who is arguing that govt should give higher interest rate or reinstate the old interest rate or scheme? That's not realistic. As it is, the rates are good enough for tying your money in SA and RA. And if interest rate keeps remaining low for a long long time, a day will come when CPF interest rates will have to come down.

 

[OngHuatHuat]

That's why they are able to raise the payout a bit. The model they used during payout period is tied with interest rate.

CPF interest rates can't come down in an environment where interest rates are on the uptrend, which is where we are right now.

 

[w1rbelw1nd]

I disagree on reinstating the estate taxes. Why should people who work hard all their lives have to have a portion of their money taken away from them when they die ?

And what does the govt do with the money ? Increase ministers pay ??

Perhaps you are feeling unhappy as you dont think you have as much to leave behind for your descendants and you dont want to be taxed for it. Same concern I may face.

I think for a start a bequest below $10,000,000 not to be taxed seems fair. End of the day I believe what we want is for the ultra-rich to contribute more to the society rather than give it to their descendants to waste away. Not forgetting the ultra rich are very geographically mobile and they can bring the money out of Singapore easily.

Just look at useless 2nd generations like Kim Lim...

 

[henrylbh]

I disagree on reinstating the estate taxes. Why should people who work hard all their lives have to have a portion of their money taken away from them when they die ?

And what does the govt do with the money ? Increase ministers pay ??

Why should you be against? Estate duty should not affect the ordinary rich.