 |
| Yet another |
| 55th birthday on or after | Minimum Sum (in 2003 dollars) | Minimum Sum (after adjustment for inflation) |
| 1 July 2003 | $80,000 | $80,000 |
| 1 July 2004 | $84,000 | $84,500 |
| 1 July 2005 | $88,000 |
$90,000
|
| 1 July 2006 | $92,000 |
$94,600
|
| 1 July 2007 | $96,000 |
$99,600
|
| 1 July 2008 | $100,000 | $106,000 |
| 1 July 2009 | $104,000 | $117,000 |
| 1 July 2010 | $108,000 |
$123,000
|
| 1 July 2011 | $112,000 |
$131,000
|
| 1 July 2012 | $116,000 |
} To be
|
| 1 July 2013 | $120,000 |
} announced
|
Inflation doesn't come cheap.
In 2003 the initial Minimum Sum in $80,000. In 2004, the adjustment for inflation brings it up by $4,500 to $84,500.
In 2003 the initial Minimum Sum in $80,000. In 2004, the adjustment for inflation brings it up by $4,500 to $84,500.
Fast forward to 2011, the adjustment for inflation for the MS has ballooned to $7,000 and the Minimum Sum today of course, stands at a glorious $131,000. Almost doubling after 8 years.
The CPF Boards declared that the adjustment for inflation will stop in 2013, when the MS reaches $120,000 (in 2003 dollars). How much will be the adjustment for next year? $8000? $9000?
In case you are a member of the class:=median wages, reportedly to be around $3,000 and have just purchased a HDB flat from the BTO scheme, you may be heading for a nasty surprise.
Do you make enough money to service the adjustment for inflation for the MS? As we know, when we sign the Agreement of Lease our CPF account will be emptied and we will pay the rest of the mortgage loan by monthly installments thereafter.
Let me show you my sums (unaudited) of your situation.
Assuming your HDB flat cost $320,000, the price of a normal BTO HDB flat now.
If you take a 30 years loan of $250,000 and share the payment with your spouse, you will fork out $500 per month for your payment. Thus:
You earn: $3000 per month
You contribute to CPF: $1080 per month
You pay HDB: $500 per month
What's left in your CPF: $580 per month, that would be $6960 in a year.
If you fall into these assumptions, bad luck to you. You didn't even make it past the 2011 increase in the MS. You certainly don't stand a chance making it in 2012 unless of course, you have the 13th month bonus or more, investments gains for previous punts using your CPF funds or you contribute cash voluntarily (dumbo).
If you bring in more than the median wage, are taking less loan for your HDB flat than the above assumed, or always raking in healthy year end bonuses, haven't bought or decided not to buy your HDB flat, congratulations. Woes no you.
If you are buying or have bought a 5 room flat, earning less than $3,000, getting a loan of $200,000 or more and may not get bonuses. Tough luck brother.
Some bad news. If you made it to the required $7,000 in 2011, are you going to make it in 2012 and 2013? If you are anticipating the increment to be $7,000 in the following years, you are in for another nasty surprise. It's going to be more than that for sure.
Are you going to have an increment annually significant enough to counter balance the MS annual adjustment?
Are you going to have an increment annually significant enough to counter balance the MS annual adjustment?
Some more bad news. Does inflation stop after 2013? There are positive thinkers out there but I'm not among them, as usual. I'll see the CPF Board announcing that our retirement fund could not remain in 2013 dollars because many of us will retire much later than 2013 and logically (to them), MS should be adjusted to the same value in future. How much would the MS be by then?
$200,000? $300,000? I'm no economist. You do the sums.
You can be sure it's not going to be $131,000 by then. You don't need to know how much it is. As long as you don't meet the adjustment for inflation yearly, you'll never make it. If you manage to job hop to higher salaries during your career span, good for you. If not, tough luck bro.
Another bad news: You can't afford to lose your job as it'll be a paramount task to up for the loss of CPF contributions in the process unless you top it up in cash (dumbo). For ladies, if you are thinking of taking a break to take care of the kids, dream on.
Even more bad news. The CPF Board says:
If you are unable to set aside your full Minimum Sum in cash, your property, bought with your CPF savings, will be automatically pledged for up to half of your Minimum Sum.
Automatically is the dirty word. Pledge is pure crap. I'll lose the ownership of my flat if I can't meet my Minimum Sum (whatever it is) by my retirement age. Oh wait! I don't own the flat in the first place. I signed the Agreement of Lease, not the Deed of Entitlement.
Stop to think for a second. Every single cent in our CPF account belongs to us. The government has no right to tell us what to do with it, much less control and withhold our money this way. Now that some of us have the real possibility of losing our flats by retirement age because we didn't save enough money in the CPF account, things have gone way overboard.
What next? There will be many new changes to our CPF in future. It'll make the entire scheme more complex, that it confuses the masses so much so that one day in future, if it hasn't happened already, the people will simply choose to regard the CPF as some form of tax instead of their cold hard cash, every single fucking cent of it, that rightfully belong to them.
Wake up Singaporeans. The slumber is over.
Wake up Singaporeans. The slumber is over.
Excellent article. I wonder if u compute the CPF contribution fm the employer's side? Read this : http://leongszehian.com/?p=1353
ReplyDeleteU didnt mention abt Medisave.
Only 15 yrs ago, my parents bought a 4A fm HDB at S$101K. Today it is now worth more than S$400K in the open market. This is madness! If we sell it off we still need to buy another flat also at a higher price say a 3 rm flat. There is not much u can make after the levy, taxes etc. Most pf the sale profits will go back to CPF since they got no CPF in their medisave.
Only those PRs stand to gain. They could sell off, pocket the profits and go back to their country to retire. We cant. We got no choice but to stay put.
@asingaporeanson - in your example, you forgot that only $630 wil go into the Ordinary Acct, and $209 will go into the Special Acct. After deducting the loan, there is actually only $339 left towrds the Minimum Sum. Correct me if I'm wrong ....
ReplyDelete@Gintai - you can choose to leave. Seriously.
I prefer to live and die in my place of birth. As simple as that. I love my country but doesnt mean I love the govt of the day. There are lots of ppl feel the same way. Leaving is nvr an option esp I no longer young. As u grow older, it is not easy to adjust to the diff climate, norms and customs of another foreign country.
ReplyDeleteI am also dead serious about that.
to me, if you can't beat them, join them. One of the reasons why I'm now in Melbourne.
ReplyDeleteLoyalty to the country don't mean anything now, looking at how our country has been "sold". Am not proud to be a quitter, but we've been marginalised for ages and I just couldn't take it anymore.
@Peck: I'm taking it as a best case scenario. If you are right, many, many more are fucked.
ReplyDelete@ Gintai: hmm. i took a full 36% (including employer's contribution) for the calculation. I'm assuming 100% of the CPF account count towards the MS. If medisave or special account is not, we are truly in deep deep shit if the CPF board decides to continue adjusting for inflation after 2013.
ReplyDelete@Ahm: I didn't leave because of bad policies of Singapore. I couldn't live in such a crowded place and i am constantly unhappy because of it. I can still tolerate the jokes that PAP churn out year after year.
ReplyDeleteAt this stage, i'm not even sure what will future will hold. Like i said several times, i may lose my job, can't find another and return to Singapore as a hungry dog with tails between my legs. I'm not taking anything for granted at this stage.
Besides the CPF Minimum Sum, there is also a Medisave Minimum Sum of $36k.. so we are talking about $167k of minimum sum... :(
ReplyDeleteThe more money Temasek and GIC loses, the more difficult it is to get your CPF out.
ReplyDeleteJust thinking of the recent Temasek's "misadventure" in some Pakistani bank...
As all opinions they are open to interpretation. This doesn't sound like an intelligent piece but you may have your points across to the Median wagers.
ReplyDeleteThe cpf scheme is the biggest ponzi scheme in the world, how many of us think the money is really liquid in our account? I know of people who died and their next of Kin are still waiting to see the cpf monies. Came to your blog cos it was recommended by a friend on fb, admire your guts and resolve, ur wife and child are lucky, keep blogging! Looking forward to reading more!
ReplyDeleteI have been following your blog but had not posted my comments. Thank you for sharing your life experiences in Perth. I'm 27, i'm starting to question where i want to live for you. After serving 14 years of HDB loan, my family still have $200k to clear. I have to decide if the dangerous world beyond this 700 sq km2 is worth exploring.
ReplyDeleteI worked as an insurance agent in 2006-2008. Yes, the Minimum Sum = Ordinary + Special Accounts. Medisave Minimum Sum is another sum.
Thank you for the inspiration, it's all about living one's dreams, though my family gonna disown me once i step out for good.
@Darren: bad news then...
ReplyDelete@anonymous: bet you are intelligent enough to know anonymous commenters don't get replies in the cyberworld. It's an unwritten rule. You get yours though. I AM a median wagers. Do i care about people above the bracket affording their MS with ease?
If you have facts, hit me with a better shot.
@AQ: i have been warned by a friend about what you commented on 5 years ago. Was skeptical but gave him the benefit of doubt and open my mind to the possibility. Over the years the signs are too obvious to ignore. I had to admit to him he was right. I'm writing to pass it on. Hope the others will do their own observing and decide for themselves. Pls help me pass it on
ReplyDelete@cannothear: Dude you're still so young. If you are determined enough you'll definitely be able to achieve what you want to do. Hopefully you'll walk a better path and don't have to go through what i did.
ReplyDelete@claire: The government should release the figures. First, it is good for themselves. It's unhealthy for the PAP to continue to be secretive because the population are getting suspicious. 5 years ago, it'll be a hush-hush thing to even suggest what you claim.
second, the government does not have the right to hold back the figures. this is public money. they do not own it. they are merely appointed as custodians on behalf of the citizens.
i'm afraid you may be right. it's rotting right inside and we may be relying on fresh funds to keep the whole thing going. i'll not be surprised a slight bit if i see it collapsing in my lifetime.
confidence for the future indeed. while you play with your CPF, the ministers roll in their pensions, receiving millions for not working.
ReplyDelete@Anonymous: A toast to your confidence for the future. More good years ahead!
ReplyDeletePerhaps you should clarify with CPF about what the word "pledged" means, rather than using your own definition and then inventing a conspiracy theory around it about losing your flat at retirement age.
ReplyDelete@Anonymous: Perhaps you should check with CPF what that means than suggesting I am using an invented definition and theory.
ReplyDeleteIf I cannot meet the payment for my HDB that should suggest that I couldn’t meet the Minimum Sum for my CPF as well, correct? Follow my train of though so far?
ReplyDeleteIt does not mean that I’ll lose my flat after my retirement age. As long as I cannot earn enough money to service my mortgage and Minimum Sum in my CPF, it is possible that I can lose it before I reach my retirement age.
Please correct me if I am wrong.
My question is why do you highlight retirement age as the time to lose ownership of the flat when the Minimum Sum is not met?
@Fatboy Joe: If you are paying your HDB loan via CPF and not being able to meet the full payment, i.e you gotta fork out a little more in cash, and it remains unchanged until retirement, you're certain to get your flat pledged at retirement age.
ReplyDeleteYou'll not lose the ownership of the flat before retirement age so long as you can service the flat by the combined cpf contribution of yourself n the 2nd owner, or top it up with cash for the shortfall.
Either way, your balance in the account will be technically zero in this situation until you pay up your flat. By then, there is hardly enough time to save enough in the CPF account until retirement age.
Hope I make sense?
Thank you for helping me understand more about my CPF.
ReplyDeleteYou see, according to your article I realise that I might be in a high-risk group. I got a 5 room HDB at S$225,000 odd in 2003 and am currently just able to pay for my HDB with the help of my wife (at about S$500 odd each).
The part that I have been searching CPF website and am still currently unable to understand is whether my HDB flat will be taken from me if I cannot meet the Minimum Sum during my retirement age in about 20 odd years time.
@Fatboy Joe: You're not alone. I'm in the high risk group and I know I'm going to get it since they came up with the scheme. I'm still thinking of solutions but I don't think I can make it in time.
ReplyDeleteMy flat's gonna get pledged for sure.
Supposedly the Minimum Sum is there so that when you reach the draw down age of 65, u will be able to receive monthly payouts until you deplete your Minimum Sum.
ReplyDeleteWhat is not known is that what happens to the pledged property when your MS is depleted. Do they just leave it pledged and stop paying your monthly payouts?
Anyway the whole idea of minimum sum is ridiculous to alot of ppl who can't meet it. Why are they forced to put money in a saving acct the govt managed, when they are having problem to survive til the draw down age of 65?
Correct me if i am wrong.
According to the the numbers that is shown in this article, it suggest that there is gonna be a high percentage of HDB owners who cannot meet the minimum sum in their CPF (including me) at retirement age.
DeleteThe part that got me searching and reading is the -
"I'll lose the ownership of my flat if I can't meet my Minimum Sum".
So far I am still searching the CPF website to confirm this part. At the same time I need to kick myself to work smarter and better for my family sake.
Hello, I am a student studying in Perth, and have a car too, fully paid for under AUD$3000. However, I very rarely come across $1.30/L for petrol. Which kiosk(s) do you go to for such good rates? Thanks.
ReplyDeleteit was a mistake... if you trace back the original ms scheme, the adjustment for inflation is only applied after 2013. the numbers they provided in the table at that time was fixed.
ReplyDeletethey bend the rules because of massive withdrawals.
they also included the medisave ms in the calculation as a result to stop the withdrawal.
@messy: there is only 1 legitimate reason that MS exists and it's unspeakable.
ReplyDelete@anonymous: HI student, I always pump on Wednesday, where the 2 kiosk near where I stay offers the lowest price. On top of that, I get 8 cents off per litre of petrol using woolies' discount card. I get one 'credit' for each $30 I spent in woolies.
Since I shop each weekend only, it's easy to chalk up $30 and I get a 'credit' per week.
With the 8 cents, I pump at $1.26 at most. Could be lower if the kiosk decide to be generous.
http://www.fuelwatch.wa.gov.au/ is your friend
@Anonymous2: If I have the ability to trace, I would like to know why is there a MS in the first place.
So far, after reading and asking about CPF minimum sum I have discovered that the government will not take away my HDB apartment at my retirement age if I cannot meet my minimum sum.
ReplyDeleteIf I am able to be faithfully paying for my HDB by my CPF with my wife, there should be a roof over my head at retirement age.
The problem seems to be if I intend to sell off my HDB or withdraw my CPF at my retirement age without meeting the minimum sum.
If I choose stay in my current HDB apartment with a healthy track record of paying my HDB debt, I should not need to worry that I'll loose my home.
Do correct me if I am wrong.
You will be allowed to live in the HDB flat, but you'll lose the ownership. Since you asked the CPF board and believe otherwise, live and let live.
ReplyDelete