What do you think of the CPF? What improvements do you think you would like to see in the near future? - Seedly
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Kenneth Lou

Asked on 24 Apr 2019

What do you think of the CPF? What improvements do you think you would like to see in the near future?

We're meeting the CPF team next week and we are keen to give them some feedback on how it can be improved as well. I just wrote a piece on CPF vs other pension schemes in the world, and I'm curious to understand the community's thoughts on CPF in Singapore!

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Goh Kah Kiat
Goh Kah Kiat, Editor-in-chief at Risknreturns.com
Level 5. Genius
Updated on 07 Jun 2019

The main issue I have with CPF is the CPFIS scheme. Some reforms have been implemented but more can be done.

  • Cost prohibitive to have a diversified portfolio of stocks (especially if your positions are small) due to quarterly $2.14 charge per counter. Having 10 stocks = $85.60 per annum. I understand these are bank fees and CPF may not be able to influence them, but one can try.

  • Limit amount you can use to buy Unit Trusts, ILPs, Annuities and Endowments. Having no limits on those products make no sense when most of these products underperform Index funds. It also encourages predatory financial advisors to recklessly sell these products to customers as “you can’t touch this money anyway”

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Goh Kah Kiat
Goh Kah Kiat

25 Apr 2019

Https://www.cpf.gov.sg/Assets/members/Documents/CPFISInvestmentProducts.pdf This document seems to contradict the point on annuities and endowments. Anyway, I get that stocks are risky to the uninitiated. Which is why I understand why there are limits on stocks and I'm not arguing for a lift on the limit. I'm more arguing from the point of view that ILPs and Unit Trusts should have limits too as they are risky products (they are essentially equities too if you buy a equity fund). Just because there are so-called experts managing those products doesn't make them risk free.
Hariz Arthur Maloy
Hariz Arthur Maloy

25 Apr 2019

A long time ago you could buy endowment and annuities. Not anymore for a number of years now. Currently you have to leave behind 20k in OA and 40k in SA before investing. I would agree to not allow SA investment but only OA. And yes they aren't risk free, but they are less risky.

Limits on property purchase. Higher Medisave withdrawal limits for insurance and bills across all ages.

Other pension schemes around the world are sometimes only for the social security or the CPF Life part. Not many use our 3 account system for housing needs, retirement needs, and medical needs.

I think that our CPF needs to be more segregated from each other. People don't understand that Medisave amount cannot take out, and say their CPF got a lot of money when it's all just Medisave. Quite a lot of lack of education.

And I can't wait for RSS to be phased out permanently and for everyone to be on CPF life. Less headache as well.

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Kenneth Lou
Kenneth Lou

25 Apr 2019

Yup this one is noted in my recent research as well! "Other pension schemes around the world are sometimes only for the social security or the CPF Life part. Not many use our 3 account system for housing needs, retirement needs, and medical needs."
Ian Lau
Ian Lau
Level 2. Rookie
Answered on 24 Oct 2019

Definitely check out Japan's iDeco system. It allows people to voluntarily contribute to a separate pseudo retirement account and comes with tax breaks at both ends (i.e. Contributing from pre-tax income and not paying any tax on gains). It's also designed to be simple for those who aren't financially savvy but allows the individual to pick from several funds based on risk appetite etc.

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Kenneth Lou
Kenneth Lou

24 Oct 2019

Got it! yeah Japan's system is always a mystery to me, will check it out :) Thanks Ian
Ian Lau
Ian Lau

26 Oct 2019

Their pension system is an absolute disaster, not much to say there. The iDeco is unique in that it's like a combination of a securities account allowing you to invest monthly and a retirement plan, but with a lot of tax breaks. You can't make any withdrawals before 60, but that's most pension systems.
Jason Sin
Jason Sin
Level 8. Wizard
Answered on 25 Apr 2019

A lot of people are not clear what Medisave could be used for. There also seems to be a lot of restrictions with regards to the usage of Medisave. At the same time, the BHS (Basic Healthcare Sum) is increasing every year. Perhaps more education in this area could be provided to the public. Just a suggestion.

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Wang Han Yu
Wang Han Yu
Level 2. Rookie
Answered on 26 Oct 2019

Why is there a cap at 176k for SA for voluntary contribution when the enhanced scheme is 250?? Shouldn't it be capped at 250k?

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Takingstock @
Takingstock @
Level 6. Master
Updated on 24 Oct 2019

Something I have been thinking about for a while now but still irks me from time to time:

1) there are a number of employers who structure the pay package in a way to avoid CPF. So now there's this group who don't get CPF contributions regularly, and they might not be considered self-employed. How to help them? With the way the act is worded, voluntary contribution gives no relief, and they don't get CPF relief because it is not employment contribution (and they aren't self-employed). Granted these folks may pay max 150 tax per year, but surely you would want them to start baby steps in CPF at least? They get relief for MediSave / SA top up, but isn't voluntary contribution going to OA also a means for them to save towards HDB, which might be a more pressing need than retirement? They aren't getting the CPF relief for employment but they are working... Shouldn't the act be expanded to give them some leeway to help them save for HDB?

2) the accrued interest concept for CPF monies drawn out for property is... rather strange.

A) taking money out for property accrues interest, but taking money out for investment doesn't accrue interest... A bit double standard. And add on my own example - let's say I use my 200k of OA to buy some REITs and they generate 5% dividends annually = 10k dividends which I return to CPF OA to pay HDB loan. I don't owe interest to myself for borrowing to buy the REITs, but once I use the dividends to pay for HDB loan payments, I accrue and owe myself interest. Hmm a bit strange, but if I have enough in my SA, and I make good returns to use the OA to pay for HDB and excess dividends to save for retirement... I still need to owe myself interest?

B) the CPF accrued interest as I understand now will continue to accrue until you reach 55, upon when the RA is formed, and I think the accrued interest is wiped out / forgotten. So what does that mean? If we have enough money for retirement, then the accrued interest isn't an issue? But if the folks who drawn on CPF to pay for HDB have extra cash, then doesn't it make more sense to do the RSTU and get tax relief for that, while contributing to SA that earns 4%? Does it make more sense to have the accrued interest abolished/written off if these folks have hit the FRS with SA balance? It should be along with the same goal and does away with this weird accrued interest concept.

C) if we aren't doing away with the accrued interest, then something I would like to have... A form for recurring giro deduction to pay down the monies I draw from OA for my property. I think it might be a lot easier to pay a bit monthly for a while to clear away this "debt".

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Kenneth Lou
Kenneth Lou

25 Oct 2019

Thank You for sharing your thoughts with the community :)
Alvin Teo
Alvin Teo
Level 6. Master
Answered on 24 Oct 2019

I hope to see more simplicity of the system

more education of any changes to the many nooks and crannies of the schemes so that there wouldn’t be pointless sensationalism over non-mainstream media

And for the scheme to focus more on retirement than usage on the property for obvious reasons

And it’ll succeed when people’s point of view towards CPF monies usage to be more for retirement planning than merely buying HDB

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Jeff Wong
Jeff Wong
Level 2. Rookie
Updated on 25 Apr 2019

I am a retiree, age 72 yes. I enjoyed a mthly withdrawal from CPF retirement a/c for our daily household living expenses. I've chronic illnesses and is prescribed medications from our NHS polyclinics for hypertension and stroke medications. These medications plus consultations comes to avg S$120.00/mth. However, MOH, will allow a withdrawal of ONLY $700.00 max per year. At this rate my current Medisave a/c bal can sustain the my withdrawal for another 50+ yrs ( IE, I'll be 120+ yrs old). I had asked CPF Board as well as MOH officers responsible for the Medisave a/c to allow for an increase in my Medisave a/c withdrawal for payment of my medications but was rejected. Hence, I had to reduce my cash expenditures to offset the max Medisave limit allowed for withdrawal for my chronic illnesses medications. With such a policy, I am sure to leave a sum of Medisave fund on my demise when my need for it is denied now. There are many netizens in similar circumstances. I hope to see a fair withdrawal limit, IE, l in relation to fund available in Medisave a/c and notban arbitrary amount applicable to every member a/c balances.

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Kenneth Lou
Kenneth Lou, Co-founder at Seedly
Level 9. God of Wisdom
Answered on 25 Apr 2019

I'm writing a piece now and here's a really interesting and also slightly comical finding:

  1. Singapore: Central Provident Fund (CPF)

  2. Malaysia: Employee Provident Fund (EPF)

  3. Hong Kong: Mandatory Provident Fund (MPF)

  4. USA: 401k scheme

They mostly sound the same... CPF, EPF and MPF.

Waiting to get more comments on this!

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Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 9. God of Wisdom
Answered on 26 Oct 2019
  1. Reduce the incentive for unscrupulous financial advisors. If a customer surrenders any policies in his CPF, within 12 months, new policies will have NO commission for the advisors.

  2. Provide a higher interest rate for CPF-SA. Right now 4% is very little for an account that has 20 - 40 years of lock-in.

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Mypetrescue Givelife
Mypetrescue Givelife
Level 2. Rookie
Answered on 23 Oct 2019

I am 62 and my wife is 60 this year. We are fortunate to be able to accumulate both our RA to ERS and will be drawing down from age 65. If I pass on before my wife or her before me, my suggestion is for CPF to allow the remaining balances in our RA account to be transferred to the surviving spouse's account, instead of a payout in cash to prevent the elderly to money scams, investments etc. An enhanced nomination has its limitations as you are well aware.

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Shirley Tay
Shirley Tay
Level 2. Rookie
Answered on 23 Oct 2019
  1. Medisave acct - for those with no chronic history and hardly touch Medisave, makes no sense to keep increasing amt and retiree can't touch when still alive. Esp if the person has no dependents to bequeath to.

  2. Whole CPF system is overly complicated. Suggest revert to the primary objective of funding retirement need and maybe plus one secondary area eg housing or health etc (depending on members choice). Can't have everything.

  3. From age 65, calculate monthly payouts based on max 20 yrs duration. More meaningful to live a better quality of life when retiree still mobile. No point leaving hard-earned $$$ behind when gone.

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Min Shun Hsu
Min Shun Hsu
Level 2. Rookie
Updated on 29 Apr 2019

Hello there,

Regarding CPF Vs other provident fund. One main difference is with regards to expats requirement to contribute to the fund. It should be mandatory for employer that for all employees local or non citizen should be required to make such contribution.

Example if a job opening that has a budget of 5000.

The company can hire a local at 4200 or an expat at 5000. This is the discrepancy when such provident rate is not applied across the board. Meaning 37% of the CPF is technically contributed by local and PR due to the long run effect of the scheme.

Employers should be required to contribute employer's portion regardless of citizenship. This will make hiring consideration more fair and just.

Other countries likely require expats to contribute.

I hope this issue can be raise for discussion as it affects almost all PMETs and fellow Singaporeans during hiring consideration

Thanks

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Wong Yixiang
Wong Yixiang
Level 2. Rookie
Updated on 07 Jun 2019

Upon turning 55, RA will be created and savings from SA will be transferred to RA first, followed by OA if there’s insufficient fund in SA.

May I suggest that CPF Board gives members a choice to decide if they want to transfer their monies in OA to RA first (before SA)?

This is because CPF members aren’t allowed to top up SA through Retirement Sum Topping-Up Scheme (RSTU) after 55 and many of us prefer to preserve our savings in SA so as to earn higher interest.

Thank you.

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Hariz Arthur Maloy
Hariz Arthur Maloy

25 Apr 2019

Haha cannot la. It's meant so that govt don't have to give so much interest. You can shield your SA however using CPFIS before 55.
Jacinda Siew
Jacinda Siew
Level 3. Wonderkid
Updated on 07 Jun 2019

How much higher can we have the interest rate go? How did this rate get computed? Why up to 5%?

Can we lift the $7k cap annually for tax relief when transferring OA to SA?

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As Df
As Df

25 Apr 2019

There is no 7k cap on OA to SA transfer. I think you're confusing the maximum tax relief on cash top ups with transfers.
Jacinda Siew
Jacinda Siew

26 Apr 2019

You are right, my apologies for getting it wrong! https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme I've edited the original question.