Trust in CPF?

[Perisher]

Some may start to request CPF should be allowed to buy car, handphone etc.

Etf vs car/hp. Which one more likely to help towards retirement fund?

 

[maple96]

I guess you have no knowledge on cardboard, aluminium price. It's so pathetic and is not worth anybody effort to collect.

there is more than meets the eye!

 

[BBCWatcher]

The list of CPF Investment Scheme choices is available here.

It's a long list, and I don't think it's an unreasonable list. You can also invest in individual residential real estate properties (and education) since CPF OA funds can be used for that, too.

No, you cannot "invest" in cryptocurrencies, for example...but why should the government allow that within its bedrock foundational savings program?

There are a couple reasonable investment choices that are missing, but it has more to do with the fact they're basically missing in Singapore but outside CPF. I'd like to see these investment choices, all in low cost form with automatic dividend reinvesting:

(a) An investment grade corporate bond index fund (SGD);
(b) An investment grade corporate bond index fund (Global);
(c) A global stock index fund (similar to VWRD);
(d) "Target" funds at 5 year intervals that gradually, automatically rebalance as the target date approaches.

The target fund would start at 90% stocks (split 2/3rds global and 1/3rd local) and 10% bonds (split half global and half local), using the three funds above plus the lowest cost STI fund. Then, starting 7 years before the target date, the fund would gradually shift to a 30% stocks-70% bonds mix, and it would also shift to a more local mix. The stocks would flip to 2/3rds local and 1/3rd global upon reaching the target, and the bonds would shift to 1/7th global and 6/7ths local.

Add those, then shut down all the other CPF Investment Scheme choices for all I care, but that's optional.

 

[henrylbh]

They recently just change the rule of the CPF investment scheme, what's the big deal? They should allow the usage of CPF to purchase ETF.

To me, I rather the government make it a rule that all sale proceeds in proportion to the amount of CPF used for housing be returned to the CPF just like proceeds from used of CPF for investments. Same for income generated from rental of the property.

 

[cheongmanz]

To me, I rather the government make it a rule that all sale proceeds in proportion to the amount of CPF used for housing be returned to the CPF just like proceeds from used of CPF for investments. Same for income generated from rental of the property.

Not feasible. I believe people sell their hdb is to flip for cash liquidity and same for rental. But again, it may prevent hdb price from increasing.

 

[hwmook]

To me, I rather the government make it a rule that all sale proceeds in proportion to the amount of CPF used for housing be returned to the CPF just like proceeds from used of CPF for investments. Same for income generated from rental of the property.

I think it's difficult to track the ratio thus they came out with accrued interest method which is easier to implement. Rental is not covered though.

 

[highsulphur]

For those who have set aside their finances properly for their home, some investment and emergency funds, cpf provides a unique vehicle to provide an attractive RETIREMENT income stream. Most people who are unhappy with CPF forgot CPF was meant for retirement and not meant for you to punt in shares or buy your homes but along the way, G decided it was a good idea to liberalize CPF for housing and investment purposes which obviously has other side effects. But I digress.

For me, I have been a believer of the scheme but was thrown a curve ball when they announced the change to CPF Life. However I accepted it was for the greater good in terms of providing a safety net for the lower income group. Assuming I continue to be employed, I should reasonably expect a decent amount in less than 15 years when I hit 55.

 

[cheongmanz]

Most people who are unhappy with CPF forgot CPF was meant for retirement and not meant for you to punt in shares or buy your homes

If I think I have the ability (which I have proven before) to increase my retirement using CPF to buy shares that can yield a higher return than 2.5% but garmen is restricting me, shouldn't I be unhappy?

 

[swordsly]

If I think I have the ability (which I have proven before) to increase my retirement using CPF to buy shares that can yield a higher return than 2.5% but garmen is restricting me, shouldn't I be unhappy?

You can be unhappy.
You should be unhappy? Depends on the observer's stance.

But either way, you can't change anything about it. Not within the decade at least.
If you do decide you want to change something about it... well you can channel it through the proper channels.

Personally, I would prefer that the CPF has an opt-out option where I can choose to (and must) place my funds in a similar retirement vehicle competing against CPF (since they claim that they are so so awesome, a little competition shouldn't affect that fact right?) or remain in CPF.

 

[Toni90]

You can be unhappy.
You should be unhappy? Depends on the observer's stance.

But either way, you can't change anything about it. Not within the decade at least.
If you do decide you want to change something about it... well you can channel it through the proper channels.

Personally, I would prefer that the CPF has an opt-out option where I can choose to (and must) place my funds in a similar retirement vehicle competing against CPF (since they claim that they are so so awesome, a little competition shouldn't affect that fact right?) or remain in CPF.

Problem is no such retirement vehicle can give u same return. How?

 

[swordsly]

Problem is no such retirement vehicle can give u same return. How?

At least not now.
Also, not when CPF is still so feature-heavy (buying homes, medisave account etc) rather than its initial and primary goal: retirement.

Just in case there's misunderstanding, I think MA is still necessary but maybe not packaged together with RA.

 

[BBCWatcher]

Also, not when CPF is still so feature-heavy (buying homes, medisave account etc) rather than its initial and primary goal: retirement.

One person in government broached the idea of getting rid of the Ordinary Account, and (one has to assume) the OA portion of CPF contributions. Without OA, if you want to save for a housing down payment, you'd be able to do that with SSBs, for example. The usual HDB grant options would still be available to those who qualify, presumably. Or you could take your higher take home pay and invest your extra unrestricted dollars in whatever individual stocks or global funds you wish.

So I gather the participants in this discussion would prefer ending OA (and its associated pre-tax compulsory employer and employee contributions), correct?

Note that you can make CPF act solely (or almost solely) as a retirement savings account: just convert all OA funds to SA every month. That works as long as your Special Account is below the Full Retirement Sum. Once it hits the FRS, there's another trick available to some: OA to (elder parent) RA. For those who have particularly high incomes from work in Singapore, this technique doesn't last forever, but you can skew CPF toward a more exclusively retirement-oriented posture, if you wish.

 

[swordsly]

One person in government broached the idea of getting rid of the Ordinary Account, and (one has to assume) the OA portion of CPF contributions. Without OA, if you want to save for a housing down payment, you'd be able to do that with SSBs, for example. The usual HDB grant options would still be available to those who qualify, presumably. Or you could take your higher take home pay and invest your extra unrestricted dollars in whatever individual stocks or global funds you wish.

So I gather the participants in this discussion would prefer ending OA (and its associated pre-tax compulsory employer and employee contributions), correct?

Note that you can make CPF act solely (or almost solely) as a retirement savings account: just convert all OA funds to SA every month. That works as long as your Special Account is below the Full Retirement Sum. Once it hits the FRS, there's another trick available to some: OA to (elder parent) RA. For those who have particularly high incomes from work in Singapore, this technique doesn't last forever, but you can skew CPF toward a more exclusively retirement-oriented posture, if you wish.

It doesn't really matter to me how many accounts there are. My only concern is that CPF should go back to what it was originally meant for: retirement and retirement only.

We can definitely buy homes without CPF. For too long people have started associating CPF to homes rather than to retirement. If CPF funds are purely meant for retirement, it would force home buyers to seriously start looking at their real purchasing power with regards to liquid cash. Then and perhaps then, the property prices wouldn't look as huge as it is now.

And look, people are all attempting to find ways to cash out their CPF, be it through buying second properties for rental yield-ing or what not. The whole CPF concept seems so defeated.

 

[Toni90]

It doesn't really matter to me how many accounts there are. My only concern is that CPF should go back to what it was originally meant for: retirement and retirement only.

We can definitely buy homes without CPF. For too long people have started associating CPF to homes rather than to retirement. If CPF funds are purely meant for retirement, it would force home buyers to seriously start looking at their real purchasing power with regards to liquid cash. Then and perhaps then, the property prices wouldn't look as huge as it is now.

And look, people are all attempting to find ways to cash out their CPF, be it through buying second properties for rental yield-ing or what not. The whole CPF concept seems so defeated.

U can withdraw OA to buy house but put back in SA or volunteer transfer to SA. Can? What other people do with their OA is not your business, right? Or u want Singapore properties crash and burn so u can buy cheap house?

 

[tangent314]

Encouraging people to own their own homes is a good idea. If you own a home, that saves you a lot on rental fees when you are in retirement, so the payouts can go towards all your other necessities.

I can see why they thought OA was a good idea to use for home ownership. It forces people to start saving when they enter the workforce instead of splurging all their cash, so that when it's time to settle down and get married they have enough money in OA for the down payment of the house.

However, this has caused some (unintended) consequences. Because of accrued interest, people expect the value of their homes to go up (instead of depreciating like a normal 99 yr lease) at a rate that matches 2.5%, and this has contributed to the skyrocketing of prices.


So if it's time to go back to the drawing board and to ditch the OA (ideally by cutting employee CPF contribution by maybe half and have everything that would have gone into OA go to SA), how do we encourage people to save for the down payments of their homes?

One simple method may be to simply allow everyone a one-time withdrawal of up to half of their SA for the down payment of the flat. Sort of like having a home allows you to set aside a BRS instead of FRS. Or perhaps just allow for 100% loans for first homes?

 

[swordsly]

U can withdraw OA to buy house but put back in SA or volunteer transfer to SA. Can? What other people do with their OA is not your business, right? Or u want Singapore properties crash and burn so u can buy cheap house?

While what other people do with their OA doesn't affect me directly, it does affect the direction of the policy which in turn affects every stakeholder under the policy, no?

There is a limit to transferring to and topping up of SA? No?

And yes I do want the housing properties in Singapore to crash.
I am by no means a high income earner (~3k-ish). If I can buy cheap houses, every other person out there will be able to buy cheap houses as well.
If one wants to flip properties for gains, do it on private properties.
And yes I am only talking about public housing -- HDBs.

 

[Maeda_Toshiie]

Should allow global access of index etf.

And let it allow capital flight?

 

[highsulphur]

U can withdraw OA to buy house but put back in SA or volunteer transfer to SA. Can? What other people do with their OA is not your business, right? Or u want Singapore properties crash and burn so u can buy cheap house?

Because cpf is meant for retirement. Or at least it was when it first started

 

[Perisher]

And let it allow capital flight?

How that works?
If we average the etf returns, would think it will substantially increase the wealth of cpf instead of sucking it out.

 

[Maeda_Toshiie]

How that works?
If we average the etf returns, would think it will substantially increase the wealth of cpf instead of sucking it out.

Ok, it's a temporary capital flight. Monies that go into foreign investments means less liquidity for the local market. Essentially, it reduces available liquidity for the local capital maket.