Finance
Do you know that CPF Life eats up all you accumulated interest if you die early?
![](https://theonlinecitizen.s3.ap-northeast-2.amazonaws.com/uploads/2018/06/27055208/cpf-logo.jpg)
An old schoolmate from RI (Raffles Institution), CK, alerted me to the following information which he was pointed to by the Central Provident Fund Board after asking what happens to his CPF money if he passes away early.
On the website, “areyouready.sg” which is a website run by the CPF board, it writes:
“3. What happens to the premium if I pass away?
A bequest is the amount of money that you leave for your beneficiaries when you pass on. If you are on CPF LIFE, the bequest refers to the unused annuity premium and Retirement Account savings, if any, after death. This will be paid to your beneficiaries along with your remaining CPF savings.However, the interest earned on annuity premiums does not form part of the individual member’s bequest as it is paid into the Lifelong Income Fund to provide lifelong monthly payouts to all members under CPF LIFE.
As with all annuity products, CPF LIFE works based on the concept of risk pooling. In order to provide lifelong monthly payout to all CPF LIFE members, the interest earned on the annuity premium has to be pooled. The pooled interest will then be used to pay the monthly payout to all surviving members in the scheme. Therefore, the interest earned on the CPF LIFE annuity premium will not form part of the individual member’s bequest upon death.”
However, on the official CPF website, under the section, “CPF Life – Details – Understand – Will I lose all my money if I pass away early? “. It wrote, “You and your loved ones will always get back at least the amount that you have put into CPF LIFE, in the form of payouts and/or bequest, no matter what age you live to.”
![Life payouts you received during your lifetime together with your bequest you leave behind for your loved ones will always be larger or equal to the principal amount you have put into CPF LIFE.](https://ci3.googleusercontent.com/proxy/stCtAR0t7KsvsSck4gewNi94SIQN9Iq0ggMF8aeIurmX8zT4rhzxqQj1jgFgvLVoKyOPMW37n5sRBx-wvUsDDM0n4MX82MypsGRTb7jYjk0DNSKrVjh6F6vgIOnMRJ33XTM8mmWMzKSapjwg=s0-d-e1-ft#https://www.cpf.gov.sg/assets/members/PublishingImages/LIFEPayouts_Bequest_Desktop.png)
Image from CPF website
Don’t you find that the above explanation in the official CPF website may be somewhat misleading as it may give the impression that you may get more than what you have put into CPF Life if you pass away early, whereas the fact of the matter explained in the website, “areyouready.sg” is that “the interest earned on annuity premiums does not form part of the individual member’s bequest”?
Are there any national pension schemes in the world that eats up all your accumulated interest when you die early – only pays your beneficiaries the difference between your upfront premium and your total monthly annuity payouts received – and nothing at all if the total payouts exceed the premium?
Is this the national pension scheme with the lowest bequests in the world?
How many Singaporeans are aware of this?
![](https://theonlinecitizen.s3.ap-northeast-2.amazonaws.com/uploads/2023/03/26202010/TOC_newlogo_small.webp)
Finance
US taxation authority to pursue wealthy tax evaders with advanced AI tools
The Internal Revenue Service (IRS) of United States has announced a comprehensive initiative aimed at aggressively pursuing individuals and entities that owe substantial amounts in overdue taxes.
Under the initiative, 1,600 millionaires and 75 large business partnerships are the primary focus of the IRS’s intensified “compliance efforts.”
WASHINGTON, UNITED STATES: The Internal Revenue Service (IRS) announced last Friday (8 Sept), that it is embarking on an ambitious mission to aggressively target 1,600 millionaires and 75 large business partnerships that collectively owe hundreds of millions of dollars in overdue taxes.
IRS Commissioner Daniel Werfel revealed that with increased federal funding and the aid of cutting-edge artificial intelligence tools, the agency is poised to take robust action against affluent individuals who have been accused of evading their tax obligations.
During a call with reporters to provide a preview of the announcement, Commissioner Werfel expressed his frustration at the contrast between individuals who dutifully pay their taxes on time and those wealthy filers who, in his words, have “cut corners” when it comes to fulfilling their tax responsibilities.
“If you pay your taxes on time it should be particularly frustrating when you see that wealthy filers are not,” he said.
The IRS’s latest initiative targets 1,600 millionaires, each of whom owes a minimum of US$250,000 in back taxes, along with 75 large business partnerships boasting average assets of approximately US$10 billion.
These entities are now under the spotlight of the IRS’s renewed “compliance efforts.”
Werfel emphasised that a substantial hiring campaign and the implementation of artificial intelligence research tools, developed both by IRS personnel and contractors, will play pivotal roles in identifying and pursuing wealthy tax evaders.
This proactive approach by the IRS aims to highlight positive outcomes resulting from the increased funding it has received under President Joe Biden’s Democratic administration.
Notably, this move comes amid efforts by Republican members of Congress to reassess and potentially reduce the agency’s funding allocation.
IRS has introduced an extensive programme aimed at revitalisng fairness within the tax system
The IRS announced the groundbreaking move aimed at enhancing tax compliance and fairness, with a particular focus on high-income earners, partnerships, large corporations, and promoters who may be abusing the nation’s tax laws.
This initiative follows the allocation of funding under the Inflation Reduction Act (IRA) and a comprehensive review of enforcement strategies.
The new effort, which builds on the groundwork laid following last August’s IRA funding, will place increased attention on individuals with higher incomes and partnerships, both of which have experienced significant drops in audit rates over the past decade.
These changes will be facilitated through the implementation of advanced technology and Artificial Intelligence (AI) tools, empowering IRS compliance teams to more effectively detect tax evasion, identify emerging compliance challenges, and improve the selection of audit cases to prevent unnecessary “no-change” audits that burden taxpayers.
As part of the effort, the IRS will also ensure audit rates do not increase for those earning less than $400,000 a year.
Additionally, the agency will introduce new safeguards to protect those claiming the Earned Income Tax Credit (EITC).
The EITC is intended to assist workers with modest incomes, and despite recent years seeing high audit rates for EITC recipients, audit rates for individuals with higher incomes, partnerships, and those with complex tax situations have plummeted.
The IRS will also take measures to prevent unscrupulous tax preparers from exploiting individuals claiming these vital tax credits.
This move underscores the IRS’s commitment to fostering a fair and equitable tax system, ensuring that all taxpayers, regardless of income or complexity, are held to the same standards of compliance and accountability.
The initiative reflects a comprehensive approach to addressing disparities in tax enforcement and strengthening the integrity of the tax system for the benefit of all Americans.
“This new compliance push makes good on the promise of the Inflation Reduction Act to ensure the IRS holds our wealthiest filers accountable to pay the full amount of what they owe.
“The years of underfunding that predated the Inflation Reduction Act led to the lowest audit rate of wealthy filers in our history. I am committed to reversing this trend, making sure that new funding will mean more effective compliance efforts on the wealthy, while middle- and low-income filers will continue to see no change in historically low pre-IRA audit rates for years to come,”
“The nation relies on the IRS to collect funding for every critical government mission, from keeping our skies safe, our food safe and our homeland safe. It’s critical that the agency addresses fundamental gaps in tax compliance that have grown during the last decade,” Werfel said.
Major expansion in high-income/high wealth and partnership compliance work
Prioritisation of high-income cases: Under the High Wealth, High Balance Due Taxpayer Field Initiative, the IRS is intensifying efforts to address taxpayers with total positive income exceeding US$1 million and recognised tax debts of more than US$250,000.
Building on prior successes, which resulted in the collection of US$38 million from over 175 high-income earners, the IRS is allocating additional resources to focus on these high-end collection cases in Fiscal Year 2024.
The agency is proactively reaching out to approximately 1,600 taxpayers in this category who collectively owe substantial sums in taxes.
Expansion of pilot focused on largest partnerships leveraging Artificial Intelligence (AI): Recognising the complexity of tax issues in large partnerships, the IRS is expanding its Large Partnership Compliance (LPC) programme.
Leveraging cutting-edge Artificial Intelligence (AI) technology, the IRS is collaborating with experts in data science and tax enforcement to identify potential compliance risks in partnership tax, general income tax, accounting, and international tax.
By the end of the month, the IRS will initiate examinations of 75 of the largest partnerships in the United States, encompassing diverse industries such as hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms, and more. These partnerships each possess assets exceeding US$10 billion on average.
Greater focus on partnership issues through compliance letters: The IRS has identified ongoing discrepancies in balance sheets within partnerships with assets exceeding US$10 million, indicating potential non-compliance.
Many taxpayers filing partnership returns are reporting discrepancies in the millions of dollars between year-end and year-beginning balances, often without attaching required explanations.
This effort aims to address balance sheet discrepancies swiftly, with an initial mailing of around 500 partnership notices set to begin in early October.
Depending on the response, the IRS will incorporate these cases into the audit process for further examination.
Priority areas for targeted compliance work in FY 2024
The IRS has launched numerous compliance efforts to address serious issues being seen. Some of these, like abusive micro-captive insurance arrangements and syndicated conservation easement abuses, have received extensive public attention. But much more work continues behind the scenes on other issues.
Among some of the additional priority areas the IRS will be focused on that will touch the wealthy evaders include:
Expanded work on digital assets: The IRS is continuing its expansion of efforts related to digital assets, encompassing initiatives such as the John Doe summons and the recent release of proposed broker reporting regulations.
The IRS’s Virtual Currency Compliance Campaign, which aims to ensure compliance with tax obligations related to digital currencies, will persist in the coming months.
An initial review has indicated a potential non-compliance rate of 75% among taxpayers identified through record production from digital currency exchanges.
The IRS anticipates the development of additional digital asset cases for further compliance efforts in early Fiscal Year 2024.
More scrutiny on FBAR violations: High-income taxpayers across various segments have been utilising foreign bank accounts to avoid disclosure and related tax obligations.
US individuals with a financial interest in foreign financial accounts exceeding US$10,000 at any point in the year are required to file a Report of Foreign Bank and Financial Accounts (FBAR).
The IRS’s analysis of multi-year filing patterns has revealed hundreds of potential FBAR non-filers with average account balances exceeding US$1.4 million. In response, the IRS plans to audit the most egregious potential non-filer FBAR cases in Fiscal Year 2024.
Labour brokers: The IRS has identified instances in which construction contractors are making payments to apparent subcontractors via Form 1099-MISC/1099-NEC, yet these subcontractors are, in fact, “shell” companies lacking a legitimate business relationship with the contractor.
Funds paid to these shell companies are routed through Money Service Businesses or accounts associated with the shell company before being returned to the original contractor. This scheme has been observed in states like Texas and Florida.
The IRS is expanding its attention in this area, conducting civil audits and launching criminal investigations to address non-compliance.
This effort is aimed at improving overall compliance, ensuring proper employment tax withholding for vulnerable workers, and creating a fairer playing field for contractors adhering to the rules.
Business
Shareholders most likely to contest executive pay resolutions during European AGMs in 2023, says Georgeson
During the 2023 AGM season, European shareholders primarily challenged executive pay resolutions, reveals Georgeson’s Annual European AGM Season Review.
In seven key markets, they found 36.1% of such resolutions contested, mirroring the 2022 figure of 37.1%.
LONDON, UNITED KINGDOM: Shareholders in European companies were most likely to contest resolutions related to executive pay during the 2023 AGM season, according to global shareholder engagement firm Georgeson.
In its annual 2023 European AGM Season Review, Georgeson analysed proxy voting data from annual general meetings (AGMs) in seven European markets (the UK, the Netherlands, Germany, Spain, France, Switzerland and Italy).
The report found that more than a third (36.1%) of resolutions relating to executive pay were contested (defined as attracting 10% or more negative votes) — similar to the proportion during the 2022 season (37.1%).
However, within the category of executive pay, the report found that the proportion of resolutions relating to remuneration reports that were contested by shareholders rose to 42.9% from last year’s 39.4%, while the proportion of resolutions on remuneration policy that were contested declined more significantly to 29.2% from 34.8%.
The proportion of director election resolutions that were contested increased slightly to 11.7% from 11.2% in 2022.
By contrast, the proportion of share issuance resolutions that were contested declined to 13.8% from the previous year (14.5%).
AGM season
The majority of listed companies have already started contemplating their 2023 AGMs, and these AGMs are predominantly scheduled to take place between September and November 2023.
The Georgeson’s report also highlighted the impact of an ‘against’ recommendation from proxy advisors ISS and Glass Lewis, with the majority of company resolutions that received shareholder opposition also receiving ‘against’ recommendations from the advisors.
Domenic Brancati, Global COO of Georgeson, said: “Although the numbers show that shareholders in European companies continue to perceive a misalignment between compensation and shareholder interest, they seem to be taking issue with the way policies are implemented, not how they are structured.
“Director elections also remain in focus, as shareholders continue to use their votes to express dissatisfaction about specific matters such as board diversity and climate change.
“Our work elsewhere in the world tells us that the increase in the portion of disputed director election resolutions is a global trend and underlines the need for companies and boards to actively engage with their shareholders.”
European corporations navigate evolving ‘Say on Climate’ landscape amid heightened investor focus
The 2023 AGM season also marked the third year that European companies have experienced ‘Say on Climate’ resolutions.
24 European companies presented voluntary Say on Climate resolutions: a decrease from the previous year (36), but twice as many than in 2021 (12).
The report noted that companies in the UK (FTSE 350) and France (SBF 120) contributed the majority (17) of Say on Climate resolutions in the 2023 season. Companies in Germany and Portugal introduced their first Say on Climate resolutions this year.
Daniele Vitale, Head of ESG in UK/Europe at Georgeson, said: “Several companies transitioned to a three-year Say on Climate resolution cycle, which may have contributed to the decline in resolutions this proxy season.
“Investors have also conveyed their intention to cast votes against directors they perceive as failing to disclose, manage or oversee climate risk.
“The decline in Say on Climate proposals may indicate that companies are exercising caution because of this heightened investor scrutiny.”
Contrasting corporate governance dynamics
German DAX companies experienced the highest share of contested director elections in 2023 (18.7%). UK FTSE 100 companies saw the lowest share of contested resolutions (3.2%).
Switzerland SMI companies saw the largest share of contested remuneration report resolutions (68.4%). Despite a 5.2% annual increase in the proportion of contested remuneration reports, the UK remained the market with the lowest share of contested resolutions of this type (20.2%).
Spanish IBEX 35 companies saw the highest share of contested remuneration policies (47.4%), followed closely by French CAC 40 companies (45.2%). Whilst only one of the nine remuneration policies (11.1%) put forward at DAX companies in Germany was contested.
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