Leong Sze Hian
I refer to the article “Singapore envies Kiwi lifestyle” (New Zealand Herald, Feb 9).
It states that
“The bait was better working hours, cheaper cars and housing – and in three weeks thousands from Singapore have registered their interest in living in New Zealand.
An Immigration New Zealand pilot project aimed at attracting Singaporean migrants has resulted in over 1000 registrations each week since it was launched last month, with 3565 potential immigrants having registered their interest in just three weeks”.
According to another article “Survey finds that workers in Singapore put in longest hours” (The China Post, Jan 12),
“Singapore’s workers continue to lead the pack when it comes to the number of hours they put in at work, according to a report by the International Labor Organization (ILO). The report puts them at the top of 13 economies in the group’s Global Wages Report for 2008-09, surpassing even the notoriously hardworking Japanese and Taiwanese”.
Singaporeans are among the hardest workers in the world, but do not have enough, upon retirement, to live in comfort in their home country. Is there any wonder why they should choose to migrate to other places that are much more affordable?
Cars for example, are so expensive in Singapore that a car owner may end up with $2 million less in retirement. This is calculated from an estimated cost of $1,000 monthly compounded at 6 per cent over 40 years.
To explain the poverty of retired Singaporeans, we’d have to explore the possible link between the 2 largest entities that effectively ‘lock up’ the wages of Singaporeans – HDB and CPF.
Increasing flat prices decrease the amount of CPF upon retirement
In line with the government’s policy of letting Singaporeans use their flats for asset enhancement, many Singaporeans have bought their flat, using the bulk of their CPF in a typical 30-year mortgage, in hope that the continued increase in property prices would serve as a boon during retirement.
By pricing flats under ‘market subsidy’ pricing, asset ‘enhancement’ schemes such as upgrading inevitably become a burden to Singaporeans who have no choice but to use even more of the CPF for their upgraded HDB flat. In addition to that, HDB has never disclosed the cost of building flats. Thus, flat pricing, and the amount of CPF ‘locked’ in it, is really at the whim of property speculation.
With 80 per cent of the population living in public housing, and with a bulk of a typical homeowner’s CPF savings ‘locked’ by the flat, social security for the average Singaporean is contingent on HDB policies. When you can’t pay your mortgage, you may lose your home and maybe your life CPF savings too.
Consequently, with the bulk of their CPF ‘locked’ in unliquidated assets, many Singaporeans end up with very little CPF when they retire.
CPF gets transferred out of Singaporeans’ hands, into HDB’s pockets
When the HDB sends a notice of Compulsory Acquisition to flat owners, 90 per cent of the flat’s valuation is used to offset the loan arrears; HDB makes a profit of 10 per cent of the valuation. While it is understandable that HDB as a statutory board has to run on a sustainable business model, it seems counterintuitive that a public housing board should profit from the destitution of its citizens.
For example, flat owners in addition to losing 10 per cent of their flat valuation to HDB, are only given one month to vacate their flats. Why does the HDB not give them a bit more time to find alternative accommodation?
As a public housing authority with the mission to provide affordable housing for Singaporeans, is the HDB not in a sense, in breach of its fiduciary duty, in this arbitrary practice of ‘pinching’ 10 per cent of the valuation?
Are there any public housing authorities in the world that takes an additional 10 per cent profit on foreclosure?
Parliamentarians may like to raise this issue with a view to refunding the ‘pinched’ valuation to all past foreclosed flat owners.
Why it’s almost impossible to get enough cash upon retirement
Effective last year, if you sell your HDB flat after age 55 to downgrade to a smaller flat and to monetise your flat for retirement, any CPF utilised plus accrued interest has to be returned to the CPF account if the CPF Minimum Sum (MS) has not been met.
With the current MS at $117,000, what this policy change means is that this sum cannot be used to purchase the smaller flat downgrade.
Why are we making it harder for Singaporeans to downgrade to monetise their flat for retirement?
Many Singaporeans subscribed to the call for asset enhancement by purchasing HDB flats – only to be hit by the policy change now, which in effect, may result in their inability to cash out of their “enhanced” HDB asset.
The CPF Minimun Sum (MS) was raised from July 1, 2009, for those aged 55 years, to $117,000, up from $106,000. This is an increase of 10.4 per cent, much more than the inflation rate for the previous year, which was 6.5 per cent. How can the increase in MS be “an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement?”
Similarly, the MS was increased by 6.4 per cent in July 2008, from $99,600 to $106,000, when inflation was only 2.1 per cent in 2007.
With the current recession, some of those reaching age 55, may have lost their jobs or failed in their businesses, and thus a large increase in the MS, may cause some financial stress to them. As last year’s increase is the highest in the history of the MS scheme, at its current quantum of increase, does it mean that by 2013, the MS may be about $161,000 ($117,000 now plus $11,000 increase for 4 years)?
Can anyone afford to retire in Singapore in future?
The Longevity Insurance Committee’s (LIC) CPF Life report last year only projected a MS of $134,000 in 2013 (chapter 4). Adding the projected Medisave Required Amount (MRA) of $36,000 in 2013, does it mean that those reaching age 55 may only be able to withdraw $5,000, if they have less than $197,000 (MS $161,000 plus MRA $36,000) in their CPF? How many Singaporeans will have more than $197,000 in their CPF in 2013?
The answer can be found in the LIC report: only 60 per cent are projected to have at least $67,000 in their CPF in 2013.
At the current rate of increase of $15,500 per year ($11,000 MS + $4,500 MRA), will the combined MS and MRA be $352,000 and $507,000 in 2023 and 2033 respectively?
In conclusion, is it any wonder why so many Singaporeans may be thinking about migrating to New Zealand?
Photos courtesy of Wilfed Wong
Related posts:
- Higher HDB prices good for Singaporeans?
- Are more Singaporeans financially stressed?
- Are Singaporeans clueless about retirement, and if so, why?
- We are Singaporeans, race should not matter?
- CPF Life: Helping Singaporeans to decide?
Dear Oracle,
I ask you for the fourth time to answer my 2 questions below in simple English:
1. What is your solution?
2. Finally you said that I am wrong to assume that you are not a Singaporean and that you are a foreigner. Then what are you?
oh well i’m part of that crowd who puts in many working hours and etc.. yet i still enjoy my life in SG.. why buy a car if it’s expensive in the first place? Why jump for things that i cann’t afford. I booked a 200+ k flat and living in it just fine. without all the nightmare you described above. Singaporeans are such a greedy lot that will never be satisfied no matter where they go… live within your means and spend wisely.
Dear thealien, i agree with you that we should not be greedy and always live within out means and spend wisely. However, if you were to look at this article above closely and think for a moment, are you really getting what your money is worth?
Yes, we don’t have to buy a fanciful expensive car. Lets take a Toyota Altis for example, $70,000 (just a rough estimate). For $70,000 in australia you can get the same car, and at the same time have some remaining money for future maintenance works. Also, you said you bought a $200k plus flat and is living happily. For the same amount, you can get a bigger flat and live even happier don’t you think?
I feel that the author is just trying to state why are many Singaporeans migrating, he isnt describing nightmares that everyone faces.
To : khehBRYAN.
what u said makes sense there my friend :)
take me for example me selling my 5 room hdb at $330K
go Australia buy 350K and pay $100K first
balance 250K utang after 4year come back Cut my i/c take all my cpf and pay the remaining balance ($250K) i havent plus my wife money after she Cut her i/c so at the end we no utang for the rest of our life :)
if we stay here utang until 60 years…old
cheers!
To: T A Balasingam
Are you trying to flame or something? I don’t understand the intention of your questions. (Pardon me, i do not read all the articles here)
But if you are referring to the above article, i know where to get the answer for your 1st question.
Ans: Please read the title
We are creating an elitist society.
Go check out the latest intake of medical students, how many students are from HDB (the heartland), versus how many living in private properties, and how many PR or Foreigners.
School fees is about $20k per annum for medical students.
http://www.nus.edu.sg/registrar/edu/UG/fees.html
Notice how many good schools are located along the Bukit Timah belt.
Did your kid’s good A level results guaranteed a course of his/her choice in a local U?
We see but we choose to be blind.
Vote wisely before it is too late.
Cheers.
Hi Shortass,
Can you tel me which decent uni in the world don’t charge high fees and don’t choose the best applicants for their courses?
To all you guys think that they have a bad time in Singapore because everything is so exensive… think again. Nothing is free in this world. Of course, Australia is wonderful – such a big mass of land (nearly China’s size) but population of less than 20 million compared to China’s 1,300 million. With natural resources in abundance, they, of course, can have everything for nearly free. What about Singapopore, so small that it cannot be called a country but a city state, no natural resources and only people. So we have to work doubly hard. So bad luck if you are born here but what other choice? We have to accept working hard and more than other people in those rich resources country. I even heard the local office boy in Bahrein can air-travel by lst Class. Can we? Bear in mind, everytime our Government subsidize some poor chap here and there, not all come from the State’s investment profit, mainly they come from us – the tax payer. If any opposition says they are going to give you this free and that free if elected as Government, think hard. How long can our savings last. Investments that GIC or Temasek put in will bring in at most 5 to 10 percent per annum. The higher the return the more risky it will be. And when the world faces an economic crisis like last year, everything collapse. To put the blame on the Government on everything is not fair. You child cannot get into a local university, was it because you cant afford or his result wasnt good enough or he had selected a course of study which his grades could not put him through? Many taxi drivers and poorer citizens have seen their children graduated from universities despite the high costs. Admittedly some could not make it because of costs but in any society, it is impossible to have perfection. Universities need to maintain a certain standard and must attract some of the best lecturers using money and facilities must be top grade and all these will bring up costs. I am sure if only the Singapore Government has a gold mine like what the Malaysian Government has in Petronas (their oil company), things may work out better. But who knows… man is never satisfied..correct?
hi guys.
i been in Australia for almost 1 month here and loving every single day and planning to buy my own house during this six month time.
never in my life be so contented like this.
well i never regretted leaving singapore
the only regret is why i take so long to migrate out!
basically i am very happy here
cheers!!….cheers!!! and cheers!!
If there is anything we could learn from history, it’s the ills and moral values that are the innate nature of humans. Guys, great civilisations come and go. Even the greatest of all heroes had both succeeded and failed. If you have studied those great empires and their systems and framework, you would have noticed that they are a lot like what we have today, of course, minus those as a result of cultural, economical and technological advancement. Ancient virtuous emperors in China had the democracy system, whereby the throne successions were decided by merit of their successors and not by inheritance within the family. Even the Romans had a voting system and senate and the fact that the idea of democracy was already around during Socrates and Plato’s time. Great empires with its seemingly impeccable systems, finances and military strength appeared and disappeared.
Unarguably, it’s a result of the innate nature of humans. It’s the hungry people who show passion and determination. Discontentment and dissatisfaction creates dissidence and affluence fuels either greed or complacency. It’s a vicious cycle that will haunt the humans as long as we don’t do something about ourselves. We are always comparing ourselves with the privileged but never against those who are underprivileged. Always wanting more and better will inevitably lead to dissatisfaction. Three meals and a roof on top of you are bare minimum instead of something luxurious now. Sending your kids to the best school and having more in your bank account are your priority, and we will get it at all costs. Driving around in a sedan instead of taking a public transport is a must have.
I have tried very hard, but alas unable quote example of fellow Singaporean who died as a result of hunger, who did not receive financial assistance despite their genuinely dire conditions (no cash, no asset, handicapped). We are not living in a large country of abundance, and we have to fight on using what we have. What we have indeed gone wrong was the over emphasis on stringent meritocracy system without empathy, morality and humanity to go with it. We have trained the world first class academicians and scholars but not those of the likes of Bill Gates and Steve Jobs, who were both drop outs. It was either you study hard or you perish in this country that causes some of the unhappiness in society. Though these less fortunate group does have other avenues, It was the implementation and execution that had gone wrong in the process of streaming the less academically inclined students and to brand them as incapable, unintentionally, and channelling the best resources to the better group of students. The branding had gone wrong and it has been proven over and over again. We did not do enough to help these groups of people to grow in the areas they could excel in. I am seeing some changes to these now, although at a slower pace. Everyone who have put in effort should be fairly given another chance, including our leaders.
Really depends on what the person is looking for.
I’ve been living in Australia these last 9 years and I have come to realise Singapore is home not because of the passport I hold but because that is where I grew up in. All those little memories, all those little things.
To top it all off, the tax rate here is atrocious. =)
Yes. I detest the weather back on the little island but really… every country will have their warts if you are looking out for them… As for why everyone is flocking to New Zealand… have you heard of the old saying “The grass is always greener on the other side?” well you can laugh at the literal connotations..
they are just too poor, not everyone