Trust in CPF?

[Maeda_Toshiie]

Now interest rates moving up, even for SSBs and 10yr SGS, will we be looking to more than 2.5% for our hard earned lock up funds which have no exit until old age (30-40 yr fixed deposit)? I am wondering the cost of funds vis-a-vis investment income on this huge pool of funds from citizens.

No. See the rules on CPF interest rates: https://www.cpf.gov.sg/Members/AboutUs/about-us-info/cpf-interest-rates

It's not tied to 10 year SGS.

 

[BBCWatcher]

Now interest rates moving up, even for SSBs and 10yr SGS, will we be looking to more than 2.5% for our hard earned lock up funds which have no exit until old age (30-40 yr fixed deposit)?

CPF OA interest rates are pegged to bank interest rates in Singapore. Here's CPF's most recent rate announcement for 2Q2018:

The interest rate on Ordinary Account (OA) monies is reviewed quarterly. OA monies earn either the legislated minimum interest of 2.5% per annum, or the 3-month average of major local banks' interest rates, whichever is higher.

The OA interest rate will be maintained at 2.5% per annum from 1 April 2018 to 30 June 2018, as the computed rate of 0.24% is lower than the legislated minimum interest rate.

Unless bank interest rates in Singapore move substantially higher, or the government decides to change the formula (very unlikely but not totally impossible), OA interest rates will stay at 2.5%.

If you're unsatisfied with 2.5% and think you can do better, no problem. Before your 55th birthday you have three major alternatives (and some less common ones, but I'm listing the major ones):

(a) You can use OA funds for housing, if you'd like to try to be a real estate tycoon. (I wouldn't, but up to you.)

(b) You can transfer OA funds into SA, up to the current Full Retirement Sum. The SA interest rate is 4.0% plus possible bonus interest if you haven't maxed that out. This move can be very smart.

(c) Via the CPF Investment Scheme (OA), you can invest in a variety of onshore securities. You can make a reasonable argument in favor of the CPF Investment Scheme into, for example, the lowest cost STI ETF you can find, if you have a long enough time horizon and if you've maxed out option (b) already.

On your 55th birthday, option (b) disappears but a new option (d) appears:

(d) You can withdraw some or all of your CPF savings, after you have set aside your retirement savings (which goes toward CPF LIFE). However, your withdrawal will come first from your Special Account then, once that's empty, from your Ordinary Account.

You might be able to shield your SA funds via the CPF Investment Scheme (SA), using something that's temporary, low risk, and low cost, and then make your one-time withdrawal while your SA funds are briefly shielded. But that "hack" doesn't work for frequent withdrawals since you'd lose too much SA interest.

 

[BBCWatcher]

How can the CPF board be MORE TRANSPARENT when publicly listed companies hold AGMs where at the very least you can ask the management questions?

I don't think you're making a strong argument here. The A stands for "annual," which isn't very often. Management is not required to answer every question or even very many; you have no right to the microphone. Management is very unlikely to get a parliamentary question from your MP, and management can too easily evade such questions anyway.

CPF holds lots of public meetings, and they're open to the general public every day except Sunday. Corporations have no obligation even to let you in their door, even if you're behaving yourself, but CPF does have an actual public service obligation, by law. CPF experiences frequent parliamentary questioning and review.

Corporations do some things well, but transparency isn't one of them. Government agencies can be less than transparent, but this is CPF we're talking about here, not SID.

 

[dork32]

The answer to your last question is yes, you must give up your right of residency in Singapore if you disagree with CPF, have income from work in Singapore, and don't want to participate in CPF. Membership has privileges...and a very few obligations, in this case an obligation to society not to become utterly destitute in your golden years if you've been able to generate a reasonable or better income from work in Singapore.

Please note that while you cannot opt out of CPF compulsory contributions (if you work for income in Singapore and have the right of abode in Singapore), you can opt out of CPF LIFE. All you need to do to opt out of CPF LIFE is to buy a life annuity policy from a reputable insurance company that equals or betters the CPF LIFE payout (BRS level with property pledge, or FRS level without) then fill out the opt-out form. But you must have at least minimum longevity insurance in Singapore if you maintain the right of abode in Singapore, just as you must maintain at least minimum medical insurance (MediShield Life, or an Integrated Shield plan if you prefer).

That's the bottom line. Society does not want to assume these risks for you. They're your risks that you must handle, in an extremely modest way. (CPF LIFE and MediShield Life ain't lavish.)

this is ultimate. i not shy to say i vote for wp. i buay song pap. pap still win in my ward, but we managed to get a ncmp for wp.

does that mean i have to give up my citizenship?

you really xiao ang moh

 

[dork32]

So you are saying that we have to vote out the government if we disagree with the policy?

i tried but not successful.

i suck thumb

 

[dork32]

Problem with that is many here are beginning to see him like a best example due to his wall of text which when broken down will be retorted by many.

If one do follow his advice, do please have a critical mind.

i do not agree with you on everything.

at least, i do agree with you about bbc.

many think that he can write so much, means he is so smart. i do agree that readers must execute caution and not just jump into what he said.

i write so much singlish, i must be stupid.

 

[fr33d0m]

And does the CPF board does so? Does the government do so? How can the CPF board be MORE TRANSPARENT when publicly listed companies hold AGMs where at the very least you can ask the management questions? Even if they do dodge questions (and sure many a company management team do), you get the opportunity to look at them straight in the eye when they lie. AGMs are not merely for getting buffet food or vouchers.

What CPF does is written in the law. CPF board is the trustee of CPF. It is part of the government. You are neither creditor nor owner of CPF board. So they don’t answer to you. As part of the government, it has public responsibility.

If you have a problem with CPF ACT, you should talk to your MP.

 

[mummy1234]

Citizenship is our right. We don't have to give it up when we disagree with policies but we can hold public protests in certain places. If there is sufficient turnout and grabs international attention then PAP may do something. If not to them this is just kpkb from peasants or noise. Sadly, it is still a very authoritarian government like what Chiam See Tong said. They seem to think that the smartest scholars will have all the answers, at least LKY did. Fortunately, Chan Chun Sing is more open to other opinions.

We r yet to agree with PWP of 6.9m and there were protests but it was forced down our throats. Public money ie our money spent on all the mrt lines which may come to naught if businesses leave if hsr and rts doesn't happen? We forget that we r semi dependent on others and all our planning very much depends on other countries.

 

[w1rbelw1nd]

Yes, I am obliged to contribute to CPF, but does it mean that I have no rights to voice out the minuses of using it as part of a investment plans? Do I have no rights to criticise it? Do I have to forsake my residency just because I disagree with it?

The answer to your last question is yes, you must give up your right of residency in Singapore if you disagree with CPF, have income from work in Singapore, and don't want to participate in CPF.

Well, the confusion arise when BBCW didnt answer my question (or choose to answer it the way he likes, with his caveats).

If he were to plainly answer my question,

Do I have to forsake my residency just because I disagree with it?

its clearly a no, if you take into account his caveat. Essentially we agree on the same thing, just somehow he likes to highlight our difference in view. I dont understand why he wants to write that way. May not be intentional.

 

[mummy1234]

Now interest rates moving up, even for SSBs and 10yr SGS, will we be looking to more than 2.5% for our hard earned lock up funds which have no exit until old age (30-40 yr fixed deposit)? I am wondering the cost of funds vis-a-vis investment income on this huge pool of funds from citizens.

Great news for us. Good for government and good for us.

 

[BBCWatcher]

I don't think you'll get any substantial (or even more than trivial) political support for allowing Singaporean senior citizens to descend into utter destitution. This core principle of a civil society, destitution prevention, is sound and not open to serious debate. Good luck if you want to try to argue that destitution of Singaporeans in Singapore is tolerable. You'll need it.

Now, assuming you've gotten past whatever hangups you have/had about the really important core principle at stake -- that civil society simply will not tolerate, will not allow the utter destitution of Singaporeans in Singapore -- there are only a couple ways to prevent destitution. One way is to require most individuals to insure themselves against destitution, using their own resources if they have resources and while they have resources, via compulsory and near-universal programs that at least look very much like CPF LIFE and MediShield Life even if they differ in certain details. The other way is to socialize the losses, i.e. to raise general taxes to provide every Singaporean with longevity insurance and medical insurance as "free" benefits.

That's it. Those are your two basic options to achieve this public policy outcome: compulsory individual savings programs paired with universal longevity and medical insurance, or higher general taxation with higher spending on social welfare programs.

So, which public policy option do you prefer? More individual responsibility, or more public responsibility?

Of course, you can have a hybrid approach, incorporating elements of both options. You really must have some public responsibility (from general taxation), because there are individuals who simply don't have and never will have the resources to save anything and can never be individually responsible. Disabled orphaned infants, to pick an example. And that's exactly what Singapore has, a hybrid approach, although Singapore tends to be stingier than most developed countries in terms of general social welfare programs.

As it happens, I think the government ought to raise taxes (through progressive taxation and progressive base broadening) and boost social welfare spending, including higher ComCare benefits. The government is moving that way, particularly in public medical spending, but it's not happening fast and big enough for my tastes.

 

[cscs3]

I don't think you'll get any substantial (or even more than trivial) political support for allowing Singaporean senior citizens to descend into utter destitution. This core principle of a civil society, destitution prevention, is sound and not open to serious debate. Good luck if you want to try to argue that destitution of Singaporeans in Singapore is tolerable. You'll need it.

Now, assuming you've gotten past whatever hangups you have/had about the really important core principle at stake -- that civil society simply will not tolerate, will not allow the utter destitution of Singaporeans in Singapore -- there are only a couple ways to prevent destitution. One way is to require most individuals to insure themselves against destitution, using their own resources if they have resources and while they have resources, via compulsory and near-universal programs that at least look very much like CPF LIFE and MediShield Life even if they differ in certain details. The other way is to socialize the losses, i.e. to raise general taxes to provide every Singaporean with longevity insurance and medical insurance as "free" benefits.

That's it. Those are your two basic options to achieve this public policy outcome: compulsory individual savings programs paired with universal longevity and medical insurance, or higher general taxation with higher spending on social welfare programs.

So, which public policy option do you prefer? More individual responsibility, or more public responsibility?

Of course, you can have a hybrid approach, incorporating elements of both options. You really must have some public responsibility (from general taxation), because there are individuals who simply don't have and never will have the resources to save anything and can never be individually responsible. Disabled orphaned infants, to pick an example. And that's exactly what Singapore has, a hybrid approach, although Singapore tends to be stingier than most developed countries in terms of general social welfare programs.

As it happens, I think the government ought to raise taxes (through progressive taxation and progressive base broadening) and boost social welfare spending, including higher ComCare benefits. The government is moving that way, particularly in public medical spending, but it's not happening fast and big enough for my tastes.

When you get older, you will notice lots of tax does not affect you much. Example, expensive handphone, instead of 5 meals a day become 3, go expensive restaurant twice a week become once a month etc.

 

[Maeda_Toshiie]

I don't think you're making a strong argument here. The A stands for "annual," which isn't very often. Management is not required to answer every question or even very many; you have no right to the microphone. Management is very unlikely to get a parliamentary question from your MP, and management can too easily evade such questions anyway.

First of all, the original post said more transparent. I don't see it necessarily the case. What exactly does CPF do to make them more transparent than a publicly listed coporation?

I've already mentioned in my post that many management teams lay out the ********. At least I can see CEO of company X laying out his fecal matter hot and thick in person, so that I know that he is just full of it.

CPF holds lots of public meetings, and they're open to the general public every day except Sunday. Corporations have no obligation even to let you in their door, even if you're behaving yourself, but CPF does have an actual public service obligation, by law. CPF experiences frequent parliamentary questioning and review.

Corporations do some things well, but transparency isn't one of them. Government agencies can be less than transparent, but this is CPF we're talking about here, not SID.

Are the CPF mangement members there (ans is clearly no)? I've been those CPF sessions before: all you get is some low-mid level functionaries to answer the usual kind of questions about when and how much people can get their CPF money back. Same goes for MPs (they probably know even less of what goes on inside the CPF board). How much do these public facing functionaries know about CPF's books and corporate governance?

 

[NealKoh]

When you get older, you will notice lots of tax does not affect you much. Example, expensive handphone, instead of 5 meals a day become 3, go expensive restaurant twice a week become once a month etc.

Omg I'm an old man in my 20s! Am I? Hahaha.
I only buy the most expensive handphone because it serves me well and I resell it every year for a decent value.

I eat 2 meals a day, morning blend a smoothie $2, afternoon fish soup for $4.50. Dinner for $5. Sometimes I skip Dinner.
I go expensive restaurant once a week via eatigo, $30 for 2 people. Must take my gf to nice places yet be thrifty. Anything just say - saving for future house.

I try to avoid spending on luxuries with money that isn't paid for by companies to shareholders.

Anyone in the same boat?

 

[henrylbh]

Great news for us. Good for government and good for us.

What great news about interest rates going up? Good if you have more deposits than outstanding loans. When deposit rates go up, lending rate must also go up.

 

[dork32]

As it happens, I think the government ought to raise taxes (through progressive taxation and progressive base broadening) and boost social welfare spending, including higher ComCare benefits. The government is moving that way, particularly in public medical spending, but it's not happening fast and big enough for my tastes.

yeah sure, chao ang mo suggest that garmen raise taxes. when they do that ang mo just run back to his lousy country that he has abandoned. we sinky kena stuck here and pay higher taxes.

if garmen need more money, they could
1. make their much vaunted temasek and gic to improve their contribution
2. cut their salary like the malaysian ministers.

and not just bleed the people dry

 

[cheongmanz]

I think that garmen should not restrict us from using OA to invest in stocks. Currently only 35% of OA can be used. I used to own DBS stocks using my pathetic OA and guess what, its dividend itself is already exceeding 2.5% return. Not to mention capital growth.

 

[TabascoSauce]

I think that garmen should not restrict us from using OA to invest in stocks. Currently only 35% of OA can be used. I used to own DBS stocks using my pathetic OA and guess what, its dividend itself is already exceeding 2.5% return. Not to mention capital growth.

For every person like u, there will be another who made a lost by investing OA money and hoped that govt don't let ppl use OA to invest.

There's no pleasing everyone when it comes to public policy.

 

[cheongmanz]

For every person like u, there will be another who made a lost by investing OA money and hoped that govt don't let ppl use OA to invest.

There's no pleasing everyone when it comes to public policy.

At least allow the citizens to choose whether they can invest on their own using OA. In fact I also lose some of my OA in unit trust last time due to bad financial planning. After all it is still our money, no? If I have a better option to increase my retirement funds than garmen but llst due to garmen policy, is it fair to me?

 

[fr33d0m]

At least allow the citizens to choose whether they can invest on their own using OA. In fact I also lose some of my OA in unit trust last time due to bad financial planning. After all it is still our money, no? If I have a better option to increase my retirement funds than garmen but llst due to garmen policy, is it fair to me?

You can always do it with your own saving. CPF should not be the only money you can invest, right?