Trust in CPF?

[dork32]

Hi Neal. I think you have already justified your reasons for not contributing cash into your CPF.

For those who contributed cash into their SA for 1 year of tax relief, they need to be aware that it will be locked until 65 years old.

wrong. at 65 you can start only draw a small proportion of it. to totally see it, you have wait till you are 90.

ts is only 25.

 

[w1rbelw1nd]

Well TS, if you are in some sense concerned abt getting screwed by the government through changes in policies (including but not limited to CPF), you can build a career /CV that will make you employable overseas.

I rather work towards being a (tax) paying customer with a choice to work/live elsewhere than be subjected to policy risk. Yes things are still relatively favourable if you see yourself as a "Singaporean", but I don't see why it will definitely remain so. Maybe "global citizen, Singapore tax resident" is a good way of summarising my work around solution.

 

[BBCWatcher]

Well TS, if you are in some sense concerned abt getting screwed by the government through changes in policies (including but not limited to CPF), you can build a career /CV that will make you employable overseas.

OK, but a few points:

1. With the possible exceptions of Bir Tawil and a slice of Antarctica, every piece of land on Planet Earth is claimed by some government.

2. Most governments aren't as savory as Singapore's.

3. Singapore still issues (or not) a Singaporean citizen's passport. If you don't like Singapore's government and its power over you, you have to ditch the passport, too.

There's only one reasonable, logical, rational solution here if you're concerned about policy risks: take advantage of the opportunities you have, including CPF and other attractive opportunities, "off shore" and "on shore." Diversify. You're going to face policy risks no matter what you do, in every aspect of your life. Sorry about that. Frankly, CPF is a model of stability in a world chock full of rule changes, so do make CPF sing (or at least hum a tune) and take advantage of other attractive opportunities.

 

[SibehHL]

Strange that most (including myself) see CPF as a trap when we were young and prefers to manage money ourselves. In my case, finally see the light recently and play catch up by contributing maximum lump sum into SA to make full use of the 4%+ interest rates.

However having said that; I honestly believed CPF payout should only be a supplement and not the sole source of income when one retired. Seriously; by fulfilling FRS of $175K for folks hitting 55 in 2018 translate into a payout of approx 1.3K monthly in 2028 when they are 65. That will just about cover one's basic need and nothing else.

Having CPF to the maximum is useful & a necessity but must not be your sole source of retirement income.

 

[dork32]

3. Singapore still issues (or not) a Singaporean citizen's passport. If you don't like Singapore's government and its power over you, you have to ditch the passport, too.

quote an example of a student in poly that failed many subjects in the exams

when questioned why he failed badly, the student said that he does not like the teachers, the course everything. he is contemplating changing course in the poly.

The fact is this: the student is a piece of sheet. with his sheet results, no other courses will want to take him . he is stuck with the course that he does not like.
the teacher in the course also dont like him because he never try at all. but because the student is already in the course, the teacher cannot just kick him out and is stuck with the student.

can you see the analogy?

 

[cheongmanz]

TS, clearing your OA to reduce hdb interest is a double edge sword if you plan to sell your hdb in future. The accrued interest can snowball as time goes by.

 

[BlueRobin]

Strange that most (including myself) see CPF as a trap when we were young and prefers to manage money ourselves. In my case, finally see the light recently and play catch up by contributing maximum lump sum into SA to make full use of the 4%+ interest rates.

A lot of things in life are like this. I'm with you

 

[TabascoSauce]

Well TS, if you are in some sense concerned abt getting screwed by the government through changes in policies (including but not limited to CPF), you can build a career /CV that will make you employable overseas.

I rather work towards being a (tax) paying customer with a choice to work/live elsewhere than be subjected to policy risk. Yes things are still relatively favourable if you see yourself as a "Singaporean", but I don't see why it will definitely remain so. Maybe "global citizen, Singapore tax resident" is a good way of summarising my work around solution.

Work where don't have policy risk?
And if u work outside Singapore as a foreigner, wouldn't u be more likely to be hit? Usually things like healthcare, tax, subsidy all target non-citizen first.

 

[LiteHouse]

Strange that most (including myself) see CPF as a trap when we were young and prefers to manage money ourselves. In my case, finally see the light recently and play catch up by contributing maximum lump sum into SA to make full use of the 4%+ interest rates.

However having said that; I honestly believed CPF payout should only be a supplement and not the sole source of income when one retired. Seriously; by fulfilling FRS of $175K for folks hitting 55 in 2018 translate into a payout of approx 1.3K monthly in 2028 when they are 65. That will just about cover one's basic need and nothing else.

Having CPF to the maximum is useful & a necessity but must not be your sole source of retirement income.

Respect your opinions.

A minor correction to the FRS that was stated.

FRS is $171k this year and 176k next year.

 

[BBCWatcher]

And if u work outside Singapore as a foreigner, wouldn't u be more likely to be hit?

Yes, at least if you're rational and reasonable in your assessments. Just consider for a moment the precarious status of foreigners in Singapore, with the shoe on the other foot. The Ministry of Manpower frequently changes the rules, and, well, "Bye bye, Singapore."

If you want to run down this rabbit hole, then what you probably ought to do to mitigate scary policy risks is to collect a couple passports. An EU country's passport would be particularly nice since that's a ticket to residence in ~30 countries. Unfortunately, Singapore's government requires passport monogamy. But hey, divorce is a choice if your worry takes you there.

There are a few people who think this way. I happen to think they're pretty weird, but it's a big world out there.

 

[iamveryguailan]

Ts what's your income and current savings/investments?

I'm the same age as you and also recently started working (about a year). Have also contributed some money into CPF for retirement planning

 

[V_for_Vanilla]

With the exception of ordinary consumer bank accounts, CPF is the most widely held savings vehicle in Singapore. It's popular, and it's even older than Singapore's nationhood. It's as safe as practically anything denominated in Singapore dollars since it's an agency of the AAA-rated Singapore government.

It is 'popular' not because there is buy-in. But because it is mandatory. If it is an opt-in system, then we can see truly how popular it is.

 

[SibehHL]

If you want to run down this rabbit hole, then what you probably ought to do to mitigate scary policy risks is to collect a couple passports. An EU country's passport would be particularly nice since that's a ticket to residence in ~30 countries. Unfortunately, Singapore's government requires passport monogamy. But hey, divorce is a choice if your worry takes you there.

Anyone who is interested can check out some poorer European countries residence policy. Greece for example, during their crisis was issuing family residence visas to foreigners upon purchase of NEWLY build properties above 250K Euros. Had a few overseas friends did that. Not sure the minimum bar nowadays. I would think residence visa should normally allows free entry into other European countries for employment or education purposes without having to apply separately another visa.

 

[BBCWatcher]

Anyone who is interested can check out some poorer European countries residence policy. Greece for example, during their crisis was issuing family residence visas to foreigners....

This side discussion is all about the risks of policy changes. Foreigners (including Singaporeans trying to live in every other country) are always subject to significant government policy change risks in terms of their immigration statuses. That's just how it works, I'm afraid. Exactly as it is in Singapore for foreigners, when the shoe is on the other foot.

I'm not the one who starting running down this rabbit hole of policy risk concerns. But if you are worried about policy risks, then you can very easily find lots of policy risks to worry about, in every facet of your life everywhere. Governments have quite a bit of power, sometimes they exercise it, and sometimes they change their minds. Sorry about that!

 

[cheongmanz]

I am quite skeptical on CPF. Reasons are...

1) Why garmen is so confident to give 4% for SA?
2) No visibility on reserves
3) No visibility on GIC investments returns
4) Recent test balloon in ST on stopping us to use CPF OA to pay for property mortgage
5) Rumors of Ho Jinx buying high selling low and investments losses

Again, I may be wrong.

 

[item2sell]

I am quite skeptical on CPF. Reasons are...

1) Why garmen is so confident to give 4% for SA?
2) No visibility on reserves
3) No visibility on GIC investments returns
4) Recent test balloon in ST on stopping us to use CPF OA to pay for property mortgage
5) Rumors of Ho Jinx buying high selling low and investments losses

Again, I may be wrong.

Add on, increasing minimum sum
Increasing retirement age
Mandatory CPF life

Put yourself as a borrower and you can't pay your loansharks
What would you do, assuming you can state your own rules?

 

[mummy1234]

If u believe and trust the government and have a lot of spare cash then top up yr CPF. If u don't, then don't. Diversification is impt. CPF id a source of cheap loan to the government as is SSB.

 

[w1rbelw1nd]

1. I don't understand what's your point of stating this point, really. Either you think I am retarded or you find it useful to state an obvious point.

2. Singapore government policies are generally very well thought out and favourable to its citizens, but does it necessarily mean that not considering working overseas (with its higher pay, better exposure) while maintaining citizenship is a bad choice? My point to TS is, if you can work overseas, clock certain number of years for overseas employment (and open up the opportunity to being citizenship overseas), why not?

3. You can avoid CPF contribution if you are working overseas. there are other ways to reduce exposure, or give yourself opportunities to reduce exposure to policy risk.

Anyway, also good that you state the obvious (again) point on policy risk overseas as well. Shouldn't we assume that the forummers are more intelligent than that?

OK, but a few points:

1. With the possible exceptions of Bir Tawil and a slice of Antarctica, every piece of land on Planet Earth is claimed by some government.

2. Most governments aren't as savory as Singapore's.

3. Singapore still issues (or not) a Singaporean citizen's passport. If you don't like Singapore's government and its power over you, you have to ditch the passport, too.

There's only one reasonable, logical, rational solution here if you're concerned about policy risks: take advantage of the opportunities you have, including CPF and other attractive opportunities, "off shore" and "on shore." Diversify. You're going to face policy risks no matter what you do, in every aspect of your life. Sorry about that.

 

[w1rbelw1nd]

Anyway, I think BBCW points (and appreciation) of how good Singapore policies are, and how BBCW is here with us in Singapore (enjoying CPF, and other policies) is really a + point opening ourselves to overseas opportunities.

For those who are unaware, bbcw previously declared that he wasn't from Singapore. I learned much about how he was able to optimise different schemes across countries for diversification purposes.

He is a really good example that we shouldnt stick our head in the mud and just happily constrain our choices.

 

[SibehHL]

My point to TS is, if you can work overseas, clock certain number of years for overseas employment (and open up the opportunity to being citizenship overseas), why not?

3. You can avoid CPF contribution if you are working overseas. there are other ways to reduce exposure, or give yourself opportunities to reduce exposure to policy risk.

Off topic a bit here:

Middle (3-5) to Long term (>5 years) overseas working experience can really be eye opener for many locals. A different exposure & perspective to life in general is what I observed with most locals whom spend a long time overseas, mostly for the good.

In certain locations; income is tax free in addition to no CPF contribution (but of course, I still advocate having maximum contribution to your CPF accounts)

Would encourage the younger ones to go overseas if the opportunity arises, even if there are no superstar package waiting for you. The experience alone is well worth it.