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Saturday, August 04, 2012

CPF - Minimum Sum 2

I wrote an article about CPF Minimum Sum seven years back.

Well, back then not much people concern about this amount. But it has been a hot issue recent two years. It was projected that the minimum sum will be raised to $120,000 by 2013 based on the inflation rate on 2005. Unfortunately, it is more than what we expected. Thanks to the imported inflation rate, this number will be haunting CPF members in coming future.

The world is not only about the red dot. There are much more greater nation out of this country and the economic uncertainty has already taken place and gave impact to everyone. The government has been trying to control the inflation rate of this country but it is not an easy job and I can say there is not much solution left but to accept.

At this rate, inflation will continues and CPF minimum sum will be adjusted higher than projected. So, what is the catch?

Young professional who stretched too much to buy high priced property with their CPF money will be first affected. You will remember I keep emphasising on the consequences of draining CPF for high priced property. The keyword here is "stretched too much". If you can afford it, you are welcomed to buy. If you catch my post previously, I mentioned before property will be good but only applies to second property.

I mentioned the situation when you don't have sufficient fund for minimum sum in my first post. On top of that, you will need to pledge your property.

Explanation of property pledging for Minimum Sum from CPF website:
You can choose to pledge your property up to 50% of the Minimum Sum. In the event that the property is sold or otherwise disposed of, you are required to refund the Minimum Sum deficiency, or the principal CPF withdrawn for the property plus the accrued interest*, whichever is lower. The Minimum Sum deficiency is the CPF Minimum Sum applicable to you when you reach 55 less the balance in your Retirement Account (excluding the interest earned).
Well, once you pledged your property for minimum sum you are required to refund CPF a certain amount from sales of property including interest. Even if this is really intimating CPF members but the move is really to protect retiree's well-being.

Not to throw wet blanket, but don't really expect to get all your CPF money out before you die. This is really for your own benefit.

CPF - Using Medisave in Malaysia

Can I use my medisave elsewhere than Singapore? Yes you can.

With introduction of medisave usage in Malaysia, CPF members will have more choices.
News link: http://www.healthxchange.com.sg/News/Pages/Medisave-can-be-used-in-12-Malaysian-hospitals.aspx

Current overseas participating medical group:


HEALTH MANAGEMENT INTERNATIONAL
Referral centre:
Balestier Clinic and Health Screening Centre

Facilities in Malaysia:
Regency Specialist Hospital (Johor Baru), which provides a door-to-door return transport for up to four people for $80
Mahkota Medical Centre (Malacca)

PARKWAY HOLDINGS
Referral centre:
East Shore Hospital

Facilities in Malaysia:
Gleneagles Intan Medical Centre, Kuala Lumpur
Pantai Hospital, Kuala Lumpur
Pantai Hospital, Cheras
Pantai Hospital, Ampang
Pantai Hospital, Klang
Pantai Hospital, Ipoh
Pantai Hospital, Ayer Keroh
Pantai Hospital, Penang
Pantai Hospital, Batu Pahat
Pantai Hospital, Sungai Petani

My guess is more to come as Singapore government needs to cater for different needs.

There are some intelligent policies on using of medisave out of Singapore, Mahkota Medical Centre has a good FAQ for this purpose.

Thursday, August 02, 2012

CPF - Best Investment

CPF is the best investment? There are a lot of "advisors" asked you to invest your CPF money. Should you be investing your CPF?

Hell no to advisors! Why pay them commission? Risk co-exists with gain in any investment. If you are going to pay people to invest your CPF money, then it is a no-no. Keep it as retirement saving. Anyone can claim that they are some kind of investment guru in good times. When bad time comes, they blame it to the economy. CPF board has already assessed risk for each investment scheme so they limits the investment you can do by using your CPF money. The government don't want to take care of you when you are broke after you retire. This is Singapore's system, face it.

What is the best investment for CPF?

Yes, you can still invest. The best investment for CPF is paid up all your housing loan. Keep your first house debt away if possible. This is ensure you can get another bank loan for second property (if you can achieve it). There is good debt, there is bad debt. Property investment is still considered good debt but don't speculate.

Only second property will reaps profit if you invest properly. The first property is your house, your roof.

Remember the golden rule of thumb, do not overkill yourself by draining your CPF money on first property. It won't reap you any profit. If possible, start your property purchasing from HDB because you lose all privilege by buying private as first property.

Wednesday, August 01, 2012

CPF - Contribution Rate


Employee
Age (Years)
Contribution Rate
(for monthly wages ≥ $1,500)
Credited into
Contribution by Employer
(% of
wage)
Contribution by Employee
(% of
wage)
Total Contribution
(% of wage)
Ordinary Account
(% of wage)
Special Account
(% of wage)
Medisave Account
(% of wage)
35 & below1620362367
Above 35-451620362178
Above 45-501620361989
Above 50-551418.532.513.59.59.5
Above 55-6010.51323.51229.5
Above 60-6577.514.53.51.59.5
Above 656.5511.5119.5


Above is info extracted from CPF website on the date of this article is published. Take this figures as reference.

What is CPF to us?

In fact, not all of us know how to use it correctly. CPF is an amount of money set aside "forcefully" for retirement. Unless you have your own saving, otherwise don't clear up the account on risky investment. You may think inflation may be higher than CPF interest rate but the intention of CPF interest rate is to adjust against inflation (not to gain interest rate).

Let's set aside for now.

The key point here is to understand contribution by both employer and employee reduces by age. The percentage of contribution is credited into different account is also based on age. Investment or loan installment should be considered accordingly. Think also unemployed bad days or one of you is unemployed. Installment of $2,000 is very serious when you are unemployed.
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