Major CPF policy shift on the way

[egghead]

Just to check something on the new CPF $6000 ceiling. The news said about 554,000 middle-income earner will benefit. I thought those who earns >$5000 will benefit. Also effectively, the increase is $170 (max) which comes from employer's contribution. The $200 (max) is a transfer from your cash to CPF.

Based on a employed resident of 2.056mil in 2014, if I assumed that 554k workers sat in the middle band, then about about 1.3mil workers earns more than $5000. Assuming a simple 12-month (ie I excluded mid- and end-year bonus, etc), then is CPF collecting about an extra $5.8bil (=1.3*370*12) every year upfront?

Is my sum right?

There is also the age factor that you need to consider as different age band contributes different quantum. What is your purpose of working out this sum: CPF collecting about an extra $5.8bil (=1.3*370*12) every year upfront ?

[WolfT]

Just to check something on the new CPF $6000 ceiling. The news said about 554,000 middle-income earner will benefit. I thought those who earns >$5000 will benefit. Also effectively, the increase is $170 (max) which comes from employer's contribution. The $200 (max) is a transfer from your cash to CPF.

Based on a employed resident of 2.056mil in 2014, if I assumed that 554k workers sat in the middle band, then about about 1.3mil workers earns more than $5000. Assuming a simple 12-month (ie I excluded mid- and end-year bonus, etc), then is CPF collecting about an extra $5.8bil (=1.3*370*12) every year upfront?

Is my sum right?

554,000 will benefit means only 554k earns more than 5k,not 1.3mil.
You also need to consider the differences % of different age group in contribution.
about 3bil extra ba.

[GPD]

There is also the age factor that you need to consider as different age band contributes different quantum. What is your purpose of working out this sum: CPF collecting about an extra $5.8bil (=1.3*370*12) every year upfront ?

Just curious about how much CPF raked in every year from this "small change". Recently they allowed more flexibility in CPF withdrawal and now they are ensuring more fund are parked into CPF.

554,000 will benefit means only 554k earns more than 5k,not 1.3mil.
You also need to consider the differences % of different age group in contribution.
about 3bil extra ba.

Since they refer 554k as the middle-income earners, than including the high-income earners, the figure will be higher than 554k. Assuming they sit right in the middle band is probably wrong as well. Fine give and take on these plus the age factor, using just 554k, it will be about $2.5bil (not including any mid- and end-year bonus).

[egghead]

I see. So you're one of those who think that your CPF statement shows you money that is not yours.

[chongsk]

> Malaysia's EPF was paying good dividends to their members. Search thru internet, I discovered all EPF members' accounts have been
> receiving an average of 6.678% yearly dividends during the last 30 years!

> Compared to the mere 2.5% interest CPF members received. Members of the CPF Board may have been TOO conservative in the
> investment of CPF fund (total $252+ billions)

I rather choose the latter. Because if I have parked my $ in EPF, the ringgit would have dropped to less than half over the last 20 years! MY persistent deficit caused the drop in RM against the SGD...

I am talking about the returns of Singaporeans' CPF saving to that of Malaysian's EPF saving. The comparison depicts the investment performances of the two managing Boards rather than currency issue.

The calculated value of returns with 30 years compounding and taking in depreciation of the Ringgit using current exchange rate of 1:2.65, the Malaysians' returns are still 22% higher than Singaporeans'.

[yeokiwi]

> Malaysia's EPF was paying good dividends to their members. Search thru internet, I discovered all EPF members' accounts have been
> receiving an average of 6.678% yearly dividends during the last 30 years!

> Compared to the mere 2.5% interest CPF members received. Members of the CPF Board may have been TOO conservative in the
> investment of CPF fund (total $252+ billions)

I rather choose the latter. Because if I have parked my $ in EPF, the ringgit would have dropped to less than half over the last 20 years! MY persistent deficit caused the drop in RM against the SGD...

I am talking about the returns of Singaporeans' CPF saving to that of Malaysian's EPF saving. The comparison depicts the investment performances of the two managing Boards rather than currency issue.

Ya.. correct mah, just need to depreciate SGD and next year, our GIC performance in SGD will be stellar.

[CityFarmer]

> Malaysia's EPF was paying good dividends to their members. Search thru internet, I discovered all EPF members' accounts have been
> receiving an average of 6.678% yearly dividends during the last 30 years!

> Compared to the mere 2.5% interest CPF members received. Members of the CPF Board may have been TOO conservative in the
> investment of CPF fund (total $252+ billions)

I rather choose the latter. Because if I have parked my $ in EPF, the ringgit would have dropped to less than half over the last 20 years! MY persistent deficit caused the drop in RM against the SGD...

I am talking about the returns of Singaporeans' CPF saving to that of Malaysian's EPF saving. The comparison depicts the investment performances of the two managing Boards rather than currency issue.

Contrarian is right, comparing investment performance in different currency, is meaningless.

Fixed deposit return in RM is more than 4%, while around 1% in S$. Comparing the "returns" in different currency, will make deposit in S$ "very stupid", albeit it may not be the case in real life. S$ is safe haven for global hot money, and will remain so after MAS shifted the monetary policy, IMO

[egghead]

Can't compare CPF and EPF because their structures are different. CPF buys SSGS bond whereas EPF invests directly with equity, bonds, property, etc.

[investor101]

Here's my take on my earlier post:

1) If we rely solely on the yes-men (Do you think you are one?), then CPF returns will almost certainly not be improved. That's why I thanked Roy for speaking out.

2) Most of Roy's posts were never debunked. They were intentionally ignored. He was sued for only a very small part of his writings. He was not sued for a myriad of errors in his posts. Again, most people choose to ignore what they don't like.

3) Some are okay with town councils run by managing companies that are led by fellow party members, but they are not okay with non-party managing agents being friends of another town council. Some are also not okay with conflict of interest within the town council, but seem okay with the possible conflict of interests in other town councils and management of sovereign funds. If that is their stand, then we are on clearly different levels of moral values. So, nothing more to discuss. You right, everyone else wrong. Happy?

4) With regards to low CPF returns vs EPF returns, take note that our CPF returns are tied directly to CPF's mortgage loan rates. If you want better CPF returns, it means that tens of thousands of homeowners have to pay higher mortgage. Hence, this means CPF interest rates have to be perpetually kept low, very low in fact, or else the number of people defaulting on their housing loan will shoot up.

Bank interest rates also are closely linked. If CPF pays so little, banks have little reason to raise their bank savings rate. And if bank savings interest rate is forever near 0%, CPF also has little reason to offer you better returns than their 2.5 to 3% return since you are unlikely to get better returns anywhere else.

Perhaps we should consider delinking CPF returns from CPF mortgage loan rates. That could be a start to ensure that CPF returns can move up without affecting mortgage interest.

[egghead]

I've not been paying 2.6% for my HDB loan for years.