MPs offer ideas to improve CPF

[freedom]

There is only one way to improve return, that's by taking risk. In addition, CPF might ask banks to remove or lower certain charges, such as $2 service charge by holding stocks in CPFIS. In today's electronic age, $2 per counter per quarter is a hefty charge. Also, transaction fee should be lower, too. There isn't much risk with CPFIS, why are the banks charging the same rate as cash trading?

[CityFarmer]

The proposal detail is released in the report. A brief is available from the news report below.

Suggestions on MediShield Life premiums unveiled

SINGAPORE — The MediShield Life Review Committee (MLRC) has revealed its recommendations on premiums for Singapore’s universal public insurance scheme in its full report released today (June 27).
...
http://www.todayonline.com/singapore/sug...s-unveiled

[investor101]

I think labour chief Lim Swee Say has a valid point when he suggested that the way to improve CPF returns was simply to reduce spending of CPF on housing, medical and education.

Most people spend the bulk of their CPF on housing, which I think is grossly overpriced. The debate of that is in another thread, so no point going into that here yet again.

The basic premise is that if people spent less on paying for housing, they would have more money in their CPF to enjoy the compounding effect of 2.5%.
People should also not be allowed to turn their HDB flats into speculating devices through property flipping, or breaking of HDB rules on sub-letting. Law enforcement on people breaking HDB rules on subletting seems on the slow side.

I feel that CPF should pay out some form of bonus if the invested monies do well, just like what life insurance does. We should not be stuck at a lousy 2.5% while our GIC and Temasek can tout long-term compounded returns that rival Berkshire Hathaway.

[tanjm]

I think labour chief Lim Swee Say has a valid point when he suggested that the way to improve CPF returns was simply to reduce spending of CPF on housing, medical and education.

Most people spend the bulk of their CPF on housing, which I think is grossly overpriced. The debate of that is in another thread, so no point going into that here yet again.

Let's put some numbers on it. Supposing you spend 40k less on your house. That 40k would have been provided from a mortgage loan at a HDB concessionary rate of 2.6%. At the end of 25 years, you would have paid 54k. That 40k, if you had it to spare, put in CPF OA at 2.5% would have compounded to 74k at the end of 25 years.

The numbers get even larger if you assume that your mortgage is private (at an average of 5% including fees) and you put 40k into CPF SA account. 40k @ 4% for 25years = 100k.

Not bad eh? What's 40k in a house? Slight change in location, slightly smaller floor area?

So, do you think the minimum sum is so hard to achieve for a middle class person?

[tanjm]

I feel that CPF should pay out some form of bonus if the invested monies do well, just like what life insurance does. We should not be stuck at a lousy 2.5% while our GIC and Temasek can tout long-term compounded returns that rival Berkshire Hathaway.

Broken record here. So use your CPF to buy an STI ETF@100% of investible limit lah.

2.5% is an excellent rate for a risk free.

Besides any returns earned by Temasek or GIC just goes into our general kitty for the population of Singapore. It also serves as a partial basis for our AAA credit rating and the strength of the sing dollar, which in turn results in lower imported inflation which benefits everyone.

To quote Robert Heinlein. There ain't no such thing as a free lunch.

[Fish Head]

For a people who is a value investor with strong financial knowledge and discipline. it is completely not a topic for discussion.

We know how to manage our money, and if CPF on our hands, we can make better use and with a better return. But majority of middle income people who want their CPF money back, are just want to have a better car or a long oversea trip, or some fine dining.

How much money you are able to manage is very much depend on your mindset. A middle income people whose saving never more than 50k or 100k throughout their life will not able to manage 0.5M CPF at the age of 55 or 65. They will be worse than before within a short years.

There are no statistic in SG, but a study done in UK found most of jackpot lucky winner being worse financially 5 years after they won the million dollars. Even worse, many of them loss their ability to back to normal life, they can't work, loss their family, with problem in drug and sex, even commit crime. Many of them finally have to depend on social add to survive.

if 5% of our people goes into this situation when receiving their CPF. For SG, it will be national crisis. At the time, where can we find Roy Ngerng, and other opinion leaders?

[Freenasi]

Very well said. The people who need most the cpf for retirement are perhaps the lower/middle income group. This is where the gov can do better by helping them get a better return for the retirement funds. Not to lock up the funds and let it lost the value over time. The gov has proven that they can do way better than 2.5%. I m quite sure before 2016 some changes may come.

[Temperament]

Very well said. The people who need most the cpf for retirement are perhaps the lower/middle income group. This is where the gov can do better by helping them get a better return for the retirement funds. Not to lock up the funds and let it lost the value over time. The gov has proven that they can do way better than 2.5%. I m quite sure before 2016 some changes may come.

On the other hand, it may not.
i think PAPYs is quite sure they will return to "their" parliament of RUBBER STAMP. Even if only 49.99% or lesser voted PAPYs @ coming GE but still there is less than 33.33% voted for one opposition party, Papy will still got their rights of RUBBER STAMPING. Am i correct in my understanding of our democratic voting system?
Papys lose face only. But how is the World going to react? i mean will our FDI or economy affected?
i think it still too early for Singaporeans to be ready to accept a 1/3 minority of dissenting party in Parliament. Actually it's the other way round. No party in Singapore is ready to play the role of 1/3 minority in Parliament.
Sad!

[specuvestor]

I will be keen to see which fund will stick their neck out and say they can give 4-5% return annual in SGD terms over say 5-10 years

"The main challenge will be for private pension plans to offer a realistic chance of achieving better returns than the four to five per cent on the CPF Special Account, he said."

http://www.channelnewsasia.com/news/sing...77236.html

[CityFarmer]

I have an endowment plan (from AIA) with a current Projected Investment Rate of Return (PIRR) of 4.75%, which was adjusted from a more favorable PIRR when it was signed years ago. The PIRR then, made it an obvious choice to participate, and the current PIRR is comparable with SA rate. It is probably the best one in the market then, and the plan isn't available now, base on the feedback.

One point to note, it is non-guaranteed vs. the almost guaranteed for SA