A Question On The CPF

Stay-at home mothers with little savings in their CPF accounts should get more support, says the People's Action Party's Women Wing. All good and well but I have a question; why only stay-be mothers with small CPF account will get help?

Why should there be a difference between stay-at home mothers based on their CPF account? Aren't stay-at mothers...stay-at mothers? Their kids don't care how much CPF their mothers have, so why differentiate among them? Why not give help and support to ALL stay-at home mothers? Wouldn't that be fairer?

Also how would the government decide how much is "little"? With the CPF Minimum Sum at $161,000, does it really matter if the stay-at mother has say $100,000 in her CPF account when she can never take it out?

Differentiating between stay-at home mothers based on their CPF account is just stupid!

The CPF Review

With an election seemingly imminent in 2015, the Singapore government is currently carrying out a “review” of the CPF. Manpower Minister Tan Chuan-Jin threw the first salvo when he was quoted as saying this may meant a review to the much hated minimum sum.

According to the minister, one area being looked at is whether it's possible to have different minimum sums for different groups, depending on their needs. I only have one thing to say to that; forget about it! Singaporeans are not going to accept that as a solution.

The Singapore government need to understand the problem isn’t how much must be kept in the CPF due the minimum sum; it’s the fact that there’s a minimum sum in the first place. Whether it’s $1, $155,000 or $161,000 is kind of beside the main point when your money is struck there in the CPF!

Any changes to the CPF system must take this into account. The problem isn’t the amount we must keep in the CPF; the problem is that there is money belonging to us that we can never access because of the minimum sum policy.

Any review that doesn’t get rid of the minimum sum is an exercise in futilely. Having different minimum sums for different groups is like missing the forest for the trees.

One Step Forward, One Step Back

That’s what I think of Prime Minister Lee Hsien Loong’s announcement yesterday at the annual National Day Rally. Now, the newspaper are all crowing about how retirees in Singapore will now be allowed to withdraw money from their Central Provident Fund (CPF), but in the small print comes two big caveats.

a)      they can only withdraw a limited portion of their CPF savings in a lump sum (no word yet on how limited or even when they can start doing so), and

b)      the CPF Minimum Sum will be raised from S$155,000 this year to S$161,000 next year.

That is literally one step forward and one step back. On one hand you say retirees can withdraw money from their CPF but refused to say when or how much they can withdraw, and on the other hand you give a firm figure on how much the CPF Minimum Sum will be raised to and even give a date on when it will be raised.

On second thought, change that. That's not one step forward and one step back! It’s one tiny step forward, and one giant leap back!

Not Our Money

How Much Interest Must Singaporeans Earn On Our CPF To Be Able To Meet The CPF Minimum Sum?

With a summary judgment hearing set on 18 September, you have to give blogger Roy Ngerng credit for insisting to talk about the CPF. The above is the tile of his latest post which he argued again on the unfairness of the CPF system.

I will leave the argument on the fairness of the CPF to other people and give an advice to all Singaporeans; stop thinking of the CPF as your money!

The Singapore government may argue otherwise but for me, it is very simple. Till I can touch, move and withdraw my money from the CPF, it is not mine. Honestly, I never thought of it as mine to begin with.

I will probably never hit the amount of $155,000 (or the Medisave Minimum Sum of $43,500) unless I don’t buy a house or use the CPF for anything, but so what? You can’t lose something that was never yours right?

Maybe that’s why I’m not as hung up about the CPF Minimum Sum as most people. The government are just keeping me from something that was never mine (or yours) to begin with. 

It's Not Our Money

Remember last week when I commented on a video where a retired woman met her MP, Hri Kumar, to ask for a way to get her CPF money? Well, Senior Minister of State for Manpower and Health Amy Khor to issue a statement to “clear” the air.

According to her statement, the retiree in question, Ms Irene Yap, was mistaken as she “does” have some avenue to withdraw her Retirement Account (RA) Savings. She could either apply to receive monthly payouts from her RA or withdraw her RA savings in a lump sum, provided she had property to pledge.

The only thing this statement “cleared” is that I am right. Senior Minister Amy Khor has just admitted that the CPF in my account is not my money. Why else do I have to pledge my property to take out my money?

If my CPF money is really my money, surely I should be able to take it out. If you’re saying I can’t because of the Minimum Sum, which is $198,500, that’s something; but if you’re saying I can’t because I didn’t pledge property to take it out, that’s something else entirely!

I have to ask (and I don’t think I’m alone) why in the world do I have to pledge my property to take out my money? That’s makes no sense. However, if it’s not my money; then it would make perfect sense.

So the only thing Senior Minister Amy Khor has clarified is that I had been right all along. The CPF savings is not our money.

The Answer Is YES!

Should PRs Leaving Singapore be Allowed to Keep All of Their HDB Sales Proceeds?

This is the title of an article that first appeared on the MoneySmart blog. The question of the article is whether Singapore Permanent Residents (PRs) should be allowed to withdraw all their CPF money and Housing and Development Board (HDB) sales when they leave Singapore.

In my mind, the answer to that question is simple; YES!

Of course they should be allowed to withdraw all their money. What's the reason foreigners are coming to Singapore in the first place? They are here to make money. So once they are done, they will want to take their money out when they leave Singapore. What's wrong with that?

For Singaporeans who think they should not be allowed to do so, think about this; what will happen to the money if they are not allowed to do so? The money in their CPF will stay in the CPF! Do you think the Singapore government will move that money to the accounts of Singaporeans? Dream on if you think the answer to that is a "yes".

Singaporeans have little to no control over the timing and amount of their CPF money they can withdraw and many Singaporeans are angry with the government on this. Let's not allow the government to do the same thing to our foreign workers as well. 

Minimum Sum Requirement

With all the press given to it, you would be forgiven if you think the CPF issue is only about the legal action taken by Prime Minister Lee Hsien Loong against Roy Ngerng. You would be wrong however and a video doing the rounds in Singapore show why.

In the video, a retired woman met her MP, Hri Kumar, to ask for a way to get her CPF money. With the new the Minimum Sum requirement, the 76-year old retired teacher is now unable to access her retirement fund. The main problem with the video wasn't the complain by the old woman, it's a common site nowadays with the CPF, but the fact that the old woman is being penalized for keeping her money in the CPF.

The common wisdom in Singapore dictate that you cash out your CPF the first chance you get. Whether it is 55, 60, 65; the moment you reach the age, you cashed out your CPF and get your money in your hands. This retired woman did not. Whatever the reason, maybe she thought her CPF money would be safer with the government, she kept her money in her CPF and now probably can't ever access it.

This is a huge problem for the Singapore government. The Minimum Sum requirement is exactly penalizing Singaporeans who trust the government the most! Singaporeans who did not cash out their CPF, like the Singapore government encouraged, are the ones who are suffering the most from the new Minimum Sum requirement.

Honestly, I don't really have much sympathy with the retired teacher. Yes, I know it sounds terrible, but she should have cash out her CPF the first chance she got. Not doing so was a stupid and silly mistake to make and now, like it or not, the Singapore government need to tweak the Minimum Sum requirement for people like her. Not doing so would cost them big time in the next election. 

The Main Problem With The CPF

As an estimated 6,000 Singaporeans gathered at Hong Lim Park to attend the “Return Our CPF” protest, I am going to say something that might cause some offence to the speakers at the protest; "They are missing the plot!" As the many speakers at the event raised many valid questions on the CPF, one thing has not changed; Singaporeans still don't know what is happening to our CPF money.

To me, that's the big question of our CPF.

The speakers at the protest, organised by blogger and activist Han Hui Hui, seem more interested to question the low interest on the CPF, the inability to opt out of the Minimum Sum requirement, and the age citizens are allowed to withdraw their CPF money; however many are skipping on the problem of what is the CPF investing in. To me, that's a mistake.

No one knows where our CPF money is being invested in, and for me personally, that's more important than the "low" interest of the CPF. I mean if the investment is not panning out, then there's a reason for the "low" interest". Singaporeans will not be happy but the majority will understand. The problem is the question of what and where the CPF is being invested in and how well (or not) the investments are doing. To me, that's the big problem of the CPF.

In some countries, they are very clear on what and where their retirement funds are being invested in. In Singapore, this is a black hole. That's the main problem with the CPF. 

The Roy Ngerng Problem

When Prime Minister Lee Hsien Loong initiated legal action against Roy Ngerng over remarks the blogger posted alleging that CPF monies held in member accounts had been criminally misappropriated, it seems like another classic case of the Singapore government using the courts to silence their critics.

However, to everyone’s surprise, the PM's defamation suit has quickly become a PR disaster for the Singapore government!

Faced with a lawsuit in the High Court, where the typical minimum value of claims for damages is $250,000, Ngerng decided to raise money through crowd-funding in order to fight the case. In this “David and Goliath” matchup, Singaporeans has responded to his plea to the tune of $72,000.

Just to prove this was no joke; Ngerng published the transaction history of his bank account on his crowd-funding platform and it showed that thus far, 1,104 people had contributed more than $72,000 to Ngerng. This has exceeded his target of $70,000, but the thing that caught everyone’s attention is the fact that Ngerng has managed to get the sum in just 4 days!

Ouch! That sum has lay to rest any idea the Singapore government has of the lawsuit shutting Ngerng up. In fact, the show of support from Singaporeans has given the issue new life; something the lawsuit was designed to avoid in the first place. In short, the defamation suit has boomerang on the government and the longer the suit is there, the more publicity Ngerng’s stance on the CPF will get.

So I think PM Lee needs to quickly decide if the lawsuit is worth the trouble. I don’t think it is and if the PM agrees with me on that, it would be better if he just cancel the lawsuit. Let’s be serious; Roy Ngerng is just a no-name blogger. There’s no need to make a hero out of him.

Defense Is Not Enough

One of the fallout of the ongoing defamation case between Singapore blogger Roy Ngerng and Prime Minister Lee Hsien Loong is that the Singapore government has been forced to come out and defend the CPF scheme.

In a way, this shows the effect Mr. Ngerng’s complains has on Singaporeans and how most Singaporeans (silently) agree with his assessment. Let’s admit it; would the PM bothered to sue a no-name blogger if no one agreed with him?

Now it is good that the Singapore government has come out to defend (very strongly in some cases) the CPF scheme. In my view, a debate on the pros and cons of the CPF scheme is good for everyone. However, it is not enough. For the government’s logic and explanations to work on Singaporeans, they need to do one thing; get Singaporeans on board on the Minimum Sum!

In the past, Singaporeans can take out all their money in the CPF once they reached 55. Now they can’t because they must keep a certain amount in the CPF, the Minimum Sum. Of course, this is not even counting the Medisave which most Singaporeans can’t touch.

The Minimum Sum is the millstone here. This is especially so when about 55% of the CPF account holders are not able to meet the Minimum Sum. This means more than half of current account holders will not be able to take out “their” money when they reached 55. The government needs to convince Singaporeans (somehow) that the CPF is still their money even though some of them will never be able to touch it.

Yes, it’s a fool errand but they have no choice in the matter. Most Singaporeans, including me, do not think the CPF money in our account belongs to us. How could it be when there’s money inside we will never be able to use?

The Singapore government needs to do more than just give explanations and defend the CPF scheme; they need to convince.

Another Rise

Recently, the CPF raise the minimum sum (again) from S$148,000 to $155,000. Many Singaporeans are unhappy at this widely expected move and the blogsphere is filled with articles condemning the increase

I don’t understand why Singaporeans are so unhappy.

I don’t understand why because I can’t understand how any Singaporean can still think that we are ever going to get our CPF money. I have never thought of my CPF being “my money”. How can I say that when I can touch, move or take out the money? Getting the money when I retired? Forget about it! How many times has the Minimum Sum been increased already? I lost count years ago. 

So I see the latest increases in the minimum sum as a non-issue. The Singapore government want to raise the minimum sum, go ahead. I can't do anything about it and well...it's not like I'm ever going to see the money anyway. 

High Saving, High Worries

According to an international survey conducted by the Aviva Consumer Attitudes to Savings, Singaporeans are more inclined to save for their future than people in India, China, the U.S and the U.K. However, despite their high savings, the survey also noted that most Singaporeans have worries that they do not have enough for retirement.

 

To Singaporeans, the results of this survey will come as no surprise. The main reason is that in Singapore, we have rising cost of living along with little government spending on social benefits. It’s common to see old men and women in their 70s and 80s along the street hawking tissue papers or working as cleaners just to get by. The proud lack of a welfare system (for the government) and the policy of increased immigration (which leads to higher cost of living) have made Singaporeans turned more and more to savings. And that might still not be enough for retirement.

 

As for our CPF…well, the less said of it the better. I personally have no idea when I will be able to get my hands on my CPF money. So this survey which shows that despite our high savings, Singaporeans still worried about our retirement?

 

Par for course in this country.

Strange New Rule

Ever since Workfare came into being, there had been a lot of criticism from Singaporeans. Now I have to add my voice to it.

I know someone who earned about $800 a month. The way Workfare work is that if he managed to find work for 3 straight months, he is entitled for the Workfare. Seem easy enough right? It used to be, but not now.

According to him, his Workfare didn’t come in this month and when he called the CPF, he was told he is now considered a self-employed person. Why? The CPF say he is a self-employed person because he has a bus-driver vocational license. As he only speaks mandarin, I thought he made a mistake. I don’t have the exact numbers but there must be at least 50,000-60,000 people in Singapore who has a taxi or bus license, surely the CPF can’t consider all of them to be self-employed!

So I made a call on his behalf to CPF. Ho and behold, he was right! The CPF do consider him a self-employed person because of his bus-driver vocational license. In fact I was told he had to go to LTA and get a letter from LTA stating he is not self-employed.

That is just weird. How is LTA supposed to do that? LTA is in charge of roads and stuff like that; how are they supposed to know a man’s employment history? What’s even stranger is that this guy I know can’t own a bus. Buses can only be owned by a company or business in Singapore, it cannot be under a person’s name. So even if he is using his bus license, he can’t be self-employed because he cannot own a bus! He must be working for someone.

Why does the CPF think that just because a guy has a bus license, he is a self-employed? I know of many people who get a taxi or bus license as a “just in case” policy. They get it, they renew it, but they don’t use it. Are they ALL self-employed?

That’s insane! Why is the CPF making it so difficult for people to get Workfare, a scheme that isn’t really well-loved in the first place! Who in the CPF thought up this special insane new rule? The CPF should get rid of this new rule as well as the genius who thought it up.

WIS Scheme Does Not Work

After 5 hours of debate, it was proudly reported in the Strait Times papers today that almost all MPs who debated about the minimum wage in parliament yesterday argued that implanting a minimum wage in Singapore would do more harm than good.

Seeing that the Strait Times papers is a government-owned paper, this is not surprising. However if you read between the lines, it also tell you something else. Simply, what Singapore has in place right now does not work!

Instead of a minimum wage, Singapore currently has something called Workfare Income Supplement (WIS) scheme. The WIS is a regular payout given to encourage low-wage workers to stay employed. On paper it sound like a good scheme, but unfortunately the Singapore government shot itself in the foot by putting a large part of the Workfare funds into the worker’s Central Provident Fund (CPF).

Considering that the average worker gets about $80 a month in cash from Workfare, it’s no wonder most people (including it seems some PAP MPs in parliament) feel that Workfare doesn’t help low-income workers. Think of it this way; if the Workfare (as it is) works, why is there a need for a 5 hours debate in parliament?

The Singapore government can argue all it wants about NOT implanting a minimum wage in Singapore, but there’s one thing they can’t get away from. The WIS scheme as it is does not work.

Good Numbers But...

With some fanfare, the Singapore government announced that Singapore's economy grew 17.9% in the first half of the year. A superb number…that most Singaporeans couldn’t care less about.

The reason is very simple; most Singaporeans had not received any benefits from it.

With a number like 17.9, you would expect that things are rosy and Singaporeans would be upbeat about the future. Not even close! In Singapore, most Singaporeans are now worried about their jobs which are under threat from free-flowing intake of foreign workers; housing prices that are too high for them to buy; public transport that are more expensive and more crowded than before; flooding in the city which the government claim is unstoppable etc.

Frankly, if the Singapore economy did grow by 17.9% in the first half of the year, I (like most Singaporeans) sure didn’t notice it. The best thing about the 17.9%?

This is an election year so I won’t be surprise if the government “suddenly” decided that Singaporeans should received a bonus payment to their CPF account just before the election due to the good economic numbers.

Choice

In my last post, I said that Singaporeans should be allowed to sell off their flats for cash if they want to. My position is simple; if the flat is yours, then you should be allowed to sell it if you want to.

By that same token, the CPF is supposed to be your money so if you want to use it to invest in stocks, you should be allowed to. That’s why I strongly disagree with the suggestion that the CPF Investment Scheme (CPFIS) be stopped.

During a ministerial dialogue, a resident claim that that he had lost some $350,000 in his CPF account after investing in shares and suggested that the CPF Board stop allowing members to invest in shares and risk losing their retirement nest egg.

Now I’m sorry this man lost so much money in stocks, but that got nothing to do with the CPF. It’s his choice to invest in the stock market, and it’s hardly the CPF fault that he lost the money. If you are afraid of losing your nest egg, then don’t go into the stock market.

I for one never used CPFIS, but the option is there. The matter here is “choice”. You have a choice of entering the stock market, that doesn’t mean you can blame CPF if you lose.

Better to Die than to Fall Sick

One of the blog I read constantly is "Diary of A Singaporean Mind". The writer goes under the identity of Lucky and I find him to be one of the better writers in the Singapore blogshere.

His latest article is on rising healthcare cost in Singapore. In Singapore there is a saying that it’s better to die than to fall sick and the recent H1N1 crisis show this to be true. A man who went for H1N1 testing had to fork out $214 for a test that turned out to be negative. You read that right; a $214 bill for just one test. However that man can consider himself to be lucky, another man had to pay $1000 for a 9-day stay in hospital due to H1N1. When asked about the matter, the Singapore Ministry of Health (MOH) said that they had already subsidized the bill up to 80% and that the bill should be $5000!

A $5000 bill for a 9 day hospital stay! That comes to $555 per day! Any wonder why people say it's better to die than fall sick in Singapore?

The Singapore government may argue that Singaporeans have MediSave and MediShield, but most Singaporeans (including me) consider them part of the CPF money which we will never see. What the Singapore government should do is look at the ridiculous prices hospitals are charging; a $5000 bill for 9 days in the hospital and $214 for a test, I would love to know how the hospitals came out with these numbers.

The Great Singapore Fire-sale

The Great Singapore Sale is coming early this year as Singapore’s Temasek is expected to sell, sell, and sell in the coming days. That’s what you get when you make bad investments in the tune of around $1.2 billion. Bye, bye $1.2 billion of our money.

Temasek’s investments in the ailing Merrill Lynch is making life hard for the fund as the investment has caused Temasek to suffer part of the $1.2 billion loss. Already, it had to sell off an Indonesian bank to offset its exposure and more sales are expected. Merrill shares have fallen 11 percent since Temasek invested $4.4 billion in the firm and chances are its’ shares will continue to fall. A good way to see this is Temasek’s decision NOT to exercise its option to buy another $600 million worth of Merrill shares last month after the Wall Street bank's shares fell below the option price of $48. This clearly means that Temasek believe the price will come down some more.

Reports now say that Temasek will have to sell one of their banks in China to offset any potential problems they may face in the future as the sub-prime problems in America are still ongoing. Add this to GIC (Government of Singapore Investment Corp) bad investment (of $10 billion) in Swiss bank UBS; this look like a bad, bad year for Singapore.

I’m afraid its’ a little too late to ask questions on why we were so eager to invest in the West when the US are on the verge of a recession, and it’s a little useless to ask as well. After all, it’s not as if anyone is going to bother answering question from ordinary Singaporeans why they are wasting our public money.

Bye, bye $1.2 billion. You could have done so much good. Get ready guys to part with our CPF money to pay for Temasek's and GIC's mistakes.

Singaporeans unhappy with CPF changes

A month after the CPF changes were announced by the Singapore government, the government still has a long road to go to convince Singaporeans the changes are for the good of the people.

After a three day debate in Parliament on CPF reforms, Manpower Minister Ng Eng Hen said that the changes were fundamental, long-term, and will better prepare Singapore to support its larger older population as all CPF members will be better off with the higher CPF interest rates.

Again the government push the good without explaining the bad! Most Singaporeans have no problem with the higher CPF interest rates, what Singaporeans are unhappy about is the other parts of the changes. Raising the draw-down age for the minimum sum from 62 to 65 (when most people believe they are not going to live that long); the government making buying annuity compulsory (which the Singapore government openly admit gives bad returns); these are the problems!

Explain, and more importantly, convince Singaporeans the need for these changes. Until that happened, anything else coming from the minister's mouth will be nothing but air.

A "V" bonus?

In another show of how unsuccessful and unpopular the CPF changes are, the Singapore government now wants to encourage Singaporeans to voluntarily delay the draw-down of their CPF Minimum Sum by throwing in a sweetener.

Manpower Minister Dr Ng Eng Hen annoounced that Singaporeans will get a "V Bonus" - that is "V" for Voluntary - for each year they defer their draw-down. Prime Minister Lee Hsien Loong had earlier said that Singaporeans would get a one-off D Bonus, if they defer their CPF Minimum Sum draw-down age, to beyond 62. A one-two punch if you will.

Will this apleased Singaporeans and rid them of their angry? I don't think so but hey, it's better than nothing! Keep it coming!