Leong Sze Hian /
I refer to the article ‘Why do it without my permission?‘ (New Paper, Jul 17).
OA transfer to MA?
The article states that “(Jerry Low, age 58) a retired bank trader got a surprise when the CPF Board transferred $10,000 into his Medisave Account (MA) without his permission, after he applied to withdraw $37,000 from his Ordinary Account (OA) in June this year.
Mr Low had chosen to not withdraw all his money from his OA when he turned 55.
He opted for a partial withdrawal, leaving some money in his OA as the CPF interest rate of 2.5 per cent was higher than what the banks were offering.
He could do this as his Medisave Account and Retirement Account (RA) had the required amount.
Since 2008, Mr Low had used his Medisave to pay for some medical expenses, whittling away his Medisave Required Amount (MRA), which was $14,000 as of Jan 1, 2008.
However, the required amount was raised to $27,500 as of Jan 1 this year.”
Another COF change nobody knows about?
This is not the first time that CPF policies have been changed without anyone knowing about it – no announcement in Parliament or the media.
For example, the change in the CPF Minimum Sum (MS) property pledge rule at age 55 was changed so that it no longer helps you to withdraw more money at 55, but only to be pledged automatically against any shortfall in the MS.
Therefore, if one wants to avoid what happened to Mr Jerry Low, any CPF funds that can be withdrawn at 55, should not be left with CPF. Otherwise, as the MRA is raised annually in the future, the OA monies left at 55 may automatically be transferred to the Medisave account to make up for any MRA shortfall.
Since the MRA was increased by $5,000 this year (from $22,500 to $27,500), if this rate of increase continues, the OA monies which, in the past, could be withdrawn at any time, may gradually be eroded as a non-cashable asset – kind of like more and more money that may be stuck in your CPF that you may only be able to use when you are sick!
I would like to thank Jane (not her real name) for bringing the above issue to The Online Citizen.
I am also reproducing part of Jane’s email on other problems that she has encountered with CPF below.
Parents divorce – no more 1st-timer?
“In year 2007, my fiancé’s parents divorced; and in order to still have a roof over their heads, my fiancé decided to buy over half the house’s share from his father, so that my fiancé and his mother could continue living in the home which they had lived in for 20 odd years.
As his father sold his share of the house to my fiancé, my fiancé and his mother would need to re-finance the HDB loan.
When applying for a new HDB loan, I believe HDB will review both parties’ income and age as well. Due to the fact that my fiance’s mum is working in a factory, her income is approximately $700 per month and as a result, her CPF contribution would not be enough to pay for the monthly home loan instalment Therefore, my fiancé decided to let HDB deduct the monthly instalments partially from his mother’s CPF, and a bigger portion from his.
My fiancé was only 22 at that time, and by getting a HDB loan with his mother, and buying over the share of the house from his father, his CPF was wiped out. Also, he won’t be considered a 1st timer should he want to ballot for a new BTO, as he’s now considered a co-owner of the flat.
Early this year, me and my fiancé decided to get a flat on our own, so that we could settle down. But I realized we wouldn’t be able to do so after all, unless we have at least $50k of spare cash. I checked with HDB, as well as my property agent, and I realized that our chances of getting a flat is lower than others as my fiancé is considered a 2nd timer, and chances are very low as HDB balloting would award more chances (95%) to first timers instead of 2nd timers. However, even if we are that lucky to manage to get a balloting number, I realized that by getting a new flat, and a new HDB loan with me, my fiancé would need to remove his name from the current flat he shares with his mother.
I understand fully the rationale of this as each individual is not allowed to hold on to ownership of more then one HDB flat.
We enquired with both HDB and my property agent friend about removing of his name, and what I found out makes me realize that getting a new flat for our future home is nearly impossible.
By removing his name from his current flat, whatever amount that he has used his CPF to pay for the flat – his mother would have to top up back in CASH, together with accrued interest. That’s hurdle number one, as it amounts to close to $40k already. However, even if we managed to top up the $40k back in CPF eventually, his mother might not be able to get a new HDB loan on her own, due to her age & income.
All these limitations and rules makes me feel that it’s a big burden which I definitely don’t deserve.
Since CPF is required to be contributed monthly so that we can use it for housing payments/purchase and even to use it when we are old, such regulations are forbidding young couples to get a new flat should he be so unfortunate that his parents get divorced.
At the rate that housing prices are rising, and the shortage of the supply, I really really pray that I could get a flat soon and then start my own family. But unless we have the cash ready to top up back into my finace’s CPF account, I think we wouldn’t be able to start a family on our own. Even if we did eventually manage to save $40k , by topping up into CPF, we might not have money for renovations or the purchase of furniture.
In this generation, I’m 24 this year, my fiancé is 26. I believe most of us believe that starting a family, means having our own home, and be financially stable. That’s why I feel that when one of the ministers mentioned that starting a family doesn’t necessary mean you need to have a home or be financially stable, I think that’s rubbish.
So I have a question, what’s the use of contributing to CPF, 36% per month, yet when we use it, end of day we have to top it back up, and the age for withdrawal of CPF is getting higher and higher.
I feel that, at the end of the day, when my life comes to an end, maybe all I could see and bring to my grave, is the yearly CPF statement only…
I hope to highlight to the public as well, about topping up of medisave account which happened to my father.”
No Medisave, no hawker license?
“My father turned 55 in 2005. During that time, he was allowed to withdraw the full amount of CPF he had in his ordinary account, which he did. However after doing so, CPF board has been constantly sending him letters asking him to top up his Medisave account. My Father refused to as he felt that the money would not be useful. Because, even if you maintained the minimum sum required for the MA, at any point if you were to use it for medical purposes, you would have to put in cash to top it up to the minimum sum. Which is why my Father feels that it is not necessary to top up his MA Acc.
I feel that CPF board ought to explain all this clearly to the public.
To add on: my father owns a hawker stall, and the government refused to let him renew the rental unless my father’s MA Acc is topped up to meet the minimum sum required.
I really do hope the government could do a detailed report on how exactly CPF works.
I’m now a working adult contributing to CPF monthly, and I’m contributing a lot, but I feel the uncertainty of making CPF contributions.”
P.S. Leong Sze Hian (and TOC) would like to thank Jane for sharing the New Paper article with us, as well as sharing her story.
@True Democracy,
I agree with your concerns about rate of influx.
How can we have an official press release how many new citizens are awarded citizenship since the election on a month by month basis?
More importantly, why such pertinent questions the majority seems indifferent to ask or know thus sabotaging the rest 40%?
We must push for Change .
The cut in employee’s CPF contribution rate from age 50 onwards amounts to an increase in tax for this age group since CPF contribution is tax deductible. I have written several times to the feedback unit but no reply so far. The Gov’t said this has to be reviewed carefully? If the Gov’t is sincere about helping this age group, all they need to do is to provide an equivalent of an earned income relief to this age group. It’s not rocket science.
Malaysia EPF system is the best, at least Malaysian do not complain like Singaporean. So better copy Malaysia EPF system.
CPF members’ beware! Without a doubt it’s a scheme to enrich the Govt’s coffers and their pockets and also their cronies.It is THEIR MONEY! So don’t hope to use it but see it only on paper cos they are going to incrrease the drawdown-down age and the Minimum Sum. I say so cos we don’t have a say(or option) to decide whether to draw out the entire sum once one has attained age 55 (that’s the original intent). They implement schemes (like MS and compulsory CPF Life and raise the draw-down age each time giving the excusese and acting like God saying we live longer)so that they can retain more of our money to ‘gamble’ via TH/GIC and squandered our money and enrich themselves. If they can do such evil acts to us poor citizens, like maintaining the sub-standard salaries of those menial jobs and saying locals are choosy but keep on increasing the Minister’s pay quoting lack of talent each time and then taking in foreign labours to fill the menial jobs (why not increase the salaries to 2k to 3k and see whether Singaporeans are choosy?) and take in foreign talents to fill the Minister’s job at maybe a third of what is being paid now. The Govt is doing injustice to the lower rung of the society but they paid themselves out of the world with our blood money. Then again why the cash handouts only during Election year, why not every year if the Govt is sincere? So CPF or not, it’s Govts’ money and I say again, say bye bye to it. You may just look at the figures only and feel rich about it every month! Cos by the time drawdown age reaches, our world already ended!
After used the MA, people must top up with cash. What is the logic? If this is the case, I rather use my own money to see doctor.
Wish all the professionals and academics out there could make a thorough analysis and studies on CPF and have them perpetually updated online. Please help fellow citizens make informed decisions.
In some societies, as well as in old Singapore, Jenny would be very delighted at the prospect of marrying someone who already owns a house.
Her fiance’s mother is old, and this means the flat would eventually be his ( assuming he is the only child).
The problem is that she would not want to live with his mother after they are married. The bigger problem would be that poor old woman having to live alone till her death.
Pension good, CPF bad
Get pension plus salary when you reach 55 and live happily ever after. So the good people like PM, SM, MM and Ministers get pension scheme and the lesser mortals get CPF scheme. This is what we expected from honest men in white and so called great leaders. This is what we call leadrship by example..a few good men indeed..
I don’t see any issue with transferring money from my OA to my medisave account if I used my medisave to pay for my medical costs. If I take out the money from my OA, I still need to pay for my medical expenses using cash. So it is a matter of cash flow. The fact that he leave his money in OA to get the 2.5% interest only mean that he is unable to utilize his cash to generate higher return. By transfer his money to medisave, in fact would give him higher return of 4% than leaving it in his OA.
Why can’t Jenny just lower expectations and move in with her fiance and his mom? Unless you have tonnes of cash, which yoou don’t, you got to live within your means.
Right now, she is already fortunate enough that there is a potential roof over her head (her fiance’s flat), when they get married. Save up after that, and one day down the road, upgrade.
Frankly, I don’t see this as an issue. Is there a reason she would not want to live with her mom-in-law? At least hr kids one day are fortunate to have their grandma round.
Another retiree 1 August 2011
I don’t see any issue with transferring money from my OA to my medisave account if I used my medisave to pay for my medical costs. If I take out the money from my OA, I still need to pay for my medical expenses using cash. So it is a matter of cash flow. The fact that he leave his money in OA to get the 2.5% interest only mean that he is unable to utilize his cash to generate higher return. By transfer his money to medisave, in fact would give him higher return of 4% than leaving it in his OA.
________________________________________________
Seems like retirement has caused your brain cells to go dead:
1. The issue of principle. Who give the government permission suka suka transfer here & there? If you like to transfer from OA to Medisave, up to you but NOT for government to decide
2. Once you transfer from OA to Medisave, you can NEVER WITHDRAW THAT AMOUNT. That’s why they give you higher interest of 4% to compensate. U think government so generous? Is it worth it?
3. The issue of opportunity cost. You can withdraw from your OA (whatever is left after minimum sum) for whatever you need, other than medical. But in Medisave, for medical purpose only, some more Medisave so restrictive in terms of usage
to cesspool -
Still you are wrong.
The cPF document said that the 4% interest is guaranteed only for year 2011. There is nothing to tell you that it will maintain 4% next year 2012. It can even be 0%!!
I tell you, next year pap will inform everybody because of the “Global Economic outlook” “Europe debt problem” blah blah blah, they cannot sustain 4% interest any more!!
Behind all these rules there must be a man to design the rules. Who is this crazy fellow who design all the kind of strange complicated rules of MA OA RA SA? Citizens need to understand who design these rules, why did the man design the rule in this way, where are the calcuations to justify the numbers “27,500″ and so on?
zero
TRE – “Open’ Singapore figment of Murdoch’s imagination”
Even a big and advanced country like US can’t survive the economic competition today.
She is now in deep shit living off Chinese loans.
Can we? Who wil honour our bank notes if we are broke and simply print more and more money like the US?
We are not Australia backed up by the potential of its huge mineral resources.
Every idiot thinks Singapore is a GOD given and takes it for granted.
Just remember the 46 years hard work work put in by our PAP government to make this tiny model a showpiece (and it’s not unbreakable if you know economics).
There is nothing right or wrong, good or bad about CPF policies. It depend on individual’s situation and schedules.
Due to that its policies are too complex and complicated for laymen to comprehend, many executes wrong decision; be it housing, retirement or investment and get burned. Then the blame game starts.
Until today, Singaporean deemed CPF as non-monetary. Many commercial firms capitalize on this perception and always suggest using it even though the cost or returns in not healthy – U can use CPF afterall they don’t belongs to you and you cannot atke it out!!
Since the CPF website cannot clearly explain its tricky policies with so many “IF” scenarios, Mr. Heng Eng Kiat may want to include this in MOE Upper secondary syllabus – Understanding and Maximizing Your CPF. So that these student can explain to their aged parents on the “Can and Cannot” or “Do and Don’t”.
Alternatively, train personnel working in Community Centres or Resident Committees whose offices opened daily and near homes to help out the residents.
Dan Teo
Every idiot thinks Singapore is a GOD given and takes it for granted
………….
why did you surf national services?
just to prayed the ar15/m16 rifles for fun or free target shootin without payin the rabbit man?
and who owned singapoor?
the pap government?
go FART youself dan toad b4 i shaft the cookhouse cucumber up your karchng