10-06-2014, 12:55 PM
Regarding MS, let's be realistic. How many % of workers' salary can really reach the amount the so call "Today Money" adjusting for inflation. If many of the workers will not reach the MS, so why OA still at 2.5 %.
10-06-2014, 12:55 PM
10-06-2014, 01:12 PM
(10-06-2014, 12:55 PM)Temperament Wrote: [ -> ]Regarding MS, let's be realistic. How many % of workers' salary can really reach the amount the so call "Today Money" adjusting for inflation. If many of the workers will not reach the MS, so why OA still at 2.5 %.
Since you are rich enough for retirement, are you willing to give up your interest rate for the lower income singaporeans?
10-06-2014, 01:37 PM
(10-06-2014, 01:12 PM)yeokiwi Wrote: [ -> ]Since you ask me, show me what you can do first. i may follow your "good" example. And if you like to be more personal, show your face here and people may just follow you lol! (i may not).(10-06-2014, 12:55 PM)Temperament Wrote: [ -> ]Regarding MS, let's be realistic. How many % of workers' salary can really reach the amount the so call "Today Money" adjusting for inflation. If many of the workers will not reach the MS, so why OA still at 2.5 %.
Since you are rich enough for retirement, are you willing to give up your interest rate for the lower income Singaporeans?
In other words don't be personal. Just tell us what you will do (sacrifice yourself or what???) Then we may think you are a HERO Model to follow lol!
i dislike very much people trying to be personal. i always think a forum is to exchange views an ideas and not get personal.
A forum will soon get no where if it becomes someone's "personal agenda"
Ha! Ha!
10-06-2014, 01:39 PM
Yeah, agree with Specuvestor. OA and SA meant for retirement and that it functions somewhat like a risk free bond..
In all likelihood, most of Sporeans, who belong to the lower to middle income, would have majority of their assets in their flats. Even if there is supposedly a downturn in the property market now, prices of flats are likely to pick up again in the future.
I guess this is also why some or most Sporeans wont reach Minimum Sum?
In all likelihood, most of Sporeans, who belong to the lower to middle income, would have majority of their assets in their flats. Even if there is supposedly a downturn in the property market now, prices of flats are likely to pick up again in the future.
I guess this is also why some or most Sporeans wont reach Minimum Sum?
(10-06-2014, 11:49 AM)specuvestor Wrote: [ -> ](10-06-2014, 10:33 AM)CityFarmer Wrote: [ -> ]I chose to post the article here, as additional input to the discussion. An article from a financial professional (former portfolio manager and financial educator now), and a Singaporean (a stakeholder).
CPF just one part of retirement financing
Much has been written on the Central Provident Fund (CPF). With rising costs of living, Singaporeans need reassurance that retirement security is not a pipe dream.
<snip>
RAISING INCOMES THROUGH EDUCATION, TRAINING
At present, the CPF Education Scheme allows full-time students to use their CPF funds or that of their parents or spouses to finance tertiary education at approved institutions, subject to withdrawal limits.
But part-time students are excluded from the scheme and the Government has reasoned that part-time courses are generally tailored for working adults who are in a better position to pay their tuition fees as they have incomes of their own.
“If they do not have sufficient savings for a part-time course, they can defer it and build up enough personal savings to pay for their course fees later,” says the CPF Board’s website. “Part-time students can therefore plan ahead with greater flexibility to ensure that they can meet the tuition fees.”
The Government has also reasoned that subsidies and financial assistance are already available for part-time students. This is true, but the fact is that full-time students similarly benefit from these. So the playing field remains unlevel and stacked against part-time students, who already have the additional burden of work commitments. This seems to run counter to the Government’s rhetoric about the many pathways to success and the need for workers to constantly upgrade themselves.
Many part-time students are adult learners who did not have the chance for full-time tertiary education when younger. We should increase education financing options for them by allowing them to tap into their CPF monies to pay for their studies.
Taking the argument further, the Government should consider allowing CPF monies to be used for skills-upgrading courses under the Workforce Development Authority’s Workforce Skills Qualifications Framework. Existing CPF withdrawal limits and a requirement to have courses signed off by the workers’ (part-time student) employer can prevent abuse and ensure that the courses financed are relevant.
A more inclusive CPF Education Scheme can help more Singaporeans to upgrade skills and improve their chances of securing higher-paying jobs so that they can enjoy greater CPF savings for retirement.
IMPROVING FINANCIAL LITERACY, COMMUNICATION
<snip>
In fact, the less-than-impressive results of CPFIS-Ordinary Account investments from 2004 to 2013 suggest that most CPFIS investors are unable to beat the CPF’s returns and are better off keeping their CPF funds untouched.
From a total-portfolio perspective, it may be useful to view the CPF as one’s “risk-free” investment pot. A larger CPF sum subsequently translates into larger CPF LIFE annuity payouts, which continue for the rest of one’s life — a good guard against longevity risk.
It is much better to use funds with lower opportunity costs (cash or bank deposits that pay significantly less than the CPF) to invest. But before investing, one needs good financial education to make investments that are appropriate for one’s financial standing and goals. For example, younger individuals have more time to ride the market’s ups and downs before reaching retirement, and a greater proportion could be allocated to riskier instruments such as equities that usually give greater returns over the long-term. Older individuals have a shorter investment horizon and it may be wiser to allocate more to lower-risk financial instruments such as government bonds.
For an important and complex scheme such as the CPF, timely and clear communication is key.
<Snip>
The aim should be to help the majority of Singaporeans to retire securely. For those who may fall by the wayside, the Government, together with the community, can work together to help them.
ABOUT THE AUTHOR:
James Chia is the co-founder of Innervative, a financial education firm. A Singaporean, he was previously a portfolio manager.
http://www.todayonline.com/singapore/cpf...epage=true
Pretty good article CF posted, but few comments:
1) People have to agree that CPF is for retirement, other objectives from property to study to investment is ANCILLARY.
So it is prudent that if you use CPF for ancillary reasons, you have to top back up the CPF to where it should be. That is again where people don't understand why they have to pay themselves back 2.5/4% OPPORTUNITY cost because they don't understand the first principle in the first place. CPF is not a saving deposit earning 2.5/4%. It is a retirement fund.
So as per the article's good suggestions, you should be able to use it to fund studies and upgrading, BUT YOU HAVE TO TOP IT BACK is where the author is missing.
2) As per what we have been highlighting and yawnyawn posted, despite all the noise, people in aggregate can't even outperform the miserable 2.5% return. As a fund manager it would be wise to disappear into the shadow that you can't beat a deposit rate and hope no one notices. But popular opinions is all about who is loudest and captures public imagination/ ignorance rather than truths. That is why both sides of the story is always better than one-sided. Government seriously need to improve on their communications. The days of only the Elites know better is over.
3) From a total portfolio perspective I agree with the author that we should just treat CPF as a bond allocation. Equity allocation goes to SRS or our own ILP or investments. Not to mention most people's net worth is in property. So the issue is more than just the "bond return" but how to solve the cash poor situation from massive overweight in properties when one retires?
10-06-2014, 01:55 PM
(10-06-2014, 01:39 PM)Art or Science Wrote: [ -> ]Yeah, agree with Specuvestor. OA and SA meant for retirement and that it functions somewhat like a risk free bond..
In all likelihood, most of Sporeans, who belong to the lower to middle income, would have majority of their assets in their flats. Even if there is supposedly a downturn in the property market now, prices of flats are likely to pick up again in the future.
I guess this is also why some or most Sporeans wont reach Minimum Sum?
(10-06-2014, 11:49 AM)specuvestor Wrote: [ -> ](10-06-2014, 10:33 AM)CityFarmer Wrote: [ -> ]I chose to post the article here, as additional input to the discussion. An article from a financial professional (former portfolio manager and financial educator now), and a Singaporean (a stakeholder).
CPF just one part of retirement financing
Much has been written on the Central Provident Fund (CPF). With rising costs of living, Singaporeans need reassurance that retirement security is not a pipe dream.
<snip>
RAISING INCOMES THROUGH EDUCATION, TRAINING
At present, the CPF Education Scheme allows full-time students to use their CPF funds or that of their parents or spouses to finance tertiary education at approved institutions, subject to withdrawal limits.
But part-time students are excluded from the scheme and the Government has reasoned that part-time courses are generally tailored for working adults who are in a better position to pay their tuition fees as they have incomes of their own.
“If they do not have sufficient savings for a part-time course, they can defer it and build up enough personal savings to pay for their course fees later,” says the CPF Board’s website. “Part-time students can therefore plan ahead with greater flexibility to ensure that they can meet the tuition fees.”
The Government has also reasoned that subsidies and financial assistance are already available for part-time students. This is true, but the fact is that full-time students similarly benefit from these. So the playing field remains unlevel and stacked against part-time students, who already have the additional burden of work commitments. This seems to run counter to the Government’s rhetoric about the many pathways to success and the need for workers to constantly upgrade themselves.
Many part-time students are adult learners who did not have the chance for full-time tertiary education when younger. We should increase education financing options for them by allowing them to tap into their CPF monies to pay for their studies.
Taking the argument further, the Government should consider allowing CPF monies to be used for skills-upgrading courses under the Workforce Development Authority’s Workforce Skills Qualifications Framework. Existing CPF withdrawal limits and a requirement to have courses signed off by the workers’ (part-time student) employer can prevent abuse and ensure that the courses financed are relevant.
A more inclusive CPF Education Scheme can help more Singaporeans to upgrade skills and improve their chances of securing higher-paying jobs so that they can enjoy greater CPF savings for retirement.
IMPROVING FINANCIAL LITERACY, COMMUNICATION
<snip>
In fact, the less-than-impressive results of CPFIS-Ordinary Account investments from 2004 to 2013 suggest that most CPFIS investors are unable to beat the CPF’s returns and are better off keeping their CPF funds untouched.
From a total-portfolio perspective, it may be useful to view the CPF as one’s “risk-free” investment pot. A larger CPF sum subsequently translates into larger CPF LIFE annuity payouts, which continue for the rest of one’s life — a good guard against longevity risk.
It is much better to use funds with lower opportunity costs (cash or bank deposits that pay significantly less than the CPF) to invest. But before investing, one needs good financial education to make investments that are appropriate for one’s financial standing and goals. For example, younger individuals have more time to ride the market’s ups and downs before reaching retirement, and a greater proportion could be allocated to riskier instruments such as equities that usually give greater returns over the long-term. Older individuals have a shorter investment horizon and it may be wiser to allocate more to lower-risk financial instruments such as government bonds.
For an important and complex scheme such as the CPF, timely and clear communication is key.
<Snip>
The aim should be to help the majority of Singaporeans to retire securely. For those who may fall by the wayside, the Government, together with the community, can work together to help them.
ABOUT THE AUTHOR:
James Chia is the co-founder of Innervative, a financial education firm. A Singaporean, he was previously a portfolio manager.
http://www.todayonline.com/singapore/cpf...epage=true
Pretty good article CF posted, but few comments:
1) People have to agree that CPF is for retirement, other objectives from property to study to investment is ANCILLARY.
So it is prudent that if you use CPF for ancillary reasons, you have to top back up the CPF to where it should be. That is again where people don't understand why they have to pay themselves back 2.5/4% OPPORTUNITY cost because they don't understand the first principle in the first place. CPF is not a saving deposit earning 2.5/4%. It is a retirement fund.
So as per the article's good suggestions, you should be able to use it to fund studies and upgrading, BUT YOU HAVE TO TOP IT BACK is where the author is missing.
2) As per what we have been highlighting and yawnyawn posted, despite all the noise, people in aggregate can't even outperform the miserable 2.5% return. As a fund manager it would be wise to disappear into the shadow that you can't beat a deposit rate and hope no one notices. But popular opinions is all about who is loudest and captures public imagination/ ignorance rather than truths. That is why both sides of the story is always better than one-sided. Government seriously need to improve on their communications. The days of only the Elites know better is over.
3) From a total portfolio perspective I agree with the author that we should just treat CPF as a bond allocation. Equity allocation goes to SRS or our own ILP or investments. Not to mention most people's net worth is in property. So the issue is more than just the "bond return" but how to solve the cash poor situation from massive overweight in properties when one retires?
Sorry if I also have to force the issue. It is a critical juncture and it is getting to be personal for normal wage earners somewhat like myself and so many people we do know and it is important for them too, regardless of whether having too much or too little money looks to be important in the future (it is). Theoretical assumption: I can ask my dad for his retirement fund (aka CPF) as a loan with "guaranteed" interest repayment of >2.5% - any reasonably arrived at/derived number - but my ability to repay will be different than for a larger entity with more options.
10-06-2014, 09:33 PM
Probably the high HDB (asset) prices didnt benefit most people as it was original intent. It does benefit the few who can rent out while living in the condos, landed. Also, PRs found it too attractive to not make some money and cash out when they return home.
Yes its true that many people has big portion of their OA in property, and being asset rich and cash poor, they may have to cash out the HDB and downgrade as inflation catch up with the low yielding money in cpf. Hope this will be considered when the changes is made to cpf policies, if any.
Yes its true that many people has big portion of their OA in property, and being asset rich and cash poor, they may have to cash out the HDB and downgrade as inflation catch up with the low yielding money in cpf. Hope this will be considered when the changes is made to cpf policies, if any.
(10-06-2014, 01:39 PM)Art or Science Wrote: [ -> ]Yeah, agree with Specuvestor. OA and SA meant for retirement and that it functions somewhat like a risk free bond..
In all likelihood, most of Sporeans, who belong to the lower to middle income, would have majority of their assets in their flats. Even if there is supposedly a downturn in the property market now, prices of flats are likely to pick up again in the future.
I guess this is also why some or most Sporeans wont reach Minimum Sum?
(10-06-2014, 11:49 AM)specuvestor Wrote: [ -> ](10-06-2014, 10:33 AM)CityFarmer Wrote: [ -> ]I chose to post the article here, as additional input to the discussion. An article from a financial professional (former portfolio manager and financial educator now), and a Singaporean (a stakeholder).
CPF just one part of retirement financing
Much has been written on the Central Provident Fund (CPF). With rising costs of living, Singaporeans need reassurance that retirement security is not a pipe dream.
<snip>
RAISING INCOMES THROUGH EDUCATION, TRAINING
At present, the CPF Education Scheme allows full-time students to use their CPF funds or that of their parents or spouses to finance tertiary education at approved institutions, subject to withdrawal limits.
But part-time students are excluded from the scheme and the Government has reasoned that part-time courses are generally tailored for working adults who are in a better position to pay their tuition fees as they have incomes of their own.
“If they do not have sufficient savings for a part-time course, they can defer it and build up enough personal savings to pay for their course fees later,” says the CPF Board’s website. “Part-time students can therefore plan ahead with greater flexibility to ensure that they can meet the tuition fees.”
The Government has also reasoned that subsidies and financial assistance are already available for part-time students. This is true, but the fact is that full-time students similarly benefit from these. So the playing field remains unlevel and stacked against part-time students, who already have the additional burden of work commitments. This seems to run counter to the Government’s rhetoric about the many pathways to success and the need for workers to constantly upgrade themselves.
Many part-time students are adult learners who did not have the chance for full-time tertiary education when younger. We should increase education financing options for them by allowing them to tap into their CPF monies to pay for their studies.
Taking the argument further, the Government should consider allowing CPF monies to be used for skills-upgrading courses under the Workforce Development Authority’s Workforce Skills Qualifications Framework. Existing CPF withdrawal limits and a requirement to have courses signed off by the workers’ (part-time student) employer can prevent abuse and ensure that the courses financed are relevant.
A more inclusive CPF Education Scheme can help more Singaporeans to upgrade skills and improve their chances of securing higher-paying jobs so that they can enjoy greater CPF savings for retirement.
IMPROVING FINANCIAL LITERACY, COMMUNICATION
<snip>
In fact, the less-than-impressive results of CPFIS-Ordinary Account investments from 2004 to 2013 suggest that most CPFIS investors are unable to beat the CPF’s returns and are better off keeping their CPF funds untouched.
From a total-portfolio perspective, it may be useful to view the CPF as one’s “risk-free” investment pot. A larger CPF sum subsequently translates into larger CPF LIFE annuity payouts, which continue for the rest of one’s life — a good guard against longevity risk.
It is much better to use funds with lower opportunity costs (cash or bank deposits that pay significantly less than the CPF) to invest. But before investing, one needs good financial education to make investments that are appropriate for one’s financial standing and goals. For example, younger individuals have more time to ride the market’s ups and downs before reaching retirement, and a greater proportion could be allocated to riskier instruments such as equities that usually give greater returns over the long-term. Older individuals have a shorter investment horizon and it may be wiser to allocate more to lower-risk financial instruments such as government bonds.
For an important and complex scheme such as the CPF, timely and clear communication is key.
<Snip>
The aim should be to help the majority of Singaporeans to retire securely. For those who may fall by the wayside, the Government, together with the community, can work together to help them.
ABOUT THE AUTHOR:
James Chia is the co-founder of Innervative, a financial education firm. A Singaporean, he was previously a portfolio manager.
http://www.todayonline.com/singapore/cpf...epage=true
Pretty good article CF posted, but few comments:
1) People have to agree that CPF is for retirement, other objectives from property to study to investment is ANCILLARY.
So it is prudent that if you use CPF for ancillary reasons, you have to top back up the CPF to where it should be. That is again where people don't understand why they have to pay themselves back 2.5/4% OPPORTUNITY cost because they don't understand the first principle in the first place. CPF is not a saving deposit earning 2.5/4%. It is a retirement fund.
So as per the article's good suggestions, you should be able to use it to fund studies and upgrading, BUT YOU HAVE TO TOP IT BACK is where the author is missing.
2) As per what we have been highlighting and yawnyawn posted, despite all the noise, people in aggregate can't even outperform the miserable 2.5% return. As a fund manager it would be wise to disappear into the shadow that you can't beat a deposit rate and hope no one notices. But popular opinions is all about who is loudest and captures public imagination/ ignorance rather than truths. That is why both sides of the story is always better than one-sided. Government seriously need to improve on their communications. The days of only the Elites know better is over.
3) From a total portfolio perspective I agree with the author that we should just treat CPF as a bond allocation. Equity allocation goes to SRS or our own ILP or investments. Not to mention most people's net worth is in property. So the issue is more than just the "bond return" but how to solve the cash poor situation from massive overweight in properties when one retires?
11-06-2014, 08:03 AM
http://www.businesstimes.com.sg/specials...s-20140611
PUBLISHED JUNE 11, 2014
MONEY MATTERS
No reason to doubt CPF's intentions
To understand the CPF, we must understand that its primary purpose is to help us meet our basic retirement needs
BYCHRISTOPHER TANPRINT |EMAIL THIS ARTICLE
Serving a purpose: Our CPF is invested into special issues of Singapore Government Securities - otherwise known as Singapore Government Bonds - as they are rated AAA and deemed very safe. - FILE PHOTO
I KNOW for a fact that many of us do not really understand our CPF (Central Provident Fund) well. To many, it is just one of the many ways our government "hoards" our assets. Over the past two weeks, online postings and discussions have brought this mistrust to a higher level.
To understand the CPF, we must understand that its primary purpose is to help us meet our basic retirement needs. It is on this premise that the scheme was built upon and it is from this perspective that we must look from. All other uses of CPF monies are meant to support this purpose. Therefore, rules are set such that if you use your CPF monies for housing, children's education, insurance, paying medical expenses and investments, they must either help you in your retirement or not affect your retirement.
An example would be if you use your Ordinary Account (OA) monies to fund your children's education at one of the local universities or polytechnics. One year after they leave the course, your children have the obligation to pay back the money plus interest not earned by their parents in their OA. Another example will be, if you want to top up say, your parents' CPF account using your own CPF monies, you can't do it unless you have met your own minimum sum as CPF is meant for your own retirement, not your kids' education, nor someone else's retirement.
In the same vein, if you sell your property that was funded by CPF for the purchase, you need to put back the amount you have used plus the accrued interest not earned (if you had kept it in the OA), back into your OA. It is not that you are paying interest for your own money, but rather, this is to be sure that your retirement money is there when you need it.
PUBLISHED JUNE 11, 2014
MONEY MATTERS
No reason to doubt CPF's intentions
To understand the CPF, we must understand that its primary purpose is to help us meet our basic retirement needs
BYCHRISTOPHER TANPRINT |EMAIL THIS ARTICLE
Serving a purpose: Our CPF is invested into special issues of Singapore Government Securities - otherwise known as Singapore Government Bonds - as they are rated AAA and deemed very safe. - FILE PHOTO
I KNOW for a fact that many of us do not really understand our CPF (Central Provident Fund) well. To many, it is just one of the many ways our government "hoards" our assets. Over the past two weeks, online postings and discussions have brought this mistrust to a higher level.
To understand the CPF, we must understand that its primary purpose is to help us meet our basic retirement needs. It is on this premise that the scheme was built upon and it is from this perspective that we must look from. All other uses of CPF monies are meant to support this purpose. Therefore, rules are set such that if you use your CPF monies for housing, children's education, insurance, paying medical expenses and investments, they must either help you in your retirement or not affect your retirement.
An example would be if you use your Ordinary Account (OA) monies to fund your children's education at one of the local universities or polytechnics. One year after they leave the course, your children have the obligation to pay back the money plus interest not earned by their parents in their OA. Another example will be, if you want to top up say, your parents' CPF account using your own CPF monies, you can't do it unless you have met your own minimum sum as CPF is meant for your own retirement, not your kids' education, nor someone else's retirement.
In the same vein, if you sell your property that was funded by CPF for the purchase, you need to put back the amount you have used plus the accrued interest not earned (if you had kept it in the OA), back into your OA. It is not that you are paying interest for your own money, but rather, this is to be sure that your retirement money is there when you need it.
11-06-2014, 08:13 AM
Just received CPFIA monthly statement.
Thinking of this suggestion: CPF Board should immediately transfer CPFIA balance daily back to CPF-OA.
Currently it is 2 monthly of inactivity before the auto transfer. Nowadays, the banking system can easily
do that. Yet there is no improvement in this process since 90s, when paper processing was still dominant.
CPF Board not trying hard enough to act in the best interests of individual members when they allow the funds to languish
in Agent Banks CPFIA at almost zero interest rates.
Thinking of this suggestion: CPF Board should immediately transfer CPFIA balance daily back to CPF-OA.
Currently it is 2 monthly of inactivity before the auto transfer. Nowadays, the banking system can easily
do that. Yet there is no improvement in this process since 90s, when paper processing was still dominant.
CPF Board not trying hard enough to act in the best interests of individual members when they allow the funds to languish
in Agent Banks CPFIA at almost zero interest rates.
11-06-2014, 08:17 AM
(11-06-2014, 08:13 AM)opmi Wrote: [ -> ]Agent Banks CPFIA at almost zero interest rates.
good job, OPMI!
I like this suggestion.
So far, I had relied on monthly alarm and manually transfer.
Hope this is implemented and save me some time and earn more interest.
LCEarth day - save the world everyday.
11-06-2014, 08:36 AM
(11-06-2014, 08:13 AM)opmi Wrote: [ -> ]Just received CPFIA monthly statement.
Thinking of this suggestion: CPF Board should immediately transfer CPFIA balance daily back to CPF-OA.
Currently it is 2 monthly of inactivity before the auto transfer. Nowadays, the banking system can easily
do that. Yet there is no improvement in this process since 90s, when paper processing was still dominant.
CPF Board not trying hard enough to act in the best interests of individual members when they allow the funds to languish
in Agent Banks CPFIA at almost zero interest rates.
I'm already transferring myself using DBS internet banking. You can also do it via ATM. Or you are too lazy to take care of your own interest? Should CPF assume you will not use that fund to buy shares?