SeedlyTV EP06

CPF 101 With Mr Soh Chin Heng, Deputy Chief Executive of CPF

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Unsure what the CPF system is about? Have burning doubts and questions about CPF that you want answered? Here it is! SeedlyTV EP06 presents CPF 101 with Mr Soh Chin Heng, Deputy Chief Executive, Services, from the CPF board. You can check out what was covered here!

  • Introduction of Mr Soh Chin Heng, Deputy CEO of CPF Board-- 2:05-3:00
  • Why was CPF created in the first place?-- 3:20-5:05
  • Short history of CPF and What CPF is about-- 5:40-7:40
  • What kind of attitude should we adopt for retirement or retirement planning?-- 7:45-13:00
  • Why does CPF change over the years?-- 13:10-14:40
  • What can you do with all the money you have saved for retirement?-- 14:45-15:58
  • Rule of 72-- 16:00-17:20
  • What are some common CPF hacks that Singaporeans should take advantage of?-- 17:40-20:00
  • Retirement sum top ups-- 20:03-21:55
  • Why is it important to save?-- 22:30-23:20
  • (Q&A) Will the BRS and FRS keep increasing as we age and hit 55 years old?-- 23:40-25:37
  • (Q&A) Why do we have to return accrued interest for CPF monies used for housing, but not for CPF monies used for investment in CPFIS?-- 25:40-28:10
  • (Q&A) What is your advice for retirement planning? ERS or just FRS?-- 28:15-30:35
  • (Q&A) Will CPF open up to more investment options such as Dimensional Funds, low cost global diversified ETFs? -- 30:49-32:27
  • (Q&A) What happens when we don’t hit our CPF full retirement sum by age 55? Will we still be getting payout?-- 32:20-34:50
  • (Q&A) We hear that CPFIS will soon be removed/changed into an enhanced scheme. What can we look forward to?-- 34:58-36:20
  • (Q&A) In a hypothetical situation, if everyone withdraws all their CPF today, will CPF have enough cash or liquidity for that?-- 36:25-39:20
  • (Q&A) At 55 years old, after meeting the retirement sum, will the excess funds continue to remain in the OA/SA or will it also be channeled to the RA?-- 39:35-42:05
  • (Q&A) I'm self-employed. Why do I still have to make compulsory Medisave contributions when I already have a full comprehensive integrated shield plan? Shouldn't there be a choice?-- 42:25-44:50
  • (Q&A) As lifespans increase, and as more people start drawing upon CPF Life payouts, will there come a point where it all becomes unsustainable and the payout has to decrease?-- 45:12-47:37
  • (Q&A) Can we get tax relief for top ups above $7K?-- 47:40-48:23
  • (Q&A) 4% Is an attractive interest rate. But how does CPF earn this interest rates to pay us?-- 48:35-48:51
  • (Q&A) Many seem to recommend transferring money from CPF OA to SA for higher interest rates, what kind of people should do that?-- 49:25-53:15
  • (Q&A) People often say that the Govt is losing money hence they are withholding our CPF savings. What’s the more accurate way of explaining what’s happening with our monies before 65 yrs old?-- 53:48-55:15
  • (Q&A) Giveaway details-- 55:49-56:45

Speakers: 
- Mr Soh Chin Heng (Deputy CEO, CPF Board)
- Xin Yi Lum (Content Strategist, Seedly- Moderator)

This is a Seedly organised event

NOTE: SeedlyTV is a series which will be covering topics via LIVE video and QnA on the Seedly platform. We will be inviting speakers to cover relevant topics in personal finance: Insurance, Debt, Saving, Spending and Investing.

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SeedlyTV EP06

CPF

Cpfboard
Cpfboard,
Level 2. Rookie
Answered 1h ago
Hi, CPF monies are invested by the CPF Board in Special Singapore Government Securities (SSGS) that are issued and guaranteed by the Singapore Government. This arrangement assures that the CPF Board will be able to pay its members all their monies when due, and the interest that it commits to pay on CPF accounts. The Singapore Government is one of the few remaining triple-A credit-rated governments in the world. The proceeds from SSGS issuance are invested by the Government via MAS and GIC, just as it invests the proceeds from market based Singapore Government Securities (SGS). GIC is a fund manager, not an owner of the Government’s assets. It merely receives funds from Government for long-term management, without regard to the sources of Government funds. No CPF monies go towards government spending. Government borrowings, whether via SGS or SSGS, cannot be used to fund expenditures. Under the reserves protection framework enacted in 1990 in the Constitution and the Government Securities Act (enacted in 1992), the monies raised from government borrowings cannot be spent. To find out more, you can visit: https://www.mof.gov.sg/Policies/Our-Nations-Reserves/Section-IV-Is-our-CPF-money-safe-Can-the-Government-pay-all-its-debt-obligations. Hope this clarifies!

SeedlyTV EP06

CPF

You need to understand the different eligibility for tax relief Employee 1) Voluntary contribution to MA account (Medisave up to BHS) 2) Mandotry contribution (automatically calculated) Self employed 1) Voluntary contribution to CPF account (tax relief allowable up to $37,740, or basically 17 times of the monthly pay limit of current $6,000). So could you elaborate what you mean by the $14,000? If you meant RSTU, its a limit seperate from the Voluntary Contribution of $37,740 for CPF.

SeedlyTV EP06

CPF

Tax relief is capped at 7k but RSTU is until SA hits the prevailing Full Retirement Sum. You just don't get the tax relief for contributions above 7k. Another 7k is given for top ups to loved ones accounts.

SeedlyTV EP06

CPF

General

Cpfboard
Cpfboard,
Level 2. Rookie
Answered 1h ago
Hi, CPF LIFE is a life annuity, this means members can receive a regular stream of income for as long as they live and not worry of outliving their savings. When members pass on, any unused CPF LIFE annuity premium (without interest) and Retirement Account savings, will be paid to their beneficiaries. Thank you.

SeedlyTV EP06

CPF

She might be in the Retirement Sum Scheme. Simplest way to find out is just to make a trip down to CPF and inquire with the officers. :)

SeedlyTV EP06

CPF

General

Jennifer Goh
Jennifer Goh,
Level 3. Wonderkid
Answered 2w ago
Singaporeans are living longer While many individuals voice their concerns that by the time they get their payout at the age of 65, it would be too late to enjoy the fruits of their labor. While we can make noice about the late payout, here's another way to look at it to make things less gloomy: Delaying CPF Withdrawal Pros 1. You save for 10 more years 2. Prevent spending for another 10 years 3. Your money compounds for 10 more years (rise-free interest of up to 6% a year! The 6% includes the extra interest of 1% for the first $60,000 and additional extra interest of 1% for the first $30,000) So the payout that you get 10 years later would be tremendous! While the Government feels this would place the citizens in the 'best position' to decide what they would need for their retirement based on individual cirucmstances, perhaps the CPF Board could do better to explain and rationale for their processes. Sources: - https://www.todayonline.com/singapore/room-improvement-how-cpf-board-communicates-payout-messages-manpower-minister - https://mothership.sg/2019/01/cpu-payout-withdrawal-age-65-parliament/ - https://www.straitstimes.com/politics/parliament-no-plans-to-lower-eligibility-age-for-cpf-payout-says-josephine-teo - http://investmentmoats.com/uncategorized/difficult-raise-the-cpf-withdrawal-age/ - https://www.gov.sg/factually/content/did-the-cpf-board-change-the-retirement-payout-age-to-70-years-old Hope the above helps a little! :)

SeedlyTV EP06

CPF

Bonds

Investments

Cpfboard
Cpfboard,
Level 2. Rookie
Answered 1h ago
Hi Amos, The fundamental principle is to peg CPF interest rates to returns on investments of comparable risk and duration in the market. In determining the interest rates, there is a need to recognise the fundamental difference in the purpose of the Ordinary Account (OA) compared to the longer-term Special Account, MediSave Account and Retirement Account (or SMRA). The interest rates on the OA and SMRA reflect the durations for which members’ savings are held. OA savings can be withdrawn at any time for home purchases and servicing mortgage loans, etc. It is a liquid account. Therefore, the interest rate on OA has been pegged to the 12-month fixed deposit and month-end savings rates of the major local banks. However, unlike market interest rates, it pays a guaranteed floor rate of 2.5%, or 3.5% for OA balances of up to $20,000. On the other hand, the SMRA are for longer-term retirement and medical needs. As such, the interest rate on the SMRA aim to be equivalent to what a 30-year SGS would earn, as 30 years is the typical duration for which SMRA monies are held. As the 30-year SGS did not exist when the government made changes to the interest rate structure in 2007, SMRA rates were pegged to the yield of 10-year SGS plus 1%. The current yield on the 30-year SGS, which is not widely traded, is around 3%. This is well below the minimum interest rates of 4-5% that are currently paid on SMRA accounts. To find out more, you can visit: https://www.mof.gov.sg/Policies/Our-Nations-Reserves/Section-IV-Is-our-CPF-money-safe-Can-the-Government-pay-all-its-debt-obligations. Thank you.

SeedlyTV EP06

Investments

CPF

Yixiong Chang
Yixiong Chang,
Level 5. Genius
Answered 2w ago
If u are refering to the SSGS that CPFB 'buys'. No you can't buy them, no one else can buy them. It is 'special' for that reason. =D CPF monies are invested by the CPF Board (CPFB) in Special Singapore Government Securities (SSGS7) that are issued and guaranteed by the Singapore Government. By law, the monies collected with SGS or SSGS cannot be used in government spendings. The proceeds from SSGS are invested by the Government via MAS and GIC.

SeedlyTV EP06

CPF

I believe you mean after salary paid then employer pay to our CPF account. According to CPF: Empolyer must contribute our CPF by end of the month with a grace period of 14 days to pay it. If the 14th day falls on a Saturday, Sunday or public holiday, employer can pay by the next working day. Eg. For May 2019 salary, if you receive salary by trhe first 7 days of the June, then your employer has up to the 14th June to contribute to your CPF account. Otherwise, you can write in / call CPF to lodge a complain. Source: https://www.mom.gov.sg/employment-practices/central-provident-fund/employers-contributions

SeedlyTV EP06

CPF

Cpfboard
Cpfboard,
Level 2. Rookie
Answered 1h ago
Hi, The CPF system is designed to meet the needs of the majority. Allowing members below the age of 55 to top up to the Enhanced Retirement Sum will mostly benefit the higher-income members. Members below the age of 55 can receive top-ups to their Special Account up to the current Full Retirement Sum. Members who desire an even higher standard of living during retirement can still save beyond the CPF system. Thank you.
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