Trust in CPF?

[mummy1234]

Yes, that's retirement, agreed. Either that or raise general taxation to provide every Singaporean a guaranteed, inflation-indexed, basic income in retirement. But the Singapore government prefers the "individual responsibility" approach, so there you go.

So why forced savings for housing? That's the lion's share of CPF, and you cannot explain CPF without explaining that.

In LKY's book, I remember reading that he wanted everyone to have a stake in the country, perhaps that is why. But it is scary thinking if our home values drop for whatever reason, much of our wealth would be erased.

 

[cheongmanz]

I (most probably) want Singaporeans to be able to choose freely whether they buy 99 year leaseholds or not. I don't understand why the government should pressure them, through forced savings, to buy homes.

I don't think it is right to say the garmen "force" sinkies to buy hdb. It is just that every sinkie is doing it and it is more worth than renting the whole hdb. The reason is because rental can fluctuates over time but not the hdb mortgage. It is also the asian mindset to "own" an asset.

 

[hwmook]

U want majority of Singaporean living on rented flat? Then later living in a cage like in Hong Kong? It is the policy u think is the best for people?

How old are you? Still schooling? Your comments sound childish. Hong Kong issue is due to no CPF for them to buy house? Go back to the cave you came from.

 

[Toni90]

Don't think you are qualified to speak for Singaporeans. Who are you anyway? I personally think it's great idea to abolish OA and make everybody pay cold hard cash for property. In that way people will not always think of squeezing every cent from their OA by buying property.

Ask u 1 question. Do you want to own a house? Already bought or want to buy? I am talking about house ownership.

 

[mummy1234]

Don't think you are qualified to speak for Singaporeans. Who are you anyway? I personally think it's great idea to abolish OA and make everybody pay cold hard cash for property. In that way people will not always think of squeezing every cent from their OA by buying property.

Yeah, and the silly accrued interest.

 

[Toni90]

How old are you? Still schooling? Your comments sound childish. Hong Kong issue is due to no CPF for them to buy house? Go back to the cave you came from.

U understand the conversation or not? I am talking with BBC about house ownership rate.

 

[fr33d0m]

High home ownership is good in multi-racial Singapore.

Don’t forget how bad it was before HDBs time.

Home ownership is not linked to CPF, especially in the early years.

 

[Toni90]

I (most probably) want Singaporeans to be able to choose freely whether they buy 99 year leaseholds or not. I don't understand why the government should pressure them, through forced savings, to buy homes. This is a question about forced savings that (effectively) must be pushed into home equity (and tied up there), not about whether Singaporeans can or cannot buy homes if they voluntarily choose to do so.

Now, as it happens, if you stop forcing people (including those who don't want to) to buy houses, some people won't buy houses. That means the price of houses for everyone who does want to buy houses will go down some. So the Singaporeans who want to buy houses will be better able to afford them, and more Singaporeans who cannot afford houses will also be able to buy them, if they wish.

If you're going to force somebody to save a certain way, it better be for a damn good reason. How about just give Singaporeans voluntary opportunities to save for housing? How about a voluntary HA (Housing Account) that pays the 10 year bond rate (currently about 2.7%) and allows up to $15,000/year/person? (To replace SRS.)

CPF did not allow funds to be used for housing for most of its history. That's a relatively recent "innovation." But it has gotten out of hand.

What CPF u are talking about??? Singapore one? It is created in 1955 and can be used for housing since 1968.

 

[BBCWatcher]

It is created in 1955 and can be used for housing since 1968.

OK then, thanks for the correction on that point. Half a century later, maybe the government ought to stop forcing Singaporeans to save for housing purchases? That's the question I'm asking here, why it's good public policy to have effectively forced savings specifically for housing purchases.

I'll propose an answer to my own question. Having an owner-occupied home is a hedge against rental housing inflation specifically. So the government might want to bludgeon Singaporeans into owning homes, because the government is unwilling to practice policies that curb rental housing inflation and/or protect retirees against rental housing inflation, notably through FRS level (or higher), inflation-adjusted, lifetime retirement income.

OK, fair enough, and that argument might get you to a CPF-like system that helps couples buy their first home, with (let's suppose) compulsory savings into a "HA" (Housing Account) until you've accumulated enough for a down payment on your first home.

But then why does CPF OA continue after that? Why is OA so big, at well over half of CPF contributions for so many years? It still seems like a really bad design, or at least a subpar design, to help couples get into their first homes.

 

[Mecisteus]

I think if there is no CPF and you can't use CPF to buy a property, then a small minority of people will be homeless. Maybe there will be more slumps in Singapore.

 

[lifeislonggamma]

Yeah, and the silly accrued interest.

To us, the accrued interest is silly indeed.

But legally, in my view, it tells us something important about the money in the CPF account that is 'under our name' - which is that legally the money does not belong to us (in terms of title to the money).

If I understand Section 6 of the CPF Act correctly, when we kena forced to put money into the Fund, the title to the money goes to the fund. What we have is a claim against the Fund, and the scope of that claim is determined by the other rules defined in the Act itself.

So when we 'use our CPF money for property', we are in fact borrowing money from the Fund, and hence the need to pay interest on 'our own money'.

 

[beautyseek]

To us, the accrued interest is silly indeed.

But legally, in my view, it tells us something important about the money in the CPF account that is 'under our name' - which is that legally the money does not belong to us (in terms of title to the money).

If I understand Section 6 of the CPF Act correctly, when we kena forced to put money into the Fund, the title to the money goes to the fund. What we have is a claim against the Fund, and the scope of that claim is determined by the other rules defined in the Act itself.

So when we 'use our CPF money for property', we are in fact borrowing money from the Fund, and hence the need to pay interest on 'our own money'.

This terrible! OMG! I need to go read the Act myself

 

[ocs_woodlands]

To us, the accrued interest is silly indeed.

But legally, in my view, it tells us something important about the money in the CPF account that is 'under our name' - which is that legally the money does not belong to us (in terms of title to the money).

Cpf is basically a trust fund created with us being the beneficiaries.

A trust fund has specific parameters and this particular one ie Cpf is a trust fund designed to function in differ t ways according to our ages eh before 55, between 55 and 65 and post 65...

Common sense is unfortunately not common at all.. HardwareZone Forums app

 

[lifeislonggamma]

Cpf is basically a trust fund created with us being the beneficiaries.

A trust fund has specific parameters and this particular one ie Cpf is a trust fund designed to function in differ t ways according to our ages eh before 55, between 55 and 65 and post 65...

Common sense is unfortunately not common at all.. HardwareZone Forums app

Exactly my point.

Under the law of trusts, title to the assets of a trust does not belong to the beneficiaries.

 

[ocs_woodlands]

Exactly my point.

Under the law of trusts, title to the assets of a trust does not belong to the beneficiaries.

But this particular trust has 2 "escape" clauses..
Either you migrate or get terminal illness withb <6 mths to go .....

Common sense is unfortunately not common at all.. HardwareZone Forums app

 

[lifeislonggamma]

But this particular trust has 2 "escape" clauses..
Either you migrate or get terminal illness withb <6 mths to go .....

Common sense is unfortunately not common at all.. HardwareZone Forums app

 

[lifeislonggamma]

If you're into conspiracy theories, CPF OA is a conspiracy organized by the property industrial complex, borrowing from the late Dwight Eisenhower a bit.

My (fallible) impression is that the PAP government has made ever-rising prices for those 99-year leases a central pillar of the political compact between itself and the citizenry since the early 1990s.


I think we have gone way past the point of no return on this road of overpriced property that there is a large constituency interested in maintaining the status quo, attempts by the so-called 4G politicians to talk some sense into people's expectations on those 'time-decaying' 99-year leases notwithstanding.

 

[LiteHouse]

What CPF u are talking about??? Singapore one? It is created in 1955 and can be used for housing since 1968.

I recall CPF OA was allowed to buy resale (aka second hand) flats from 1990s onwards. Hence the huge growth in the resale flat transactions.

 

[jujuhippo]

am thinking of shifting some monies from OA to SA. but can anyone recommend how much money i should ideally keep in OA? if i intend to buy a house in 7 years time

 

[TabascoSauce]

am thinking of shifting some monies from OA to SA. but can anyone recommend how much money i should ideally keep in OA? if i intend to buy a house in 7 years time

depends on ur income, whether u r sharing the bto downpayment with wife, and wat bto price range u r aiming for. then work backward and see how much u can transfer now.

personally, i have set aside 40k which sld be more than enough to cover most of the first bto 5% downpayment. anythin above i jus move to SA