Your money is my money...
I decided to take a look at the CPF website to learn about how I can
get back what is mine. What I found was a whole lot of Red Tapes separating me from my moolah.
From the CPF website as of 19th April 2007
"Supporting and caring for a rapidly aging population will be an increasing strain on Singapore's younger generations. Today, 10 economically active persons are supporting one elderly. By 2030, only 3.5 persons will be supporting one elderly! Therefore, it is important that you plan
early for a secure retirement."
Wha? Singapore does not have a pension system that pays out monies until a retiree kicks the bucket. (Except for some superscale civil servants) In Singapore, all your "pension" comes from your own pocket, and you may not even be able to take out a large part of it (Medisave). If your CPF runs our before you don't need it anymore, too bad for you. It will just "help" you not need the CPF faster. I hence do not see how this "decline" in youth economic support is going to affect Singapore as much as let say, Japan. Especially since Singapore is favoring the GST, which is revenue source that does not depend on the income of a tax payer.
"From 1 January 2013, members who reach 55 can withdraw their Special and Ordinary Account balances only after setting aside the CPF Minimum Sum and Medisave Minimum Sum. However, members can still withdraw the first $5,000 at age 55."
Am I going to get my money back after I retire? Not so fast! It is going to be more and more difficult to withdraw the money before the age of 62. Especially if I have enough to meet the CPF Minimum Sum (which will surely be more than $120000 by the time I retire). If I happen to meet the CPF Minimum Sum, then I'll have to top up my Medisave Minimum Sum too (currently $28,000)! Whee!
If I have used my CPF to pay for a property, then the CPF Board effectively "holds" part of my property as long as I do not have enough money left to meet the CPF Minimum Sum. On top of that, if the property is sold, then I have to return the money that I have used for the purchase
plus the applicable interest rate on that amount back into the CPF account. So, suppose that I have used $20,000 from my CPF to purchase the property, selling it 5 years later means that I have to return $22,628 back to my CPF account at the compounded OA interest of 2.5%. (Cool, I got to pay interest to myself for "lending" money to myself.) Recently, I learnt that this "return with interest" system also applies to CPF money that was used for education. I now wonder if the system also applies to CPFOA approved investments.
How about Medisave then? Turns out that it can only be used to pay for "approved" treatments, from "approved" institutions, up to the maximum "approved" amount. Nevermind that I may be able to go to Thailand to get similar treatments, inclusive of airfare and pampering in their medical resorts, at competitive prices. I can't use Medisave to pay for it! If I have good international medical insurance, then my Medisave can sit back and look even prettier. I have also just recently learnt that there is a fee to pay if I want to use Medisave to pay for my medical bill. Great isn't it? I've got to pay for the privilate of using my own money!
"The remaining Medisave balance, after the payment of the last medical bill, would be distributed by the Public Trustee to your family members under the intestacy laws for non-Muslims or the Muslim inheritance law for Muslims, if you had not made a nomination. If you wish to distribute your Medisave balance differently, then you would have to make a
nomination, if you have not made one yet."
Yeah sure, finally I get the money back. After I'm dead! Still, I'm not able to discern whether the payout will be in cash, or directly put into my inheritor's CPF account (gee wiz).
I really would rather CPF be more like America's 401(k) plan. Participation is voluntary, contribution rate is not fixed, and there are no such thing as "Minimum Sums".
posted by Ole' Wolvie @ 6:39 PM
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