Leong Sze Hian -
I refer to media reports (“Second chance to join CPF Life”, ST, Aug 17) about the amendments to the CPF Act passed in Parliament in August.
CPF savings left unclaimed for six months upon the CPF member’s death will be moved into the Ordinary Account (OA), which pays a lower interest than that for the Special (SA), Medisave (MA) and Retirement (RA) Accounts.
I am somewhat puzzled as to the rationale to pay the OA’s lower 2.5 per cent interest, instead of the higher 5 per cent on the first $60,000 and 4 per cent on the balance, in the RA and MA, of CPF accounts which remain unclaimed.
Why penalize the claimant by paying a lower interest, as it is perhaps already bad enough, that claimants for possibly reasons beyond their control and of no fault of theirs, may in a sense, already be disadvantaged by the delayed claim?
For example, if the deceased CPF account has $200,000, the difference in interest between the OA and RA/MA interest rates, is $25,449, for seven years.
I would like to suggest that the CPF Board reconsider this policy change, as the amount of unclaimed monies is only about $2.4 million a year. This would translate into interest savings of only about $48,000 a year for the CPF Board, assuming an average RA/MA rate of 4.5 per cent on unclaimed monies.
In contrast, every dollar of interest lost due to the reduced interest, may make a difference for nominees who may be widows and orphans from lower-income families.
Auto-inclusion into the CPF Life scheme for those who have less than $40,000 at age 55, but at least $60,000 at age 65, may mean that lower income retirees may have lower monthly CPF payouts at age 65, because the CPF Life annuity monthly payout may be lower than the original CPF Minimum Sum payout.
Based on the projected CPF RA interest of 4 per cent and 5 per cent on the first $60,000, a person with $36,835 or more at age 55, may hit at least $60,000 at age 65.
For those who continue to work and have CPF contributions after age 55 plus the accrued interest, many more of those with less than $36,835 at 55, may also hit the $60,000 cut-off point at age 65.
For example, a person with $25,000 at age 55, and monthly CPF contribution of $122, will grow to $60,000 at age 65.
The amendment in the CPF Act to include CPF contributions after age 55, into the CPF Life scheme, for those who were unable to meet the prevailing Minimum Sum (currently $123,000) at age 55, may mean that less CPF monies can be withdrawn from 55 to 65, and also less bequest to beneficiaries on death, depending on which CPF Life plan is chosen.
As to the option to pay CPF death proceeds to nominees’ CPF accounts, instead of as cash, it may cause some hardship to nominees (beneficiaries), if they have an urgent need for a lump sum of money, such as for a medical emergency, as withdrawals from the nominee’s CPF account are subject to the CPF rules, which are subject to change in the future.
The amendments to the CPF Act, may in totality signal a significant departure from a fundamental principle – that CPF members should be allowed to withdraw at least a minimum monthly payout to enable the member to survive. Historically, and up to now, a minimum monthly payout adjusted for inflation, is given to members, regardless of how little one has in his or her CPF at the draw-down starting age.
However, with CPF Life, the monthly life annuity may be simply pegged to the CPF balance one has, without any consideration as to how little the monthly payout may be.
To illustrate this with an example, $60,000 in CPF at age 65, may pay a monthly life annuity of about $330, when the “minimum monthly payout to enable the member to survive” may be say $850 in 10 years’ time. So, instead of withdrawing $850 monthly for about 7 years, one would get about $330 for as long as one lives under CPF Life. But, how does one survive on just $330 a month?
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another great article.
cpf is broke
CPF only wants the following:
1. ways to entrap your cpf monies with new schemes
2. pay out minimal interests if possible
3. make sure your ordinary account cannot accumulate much so that you need to fork out cash if you need
You would not be able to withdraw anything unless you die, full stop.
cpf only wants to entrap or exhaust your monies.
why would they want to pay more for interest? they will find ways to minimise interest and maximise entrapment period.
by spliting your account into 3, most of them have to fork out cash to repay loans.
dream on.. you can only withdraw if you die, period.
This is, in my view, a minor issue. The Special Account is meant to help the CPF member build up the retirement nest egg. With the death of the member, the need to build up this retirement nest egg disappears. It is therefore fair to move such monies into the Ordinary Account. After all, the member’s family are free to claim the monies any time and should not be allowed to ‘benefit’ from the higher risk free interest rate that cpf offers…
let see..if/upon my death..i don’t claimed within 6 months..i get a lowered interest rates? do i looked liked leekingyou to you? can a deadman rise to seek his leftover cpf savins?
now let get the STORLEE straight..shall we?
upon moi belated demise..moi go to cpf board to claim whatever leftover..cpf in tamPENIS says it a nil ZERO balance..so no money to handover..no statements..no printouts…just a verbal tellin moi no needs to sign lark..nothin to handover$ a$ well
This is another hare brain scheme from the Government formed by the Pro Alien Party to save money for themselves, while creating as many “obstacles” as possible to prevent Singaporeans from seeing the CPF monies, and at the same time with other measures implemented to soak up what little is left in the CPF.
If this Government of the Pro Alien Party is given the mandate by the people, the least it should have done is to work FOR THE BENEFIT of the People whom they claimed has given them the mandate !!!
Instead, most of the policies put in place is done not for the benefit of the people but more for the benefit of the Government of the Pro Alien Party.
The CPF is a pyramid scheme that require an annual inflow of NEW WORKERS to contribute into the CPF – so as to generate sufficient gains to allow a smaller group of retirees leaving with their savings at the apex of the pyramid.
Unfortunately, the CPF Pyramid is broken when the population birth rate is in decline, and there are fewer and fewer NEW WORKERS contributing into the CPF pyramid.
At the same time, more and more retirees from the “baby boom” years are leaving the CPF scheme and drawing on their huge savings with compounded interests included through the years.
This has resulted in an INVERTED PYRAMID with a wide top of retirees and a narrow point as its bottom representing the reducing birth rate that was suppose to provide the required NEW WORKERS to support the withdrawals of the retirees.
The other hare brain idea introduced by the Pro Alien Party was to open the gates and allow more and more “FOREIGN TALENTS” to be citizens – and work to contribute to the CPF – and compensate for the poor birth rates.
Unfortunately, this flood of “FOREIGN TALENTS” do not necessarily stay to work in Singapore, and do not necessarily contribute anything into the CPF.
The negative effects are that these “FOREIGN TALENT” caused more disruptions to the employment and higher wage prospects of Singaporeans – putting more negative pressures onto the CPF system.
The CPF scheme as it stand is unsustainable, and the amount of money that the GIC and Temasek Holdings hope to make from investing our National Reserves cannot possibly pay for all the withdrawals due to every CPF account holder.
If only the US$100 BILLION lost by the GIC and Temasek Holdings were put into a sinking fund to pay for the annual premiums of a National Insurance Plan for all Singaporeans – it would have served the country better.
With such a National Insurance Scheme in place,
Singaporeans retirees could at least get to see their hard earned CPF monies before they fall sick or get into the coffin.
They change the rules to suit themselves.
This is how the current government works.
>>But, how does one survive on just $330 a month?
“If you were a poor person, anywhere on this planet, Singapore is the one place where you will have a roof over your head, where you will have food on the table. Even if you can’t afford it, we will have meals delivered to you.”
“How much do you want? Do you want three meals in a hawker centre, food court or restaurant?”
CPF hmm si li eh lui, si ah gong eh lui.
What people don’t know is that they will lower the SA rates from Jan 1 to the 10-year SGD bond rate + 1%. This is currently about 3.5%, and everyone will get less.
CPF aka Coffin Payout Funds. Dead peoples $$$ also want to cheat!!!
I am begining to suspect that either there are no more money left in our cpf savings or our reserve has been so badly depleted that they have to resort to all these ever changing hide n seek policy to confuse the people.
This is really a stupid article. If CPF is paying higher than what the local bank are paying for FD account so why make it an issue? If CPF is paying only OA instead of SA or MA interest that isn’t an issue either because CPF belongs to the country which represent every citizen.
Did any one realize under the PAP govt the effort to buy cheap sand from M’sia and Indo’sia to reclaim land had added much wealth to the country? What if we had a different govt and they did not reclaim land like what LKY did? Possible? Likely? Put this question to the opposition if you are fair to the govt.
No wonder seeing more and more old folks selling tissue papers, collecting cardboard and drink cans.
Agree with colortv.
break news central provident fund board had change their name to cut people fund board
complaint king,
You need to see beyond the interest rates offered between CPF and the bank. While it is true that the interest rate is higher than the bank, the CPF money is ‘not liquid’ compared to that in the bank. This is a critical point for discussion because many people ran out of cash, and yet they cannot use the CPF easily (presumably, you do not belong to this category). Even those who managed to scrap through, they think many times over (not twice) about raising children (Given that cost of living is the major issue today, why else do you think we are famous for low TFR worldwide ?). Then there are those who for some reason, are unemployed or unable to work (again, I don’t think you belong to this category). So, locking up the money for retirement, is not entirely meaningful, when they cannot make ends meet now. I put it to you that if today, policy makers give people the option to withdraw their entire CPF, most will do so.
All the many changes to CPF policies over the years only reveal that they want control over our money at all cost.
Our saving is do not really belong to us since we practically have no say over it. Every aspect – how much we can withdraw, monthly ‘allowance’, whether we want life annunity or not – is all ‘predetermine’ by the authority. It is getting more and more ridiculous by the year. Sigh…..
Yeah right, continue to buy sand and reclaim land… that will add wealth.
I wonder why the other counteries are not doing the same.
Maybe CPF needs the extra dollars to rescue Temasek by buying its bonds. Its the same ‘logic’ behind the decision to disallow those (including retirees and downshifters) who can afford HDB resale flats and private property from earning passive income from their private properties here and overseas. The over-arching message is: nly the govt is allowed to make money in Singapore. The rest of you be obedient economic digits and work till you drop dead.
In the original CPF scheme, when you reach 55, you are eligible to withdraw all your CPF balance. Simple, even Ah Pek and Ah Ma understand. Now you need to a PhD to understand CPF.
Even then, money in CPF which is rightfully yours is kept by CPF board and released to you in drips and drabs.
The government should be transparent and account for the billions in CPF board. Do not give a general reply but an audited P&L and balance sheet similar to those of public listed company.
Only then, we citizens can sleep peacefull knowing that our money in CPF board is still intact and not virtual/hell money.
Now pap resorts to “gerrymander” our CPF accounts, what a joke!!! We should stop all these nonsense by voting them soonest possible to avoid touching our very own savings, not theirs.
I mean voting them OUT!!!
complaint king “because CPF belongs to the country which represent every citizen.”
Now you have been brain-washed.
My CPF account number is my NRIC. It belongs to me. It is my money, deducted from my salary.
Pls… changes and changes ? Is it no many to pay out to the member ?
The CPF system is fundamentally flawed because it is based on one pool of funds to serve two main needs which are retirement and housing.
This gives laymen the impression that they are covered for retirement, having paid hundreds thousands of dollars into CPF, but in fact the bulk of it has gone into paying interest on their over-priced pigeon holes.
They should realize by now that with the current CPF system, unless you have a very above average income, you will either have money till a ripe old age, or you can have a roof over your head, but not both.
But it is a can of worms they’ve opened and cannot close because the only “saving grace” of such a system is if property prices rise even higher in future, so that people can recoup their interest costs and make some money out of their expensive properties, to fund their retirement, either from a reverse mortgage, or downgrading.
So if the goverment cools the property market too much, many people will be in negative equity and will lose all their “retirement” money.
This is obviously unsustainable.
So it is hardly surprising that the equation looks to be getting increasingly lop-sided. Some say that in the past it took 10 years income to pay off a HDB mortgage. Today it could take up to 30 years x 2 incomes, to do the same. This means for younger people today, they will struggle even more to fund their retirement.
“World-class” indeed. Choose wisely and prudently for your future.
When thinking of the losses suffered by our two SWFs, now wonder whether we would be paid any money when reaching sixty two years. May God help us poor little rich citizens, given our Govt’s propensity of ever thinking of ways to lock up our money, for them to lose more money in the name of investments, usually by their own people who are greenhorns with paper qualifications and nothing else.
Don’t know what type of system we have in Singapore. Everything so complicated.
Withdraw CPF money also complicated
Now, buy house also so complicated
Taxi fare also so complicated
Education system also complicated
Public transport fare also complicated
Apply for financial aid also complicated
……..bah..bah..bah…
These systems are created by talented people with top education and only they can understand.
Moi noob dun understand CPF.
Onli noe it wan my money.
ideally gahmen should create a minister’s pension fund or MPF. if you die, all your monies go to MPF, so that our poor ministers can lead a happy retired life.
see, problem solved! no need to worry about CPF complexities.
I dont care! I want to withdraw my CPF monies now!!!!! I dont want to wait for a certain minimum age to get btis and bits of distribution monies. I want all my CPF monies to be able to withdraw now.
Fed up with this garhment liao!!!!
I thought Garment is the one who want to lock our money in Special Acc and Medisave Acc and Retirement Acc. How come Garment only locks us when we are alive and don’t lock us when we are dead.
Very good in changing locks from time to time, men! Can like tat mieh?
complaint king
May i ask you, the reclaimation of the sea took how long to complete? What is the total cost for the project? Have you seen the original plan of what they had in mind for the reclaim land?
The UGLY truth of the Lee Kon You lead pap government is:
1. They concentrate on making small monies when the “big-guns” can go on lossing “BIG MONIES” but still fit their cushy butts in their self-allocated “Big-shot and Up-Shot cushy-chairs in Th and GIC, etc”!
2. That said, why did the overcrowded ICA charge $60 a passport but for 5 years instead of the former 10 years for $80? Small change right and cause more to go to ICA for applications and collection more often right!
3. Anymore examples of they small boys type of playground “play plays”?
the best is to see cpf money as NOTHING and forget all about it. meaning, don’t even think of counting on it for your retirement years.
start working hard & smart & think of ways to grow other money trees.
i just don’t see any hope in cpf anymore.