HDB home prices then and now
By Fiona Ho / EdgeProp | August 8, 2018 9:00 PM SGT
https://www.edgeprop.sg/property-news/hdb-home-prices-then-and-now
https://www.youtube.com/watch?v=hxb55WzcdZQ&t=15s&utm_source=newsletter&utm_medium=email&utm_campaign=HDB+home+prices+then+and+now+
The Housing & Development Board (HDB) was set up on 1 February 1960 to solve Singapore’s housing crisis. Back in the day, many people were living in unhygienic slums and crowded squatter settlements. Only 9% of Singaporeans lived in government flats, while others yearned for a place to call home.
HDB sprang into action, and in less than three years, a total of 21,000 flats were built. By 1965, the HDB had built 54,000 flats.
Today, over one million HDB flats have been completed across the island, providing affordable housing options for generations of Singaporeans throughout the decades. But just how much have HDB home prices changed throughout the years? Read on for answers.
Source: HDB, EdgeProp.sg
1) 1970s
During its first decade of operation, HDB built only one- to four-room flats. To cope with a growing population, five-room flats were then introduced in the 1970s.
By the end of the decade, 36% of the total population were living in HDB flats. Average prices of HDB homes in the 1970s were:
3-room: Avg size - 646 sq ft; Avg price - $15,000 (New sale)
4-room: Avg size - 807 sq ft; Avg price - $20,000 (New sale)
5-room: Avg size - 1,022 sq ft; Avg price - $30,000 (New sale)
2) 1980s
Average floor sizes of new flats were increased from the early 1980s in response to the demand for bigger living spaces. Housing types like maisonettes were also introduced during this era.
More notably, HDB eased its eligibility conditions to allow more people a chance at homeownership in 1989, when it relaxed its citizenship criterion to allow Singapore permanent residents to own HDB flats. Average HDB flat prices in the 1980s were:
3-room: Avg size - 646 sq ft; Avg price - $50,000 (New sale)
4-room: Avg size - 807 sq ft; Avg price - $80,000 (New sale)
5-room: Avg size - 1,022 sq ft; Avg price - $110,000 (New sale)
Executive: Avg size - 1,506 sq ft; Avg price - $140,000 (New sale)
3) 1990s
The year 1991 saw one of the most significant changes in HDB’s policies for singles when it announced that single citizens aged 35 years and above could purchase HDB flats on their own. However, they were limited to only 3-room or smaller flats outside the central area.
In 1995, an intermediate category of housing to bridge the gap between HDB flats and private properties were introduced. Known as Executive Condominiums (ECs), these projects are built and sold by private developers. ECs offer the standard of private condo living but at lower prices and came with certain restrictions. Average prices of HDB flats in the 1990s fell in the following ranges:
3-room: Avg size - 753 sq ft; Avg price - $120,000 (New sale); $200,000 (Resale)
4-room: Avg size - 1,022 sq ft; Avg price - $170,000 (New sale); $270,000 (Resale)
5-room: Avg size - 1,345sq ft; Avg price - $230,000 (New sale); $350,000 (Resale)
Executive: Avg size - 1,560 sq ft; Avg price - $280,000 (New sale); $420,000 (Resale)
4) 2000s
Average floor sizes were decreased for new flats built in the 2000s. In the early part of the decade, further revisions were made to HDB’s policies for singles to allow Singaporeans to purchase flats of any type in any location.
It was also during this era that the Design, Build and Sell Scheme (DBSS) was introduced to add variety to public housing types in Singapore. Under DBSS, designated sites were sold to private developers, who are then responsible for designing, building and selling the flats.
Pricing increased significantly towards the end of the decade due to rising construction costs. The average prices for HDB flats during this decade were:
3-room: Avg size - 699 sq ft; Avg price - $110,000 (New sale); $180,000 (Resale)
4-room: Avg size - 968 sq ft; Avg price - $180,000 (New sale); $255,000 (Resale)
5-room: Avg size - 1,184 sq ft; Avg price - $240,000 (New sale); $340,000 (Resale)
Executive: Avg size - 1,399 sq ft; Avg price - $300,000 (New sale); $410,000 (Resale)
5) 2010s – present
Since peaking in 2Q2013, the HDB resale price index has been on a continuous descent for five consecutive years. However, we might be at a turning point as the HDB resale index showed a 0.1% q-o-q pickup in 2Q2018.
Today, a four-room resale HDB flat in Queenstown – one of the most expensive HDB estates to live in - comes up to a median transacted price of $718,000 in 2018. In comparison, three-bedroom condo units in a similar location typically costs at least $1 million. Average prices for HDB flats in 2018 are:
3-room: Avg size - 699 sq ft; Avg price - $291,000 (New sale); $310,000 (Resale)
4-room: Avg size - 968 sq ft; Avg price - $376,300 (New sale); $435,000 (Resale)
5-room: Avg size - 1,184 sq ft; Avg price - $448,700 (New sale); $530,000 (Resale)
Executive: Avg size - 1,399 sq ft; Avg price - $535,900 (New sale); $780,000 (Resale)
Note: Information is compiled from HDB and various online sources. They serve as guides and should not be used for official purposes.
An ordinary person who strives to find balance between family, work, business & life, while learning the ways to financial security and then early financial freedom ... and I like to eat potato. Also would like to coach my next generation on financial knowledge so that they can be better than my generation.
Sunday, 16 September 2018
About 6 in 10 withdraw CPF savings when they turn 55: CPF Board
About 6 in 10 withdraw CPF savings when they turn 55: CPF Board
By JEREMY LEE
Published 28 AUGUST, 2018 UPDATED 28 AUGUST, 2018
https://www.todayonline.com/about-6-10-withdraw-cpf-savings-when-they-turn-55-cpf-board
SINGAPORE — About six in 10 members (58 per cent) aged between 55 and 70 have withdrawn cash from their Central Provident Fund (CPF) savings since turning 55. The median amount withdrawn was S$9,000, and the average amount was $33,000.
Releasing an analysis of CPF withdrawal trends on Tuesday (Aug 28), the CPF Board said the information was obtained from a Retirement and Health Study involving face-to-face interviews with 7,200 members aged between 55 and 70.
The survey was conducted to find out what CPF members did with their funds, if they cashed them out. Under existing rules, when CPF members turn 55, they may withdraw part of their CPF savings in a lump sum.
Those who made cash withdrawals do so for three main purposes:
More than half (51 per cent) left the funds with banks and finance companies, without using them specifically, as there was no immediate need. The median amount deposited was S$8,000.
The second-biggest group (40 per cent) used the cash for household expenses and to pay off loans. These respondents had more children on average compared with those in the other groups, and some spent the withdrawals on their children's education. The median amount used for household expenses was S$5,000, and the median amount used for loan payments was S$6,000.
About 20 per cent used the funds to pay for big purchases like vacations or home renovations. Notably, a larger proportion of these individuals were still employed when they took the survey, compared with the other groups. The median amount used for overseas vacations was S$5,000, and the median amount used for home renovations was S$10,000.
Of the four in 10 CPF members who chose not to withdraw their savings, the CPF Board said they may have done so to enjoy higher CPF interest rates compared with those from banks.
It advised members to consider the trade-off between withdrawing their funds to meet current needs and leaving them in their CPF accounts to accumulate interest.
By JEREMY LEE
Published 28 AUGUST, 2018 UPDATED 28 AUGUST, 2018
https://www.todayonline.com/about-6-10-withdraw-cpf-savings-when-they-turn-55-cpf-board
SINGAPORE — About six in 10 members (58 per cent) aged between 55 and 70 have withdrawn cash from their Central Provident Fund (CPF) savings since turning 55. The median amount withdrawn was S$9,000, and the average amount was $33,000.
Releasing an analysis of CPF withdrawal trends on Tuesday (Aug 28), the CPF Board said the information was obtained from a Retirement and Health Study involving face-to-face interviews with 7,200 members aged between 55 and 70.
The survey was conducted to find out what CPF members did with their funds, if they cashed them out. Under existing rules, when CPF members turn 55, they may withdraw part of their CPF savings in a lump sum.
Those who made cash withdrawals do so for three main purposes:
More than half (51 per cent) left the funds with banks and finance companies, without using them specifically, as there was no immediate need. The median amount deposited was S$8,000.
The second-biggest group (40 per cent) used the cash for household expenses and to pay off loans. These respondents had more children on average compared with those in the other groups, and some spent the withdrawals on their children's education. The median amount used for household expenses was S$5,000, and the median amount used for loan payments was S$6,000.
About 20 per cent used the funds to pay for big purchases like vacations or home renovations. Notably, a larger proportion of these individuals were still employed when they took the survey, compared with the other groups. The median amount used for overseas vacations was S$5,000, and the median amount used for home renovations was S$10,000.
Of the four in 10 CPF members who chose not to withdraw their savings, the CPF Board said they may have done so to enjoy higher CPF interest rates compared with those from banks.
It advised members to consider the trade-off between withdrawing their funds to meet current needs and leaving them in their CPF accounts to accumulate interest.
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Not good financial sense to withdraw CPF savings, put it in banks to earn lower interest
By GAN KOK TIONG
Published 10 SEPTEMBER, 2018 UPDATED 11 SEPTEMBER, 2018
I refer to the report "About 6 in 10 withdraw CPF savings when they turn 55: CPF" (Aug 28), on how 58 per cent of those aged between 55 and 70 have withdrawn cash from their Central Provident Fund (CPF) savings since turning 55 and that 51 per cent of these people left the money with banks and financial institutions instead of having specific uses for them upon withdrawal.
I find these numbers puzzling, given that the interest rates offered by banks pale in comparison to that of the CPF Board.
Furthermore, CPF members aged 55 and above can earn an extra 1 per cent more in interest rate on top of the legislated minimum rate of 2.5 per cent per annum.
In contrast, the three-month average of major Singapore banks' interest rates stands at 0.24 per cent.
Besides having liquidity and a perceived ability to manage one's hard-earned money, it does not make much economic and financial sense to switch to a less rewarding financial portfolio. It is worse if the money withdrawn is kept "under the bed", as if money in hand is worth two in a bush.
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Distrust of CPF: More effort needed to educate members
Published 14 SEPTEMBER, 2018 UPDATED 14 SEPTEMBER, 2018
A letter from a reader, "Not good financial sense to withdraw CPF savings, put it in banks to earn lower interest" (Sept 10), attracted many comments from Facebook users, with a majority disagreeing with the letter writer's point that it is better to enjoy the higher interest rates of Central Provident Fund savings rather than to withdraw them and put them in a bank. However, there were also a handful who believe the majority are distrustful of leaving too much money in CPF because they are not fully aware of its potential as a financial tool.
People have no confidence in keeping their money in CPF because of the changes in regulation. Now I can take it, but then next day, I can't. So better to withdraw and put money in the bank. Josh Sim
Sometimes, it's not all about return of investment. It's about how you want to have liquidity to sensibly do the things you have always wanted to do now that you are older. What's the point of having so much money in CPF but end up having a lousy lifestyle? KC Hammy
Whether 1 per cent or 4 per cent, still would not be sufficient to fight inflation. Lim Foong Fee
High interest, so what? How long are you going to live? Just withdraw and spend it. Jeffrey Lim
Not good financial sense to keep savings with CPF and feel so rich by looking at it and yet can't use it when you need it. It's about liquidity. Lawrence At Work
How do you know what those 58 per cent do with their money after withdrawing from the CPF and depositing into the bank? Why does the report assume that they do not invest from the bank? DeLeviathan At Sg
I decide what I want to do with my money, be it a "bad decision" of putting my savings "in the bank at lower interest"... and not have a "nanny" deciding on my behalf. Rabocse Mae Enileda
I told my friend… at the end of the day, (a higher CPF interest rate of) 4 per cent of nothing will be nothing, and 1 per cent of something is still something. I took whatever I could and put it under my own control, to be used any time I want. Gabriel Khoo
Better than the changing rules and regulations with tedious paperwork and shifting goal posts, and we are unable to withdraw (from CPF). Money in hand and in bank feels more secure. Brendan Tan
It is our money, let us decide what we want to do with it. We are not kids who need you to tell us the pros and cons of what to do with our money. Vimala Suppiah
At least CPF contributors can see their money physically at last even though the interest rate is low in banks, after forcefully saving for years. Nadarajah Kulanthaiappan
Cash in hand is better than having it in CPF. Who knows when the Government may set a new policy that the money can no longer be withdrawn at age 55, and it becomes 65... no matter if bank's interest rate is low or high... Money in our own hands is safe. Aloysious Stephen Yip
Always good to have control over your money. Everything else is secondary. John FC
It's a psychological thing. CPF restricted access to the savings for half of our lives… such illogical decisions (by those who withdraw) will still persist to serve a psychological need — the need to control. Mu Chan
For them to withdraw CPF money and deposit it into a bank with lower interest rate, what do you think the reason could be? They have lost trust in CPF or they don't understand what they are doing? Paul Hui
If trust is the issue, then take out a portion, not all. Partial risk management… I think there is a lot of misinformation out there about CPF resulting in some citizens having misconceptions about CPF. It is one of the best "get rich" tool out there and people are missing this wealth because of the misinformation…
I think there are two camps of people here:
1. One that desires liquidity and freedom to spend over their desire to be richer.
2. One that wants high return rates for their money to make them richer.
There is no right or wrong, just different lifestyles. Loo Cheng Chuan
I think those who withdraw their available CPF amount do it because they don't want to go through the "troublesome" process of withdrawal. Yet I must say it's a safeguard that we cannot do without. Mark Leong
What you can't touch, you can't spend. After retirement, it's bad money management that lands retired people in hot water. Mason Jason
My mama is already 70 years old and she did receive half of her money from CPF after she retired and the rest of the money went to her Retirement Account. Since she doesn't need the money, we don't allow her to withdraw it because the interest rate in CPF is higher. But now she is enjoying monthly payouts. Priscilla Toh
If you have the time and wisdom to do your investment, then yes, you should withdraw. But if you are going to withdraw the entire sum just to put it in the bank, then it is really unwise. Chang Fong Chua
I am above 55, still working, have more than the required minimum sum needed by CPF, have not withdrawn a single cent, because it is safe and provides good return. Wilfred Lee
A lot of people do not know that leaving your withdrawable CPF in your Retirement Account earns 4 per cent interest annually. You can still choose to withdraw any amount you need monthly and it's so easy now with PayNow enabled. There is a lot of education to be done to educate the general public about these. However, there will also be a small minority who oppose the Government and choose to put their money in a savings account with a bank or under their pillows. Poon Ann Poh
I am baffled why people are averse to CPF. I didn't withdraw when I retired and reached 55 years old. Instead, every January, I transfer the maximum amount allowed from my Ordinary Account to my Retirement Account. Every year, I enjoy a total of more than S$10,000 in interest and it keeps compounding. I have opted for CPF Life payouts at 70 instead of 65 just to earn more interest and a higher payout sum. Toh Ong
Between the ages of 55 and 70, you can withdraw what's over the minimum sum anytime. If you really do not need the money, then keep it in CPF to earn better interest compared to leaving it in a bank account. Monthly payouts from the minimum sum will start at the age of 65. But if you don't need monthly payouts, then you can tell CPF to hold on until 70 to start the monthly payouts. If that's the case, your monthly payouts starting from the age of 70 will definitely be higher than if the payouts start at 65. CPF is a very good retirement tool… Your CPF money does ultimately belong to you. Even if you die early, your money will still go to your nominated beneficiary, and not kept by CPF or the Government. So in that way, you can still say that your CPF money still belongs to you. Kim Foong Foo
*Comments were first posted on TODAY's Facebook page and TODAY Readers Facebook group. They are edited for language and clarity.
The Big Read: Private-hire drivers face roadblocks as they seek way out of once-lucrative industry
The Big Read: Private-hire drivers face roadblocks as they seek way out of once-lucrative industry
By KENNETH CHENG
Published 01 SEPTEMBER, 2018 UPDATED 02 SEPTEMBER, 2018
https://www.todayonline.com/big-read/big-read-private-hire-drivers-face-roadblocks-they-seek-way-out-once-lucrative-industry
SINGAPORE — Two years ago, Grab driver Muhammad Syahmi joined a ride-hailing industry brimming with rosy prospects.
Buoyed by generous incentives dished out by firms, drivers cashed in on the lucrative business, where earning a decent wage was a relative breeze. “It was… easy money (then),” Mr Syahmi, 25, told TODAY.
For many drivers like him, however, the tide has since turned: Dogged by meagre incentives and fares in recent months, those bolting for the exit have found themselves in a quandary, as they struggle to land jobs after years in the driver’s seat.
And they cannot say they had not been warned.
It was not too long ago that observers and experts cautioned that providing a private-hire car service could harm drivers’ job prospects. It did not add to their resumes and offered little in the way of skills-building, they had said.
But few were prepared to listen then, as ride-hailing firms such as Grab and Uber grew rapidly in Singapore after muscling into the point-to-point transport sector in 2013, and turning the industry on its head.
These fears are now being lived out by drivers, as some — seeking a way out for months — have been met with nothing but rejections.
Since Grab’s acquisition of Uber’s regional operations in March, Mr Syahmi has fired off no fewer than 50 job applications.
The polytechnic graduate, who has a diploma in outdoor and adventure learning, went after openings in areas ranging from customer service to hospital patient service.
He was called up for four interviews, but has yet to bag a job offer.
The soft-spoken young man cited a depleting wage, and concerns over advancement as the main reasons he is searching for greener pastures.
“At my age, I should be doing other jobs for stability and (better) prospects,” he said.
IN THE SAME BOAT
There are many existing or former private-hire car drivers in a similar predicament, including the thousands who recently left the industry following the new licensing regime.
In July, the Land Transport Authority (LTA) said nearly half of the private-hire car drivers — 20,900 out of 42,900 — who received a one-year concession to attend a course and pass a test to obtain their vocational licence failed or did not attempt the test. Those who received the licence numbered 22,000.
Drivers who applied for the Private Hire Car Driver’s Vocational Licence (PDVL) before July last year had to undergo the course and pass the test by June 30 this year to continue offering the service. The licence was introduced last year to ensure that drivers had the requisite skills to provide the service safely.
The Employment and Employability Institute (e2i), one of the test centres for the PDVL, has also been helping drivers without a licence find jobs.
Its spokesperson said drivers are still employable in other sectors, but noted that those who have provided chauffeured services for the past two or three years “may not be familiar with the current employment landscape or know how to go about seeking new employment”.
“As such, they will need time and effort to transit into full employment, and therefore, we are helping with these interventions,” the spokesperson added.
The institute did not provide figures for drivers who have approached it for such help, nor did it specify how many drivers had been matched to jobs.
INCOMES HIT, POOR ADVANCEMENT
In the wake of the Grab-Uber deal, many drivers cried foul as their incomes took a battering after Grab slashed its drivers’ incentives, which until then served as a considerable boost to their earnings.
Drivers were hit in the pocket, as they reported lower earnings even after investing longer hours on the road each day.
For Grab driver Edmund Chua, 60, driving for at least 10 hours a day now nets him up to S$2,000 monthly. By contrast, in 2015, drivers who hit the roads for less than eight daily could earn S$2,500 quite easily with incentives, he said.
As recently as last year, drivers could snag weekly incentives of at least S$500 for completing a certain number of trips. Grab has since cut these to S$150, drivers said.
Mr Chua, a former contract teacher in secondary schools, said he plans to return to adjunct teaching, “in case I cannot drive anymore because I can be tired”.
“If private-hire drivers lose their jobs, they need to have a plan B. I don’t think this will be sustainable as a profession,” said the father of two daughters aged 13 and 15.
But the anxieties faced by drivers go beyond plummeting incomes. The lack of career prospects also weighs on the minds of some.
“When you drive for too long, maybe people think that you only can drive and you don’t have a lot of skills,” said Mr Syahmi, whose flurry of job applications were sent via various online portals, including Monster and JobStreet.
Nevertheless, he said driving has taught him soft skills, such as controlling his emotions when dealing with irate or demanding passengers. “We tend to be more patient or calm… skills that are quite important if we want to work in the customer-service line,” said Mr Syahmi, who added that he would leave straight away if a job offer lands.
Another driver, who wanted to be known only as Mr Sim, 38, stopped driving for Grab in June. His “long-term prospects” were the main consideration, he said, so he jumped at an opportunity in logistics operations when it emerged.
“Based on my age, I feel that driving can be something (I could do) towards retirement. It’s not a job I look forward to doing till the end of (my) days,” Mr Sim said.
The prospects for drivers, he added, were not as good as before and the dearth of benefits — such as contributions to the Central Provident Fund savings scheme — was a drawback.
For others, like Ms Vanessa Tiffany, 43, driving is not their only source of income. Apart from running a children’s events company, she is a relief teacher at a playgroup.
She cautioned drivers against relying on full-time driving as their rice bowl. “You’re not (going to) get anything. (You’ve to spend) 18 hours on the road every day to get S$4,000-plus (each month). In the end, you’ll fall sick,” the mother of three said.
Asked how the company was dealing with drivers’ concerns over reduced incentives and earnings, Grab Singapore head of transport Andrew Chan said its focus was to keep its drivers’ operating costs low, and to support them and their families.
Mr Chan noted that Grab was expanding its Better 365 programme, which improves drivers’ experience and welfare.
Apart from fuel discounts and free personal accident insurance coverage, Grab recently introduced a three-day rental subsidy for top drivers when they take time off from driving, said Mr Chan.
Other initiatives include discounts for medical services for drivers and their families, and education bursaries for their children.
“While the freelance nature of the gig economy often results in higher turnover rates than other industries, we continue to find more ways and opportunities to maximise our driver-partners’ earnings through better technology, more ancillary revenue streams through GrabAds, and Better 365,” Mr Chan said. “This model is more sustainable and improves overall income in the long run for our driver-partners.”
TODAY understands that Grab also has a partnership with government agency SkillsFuture Singapore (SSG), under which workshops are conducted to help drivers identify their skills-upgrading needs and how they can better tap the resources available. There is also a set of training courses curated for drivers.
Meanwhile, home-grown ride-hailing service Ryde said its drivers’ earnings have been “healthy”. They earn an average full-time income of S$5,500 monthly, after deducting commission fees, its spokesperson said.
Ryde takes a 10 per cent cut from its private-hire car drivers, lower than the 20 per cent commission Grab levies on its drivers.
ALTERNATIVES: FOOD DELIVERY, CHAUFFEURING VISITORS
While many drivers are looking to get out of the ride-hailing industry, some have found other ways to make ends meet.
These include taking on bookings from tourists — mostly from China — and chauffeuring them to and from the airport as well as between major tourist sites.
Others have switched to become delivery-partners under Grab’s food-delivery service GrabFood, for example.
Mr Ong Boon Piew, 56, who has failed at least 10 attempts at the PDVL test, said he was left with no choice but to become a GrabFood delivery-partner.
Armed with a motorcyclist’s licence, Mr Ong bought a motorcycle of more than 10 years old from a friend in July for about S$3,000.
The former lorry crane driver said food delivery was less stressful than driving a private-hire car, as he did not have to pay rental.
Right now, he clocks between eight and 10 hours a day, receiving about two assignments every hour. On good months, he can earn more than S$3,000.
He acknowledged, however, that he could earn more as a private-hire car driver, although this entailed clocking longer hours on the road.
Mr Ong said he will reapply for a Taxi Driver’s Vocational Licence, which allows licensees to drive both taxis and private-hire cars. But for the moment, he said in Mandarin: “I have no choice. Without the option of (private-hire car driving), I’ve to find another job as a substitute.”
GrabFood crew can deliver food on bicycles, motorcycles, personal mobility devices including electric scooters, and even on foot. Those who wish to use cars must ensure that they are not using a private-hire chauffeured motor car or station wagon, Grab said.
Under the LTA’s regulations, taxis and private-hire cars are meant to carry passengers for hire and reward, and cannot be used for the conveyance of goods for reward. Drivers accepting such jobs may have their vocational licences revoked, said an LTA spokesperson.
The spokesperson added that owners who use their private vehicles to carry out a business for the transportation of goods must ensure that their vehicles have appropriate insurance cover for such additional uses.
Grab’s spokesperson told TODAY last month that it has helped the majority of its drivers who did not obtain their PDVL by June 30 and were keen to explore other career options. This included converting them to GrabFood delivery-partners and referring them to e2i.
“For those who wish to retake their PDVL, Grab continues to support these drivers with their reapplication process and provides free revision classes to help them better prepare for the exams,” added the spokesperson.
Meanwhile, drivers such as Mr Chris Koh, 51, are devoting the bulk of their time to fulfilling bookings from tourists largely from China. For them, Grab rides have been relegated to a secondary source of income.
These drivers shuttle tourists between the airport and their hotels, or to tourist attractions, such as the Merlion, Gardens by the Bay and the National Gallery Singapore.
Linking up with riders via China-based applications such as Hi Guides and Yun Di Jie, drivers said that at peak travel seasons, such as during China’s recent summer school holidays, they earned nearly twice as much as what they drew from Grab rides.
Prices are fixed by the apps, where users can choose from a range of car types, said Mr Koh, who began taking on these bookings about a year ago and knows of 80 to 100 drivers doing the same.
Drivers in five-seat cars earn S$30 to S$35 for a journey from the airport to downtown Singapore, compared with about half (S$18) on Grab, before deducting commission fees, he said.
Mr Koh has cut down on Grab bookings significantly, doing just 20 rides a week now, compared with 80 to 120 trips previously.
He also gets more satisfaction from interacting with the tourists. “We get to know people from overseas, mainly… from different parts of China. We’re like ambassadors (of Singapore) as well,” he said.
Mr Koh said it was “optional” for drivers to show their guests around the attractions and they do not get paid for this, recognising that tourist guides must hold a licence granted by the authorities.
Another driver, who wanted to be known only as Mr Lim, 50, said he gets at least four such chauffeured bookings daily, including airport transfers and trips to take in the sights. He also takes on limousine services for business guests. Apart from China, his customers are from Korea, Japan, Russia, the United States and the Middle East, among other places.
Ms Ong Ling Lee, the Singapore Tourism Board’s director of travel agents and tourist guides, told TODAY that the agency monitors such practices and has contacted some platforms to tell them about Singapore’s legislation on guiding services, where necessary.
Ferrying tourists does not constitute guiding, said Ms Ong, but she added that individuals must hold a valid tourist-guide licence if they provide guiding services to one or more tourists for remuneration.
Mr Koh said that in the longer run, he was mulling over taking up a tourist-guide licence. However, juggling the course, which lasts about half a year, with his driving commitments would be cumbersome, he said.
HELP AVAILABLE
Members of Parliament (MPs) from the labour movement urged drivers to gain new skills even while on the job, so as to prepare themselves for other jobs should the need arise.
Mr Desmond Choo, an assistant secretary-general with the National Trades Union Congress, acknowledged that re-skilling and re-training can be difficult at times for many of these drivers, especially those who are older.
But he urged them to seek help from the National Private Hire Vehicles Association (NPHVA), which can work with organisations such as e2i to help workers gain new skills under the Government’s Adapt and Grow employment-support initiative.
For instance, the Place-and-Train Professional Conversion Programmes, where workers are hired by employers and trained to take on new jobs, will allow drivers to make the transition, said Mr Choo, an MP for Tampines Group Representation Constituency (GRC).
“This process will take some time, so it’s important that the workers have to start this journey earlier,” he added.
Mr Choo said that through the relevant agencies, drivers can also be matched to industries for which they have more “transferable skills”, such as the automotive sector as driving instructors or the public transport industry as bus drivers.
It is also key for younger drivers to avail themselves of career-planning resources such as the NTUC’s Youth Career Network, which helps workers keep in step with industry trends and skills in demand.
“With better career planning, they are able to see other career opportunities rather than just driving for Grab.”
There was also a need to help drivers gain transferable skills, said Mr Choo. In this regard, modular, bite-sized training — conducted online, for instance — that could count towards a diploma or certificate will become increasingly important.
“While they may not be able to go to classes full-time, they can learn during their free time and then (attend) a few days of classes and… over a certain period of time, they can get a certificate,” he said. “This must be the new direction.”
Besides help from e2i and government agencies SSG and Workforce Singapore, Mr Ang Hin Kee, executive adviser to the NPHVA and the National Taxi Association, said that both associations have asked and will continue to call on the LTA to allow private-hire car and taxi drivers to be allowed to deliver parcels, in order to “monetise their time”.
At TransportSG, a division of e2i, drivers are coached on job opportunities and the employment landscape. Employability coaches can also guide them to pick up new skills.
e2i’s spokesperson said drivers stand a much higher chance of landing a job through job matching or career fairs if they are “job-ready”. In July, the institute had 14 employers engage drivers who were seeking other driving-related positions, for instance.
It also designed a new Career Trial-cum-Place and Train Programme to help drivers without the PDVL find jobs. Under the Career Trial, drivers will be placed for a month with employers, who are encouraged to recruit them as full-time staff members at the end of the stint with a wage support scheme.
The programme is not confined to certain industries or job types, although driving-related positions are among the options. “We will assess the applicants’ transferable skill sets and work with them to match job positions according to their best fit,” said the e2i spokesperson.
Mr Choo said the gig economy is a permanent and growing part of the workforce not just in Singapore but globally, as app-based work becomes more common.
“It’s not a bad thing… because it does allow people to transit to industries to find new sources of income more flexibly,” he added, though concerns remain over how to better protect such self-employed workers and ensure their long-term financial security.
Agreeing, Mr Ang reiterated that disruptive technologies will create new job opportunities for workers, but also disrupt existing ones. “As a global phenomenon, we are better off finding a way to manage it than to reject it,” said the MP for Ang Mo Kio GRC.
As for Mr Syahmi, he recognises the benefits of picking up new skills as he looks for a new job. “We’re quite used to being our own boss… (but) we can’t be drivers for our whole life,” he said.
He is thinking of learning another language, such as Mandarin, which will come in handy for jobs in customer service, for example.
However, he will not be approaching e2i for help for now, as he will like to secure a job on his own. “I just want to discover where I should go myself,” he said.
By KENNETH CHENG
Published 01 SEPTEMBER, 2018 UPDATED 02 SEPTEMBER, 2018
https://www.todayonline.com/big-read/big-read-private-hire-drivers-face-roadblocks-they-seek-way-out-once-lucrative-industry
SINGAPORE — Two years ago, Grab driver Muhammad Syahmi joined a ride-hailing industry brimming with rosy prospects.
Buoyed by generous incentives dished out by firms, drivers cashed in on the lucrative business, where earning a decent wage was a relative breeze. “It was… easy money (then),” Mr Syahmi, 25, told TODAY.
For many drivers like him, however, the tide has since turned: Dogged by meagre incentives and fares in recent months, those bolting for the exit have found themselves in a quandary, as they struggle to land jobs after years in the driver’s seat.
And they cannot say they had not been warned.
It was not too long ago that observers and experts cautioned that providing a private-hire car service could harm drivers’ job prospects. It did not add to their resumes and offered little in the way of skills-building, they had said.
But few were prepared to listen then, as ride-hailing firms such as Grab and Uber grew rapidly in Singapore after muscling into the point-to-point transport sector in 2013, and turning the industry on its head.
These fears are now being lived out by drivers, as some — seeking a way out for months — have been met with nothing but rejections.
Since Grab’s acquisition of Uber’s regional operations in March, Mr Syahmi has fired off no fewer than 50 job applications.
The polytechnic graduate, who has a diploma in outdoor and adventure learning, went after openings in areas ranging from customer service to hospital patient service.
He was called up for four interviews, but has yet to bag a job offer.
The soft-spoken young man cited a depleting wage, and concerns over advancement as the main reasons he is searching for greener pastures.
“At my age, I should be doing other jobs for stability and (better) prospects,” he said.
IN THE SAME BOAT
There are many existing or former private-hire car drivers in a similar predicament, including the thousands who recently left the industry following the new licensing regime.
In July, the Land Transport Authority (LTA) said nearly half of the private-hire car drivers — 20,900 out of 42,900 — who received a one-year concession to attend a course and pass a test to obtain their vocational licence failed or did not attempt the test. Those who received the licence numbered 22,000.
Drivers who applied for the Private Hire Car Driver’s Vocational Licence (PDVL) before July last year had to undergo the course and pass the test by June 30 this year to continue offering the service. The licence was introduced last year to ensure that drivers had the requisite skills to provide the service safely.
The Employment and Employability Institute (e2i), one of the test centres for the PDVL, has also been helping drivers without a licence find jobs.
Its spokesperson said drivers are still employable in other sectors, but noted that those who have provided chauffeured services for the past two or three years “may not be familiar with the current employment landscape or know how to go about seeking new employment”.
“As such, they will need time and effort to transit into full employment, and therefore, we are helping with these interventions,” the spokesperson added.
The institute did not provide figures for drivers who have approached it for such help, nor did it specify how many drivers had been matched to jobs.
INCOMES HIT, POOR ADVANCEMENT
In the wake of the Grab-Uber deal, many drivers cried foul as their incomes took a battering after Grab slashed its drivers’ incentives, which until then served as a considerable boost to their earnings.
Drivers were hit in the pocket, as they reported lower earnings even after investing longer hours on the road each day.
For Grab driver Edmund Chua, 60, driving for at least 10 hours a day now nets him up to S$2,000 monthly. By contrast, in 2015, drivers who hit the roads for less than eight daily could earn S$2,500 quite easily with incentives, he said.
As recently as last year, drivers could snag weekly incentives of at least S$500 for completing a certain number of trips. Grab has since cut these to S$150, drivers said.
Mr Chua, a former contract teacher in secondary schools, said he plans to return to adjunct teaching, “in case I cannot drive anymore because I can be tired”.
“If private-hire drivers lose their jobs, they need to have a plan B. I don’t think this will be sustainable as a profession,” said the father of two daughters aged 13 and 15.
But the anxieties faced by drivers go beyond plummeting incomes. The lack of career prospects also weighs on the minds of some.
“When you drive for too long, maybe people think that you only can drive and you don’t have a lot of skills,” said Mr Syahmi, whose flurry of job applications were sent via various online portals, including Monster and JobStreet.
Nevertheless, he said driving has taught him soft skills, such as controlling his emotions when dealing with irate or demanding passengers. “We tend to be more patient or calm… skills that are quite important if we want to work in the customer-service line,” said Mr Syahmi, who added that he would leave straight away if a job offer lands.
Another driver, who wanted to be known only as Mr Sim, 38, stopped driving for Grab in June. His “long-term prospects” were the main consideration, he said, so he jumped at an opportunity in logistics operations when it emerged.
“Based on my age, I feel that driving can be something (I could do) towards retirement. It’s not a job I look forward to doing till the end of (my) days,” Mr Sim said.
The prospects for drivers, he added, were not as good as before and the dearth of benefits — such as contributions to the Central Provident Fund savings scheme — was a drawback.
For others, like Ms Vanessa Tiffany, 43, driving is not their only source of income. Apart from running a children’s events company, she is a relief teacher at a playgroup.
She cautioned drivers against relying on full-time driving as their rice bowl. “You’re not (going to) get anything. (You’ve to spend) 18 hours on the road every day to get S$4,000-plus (each month). In the end, you’ll fall sick,” the mother of three said.
Asked how the company was dealing with drivers’ concerns over reduced incentives and earnings, Grab Singapore head of transport Andrew Chan said its focus was to keep its drivers’ operating costs low, and to support them and their families.
Mr Chan noted that Grab was expanding its Better 365 programme, which improves drivers’ experience and welfare.
Apart from fuel discounts and free personal accident insurance coverage, Grab recently introduced a three-day rental subsidy for top drivers when they take time off from driving, said Mr Chan.
Other initiatives include discounts for medical services for drivers and their families, and education bursaries for their children.
“While the freelance nature of the gig economy often results in higher turnover rates than other industries, we continue to find more ways and opportunities to maximise our driver-partners’ earnings through better technology, more ancillary revenue streams through GrabAds, and Better 365,” Mr Chan said. “This model is more sustainable and improves overall income in the long run for our driver-partners.”
TODAY understands that Grab also has a partnership with government agency SkillsFuture Singapore (SSG), under which workshops are conducted to help drivers identify their skills-upgrading needs and how they can better tap the resources available. There is also a set of training courses curated for drivers.
Meanwhile, home-grown ride-hailing service Ryde said its drivers’ earnings have been “healthy”. They earn an average full-time income of S$5,500 monthly, after deducting commission fees, its spokesperson said.
Ryde takes a 10 per cent cut from its private-hire car drivers, lower than the 20 per cent commission Grab levies on its drivers.
ALTERNATIVES: FOOD DELIVERY, CHAUFFEURING VISITORS
While many drivers are looking to get out of the ride-hailing industry, some have found other ways to make ends meet.
These include taking on bookings from tourists — mostly from China — and chauffeuring them to and from the airport as well as between major tourist sites.
Others have switched to become delivery-partners under Grab’s food-delivery service GrabFood, for example.
Mr Ong Boon Piew, 56, who has failed at least 10 attempts at the PDVL test, said he was left with no choice but to become a GrabFood delivery-partner.
Armed with a motorcyclist’s licence, Mr Ong bought a motorcycle of more than 10 years old from a friend in July for about S$3,000.
The former lorry crane driver said food delivery was less stressful than driving a private-hire car, as he did not have to pay rental.
Right now, he clocks between eight and 10 hours a day, receiving about two assignments every hour. On good months, he can earn more than S$3,000.
He acknowledged, however, that he could earn more as a private-hire car driver, although this entailed clocking longer hours on the road.
Mr Ong said he will reapply for a Taxi Driver’s Vocational Licence, which allows licensees to drive both taxis and private-hire cars. But for the moment, he said in Mandarin: “I have no choice. Without the option of (private-hire car driving), I’ve to find another job as a substitute.”
GrabFood crew can deliver food on bicycles, motorcycles, personal mobility devices including electric scooters, and even on foot. Those who wish to use cars must ensure that they are not using a private-hire chauffeured motor car or station wagon, Grab said.
Under the LTA’s regulations, taxis and private-hire cars are meant to carry passengers for hire and reward, and cannot be used for the conveyance of goods for reward. Drivers accepting such jobs may have their vocational licences revoked, said an LTA spokesperson.
The spokesperson added that owners who use their private vehicles to carry out a business for the transportation of goods must ensure that their vehicles have appropriate insurance cover for such additional uses.
Grab’s spokesperson told TODAY last month that it has helped the majority of its drivers who did not obtain their PDVL by June 30 and were keen to explore other career options. This included converting them to GrabFood delivery-partners and referring them to e2i.
“For those who wish to retake their PDVL, Grab continues to support these drivers with their reapplication process and provides free revision classes to help them better prepare for the exams,” added the spokesperson.
Meanwhile, drivers such as Mr Chris Koh, 51, are devoting the bulk of their time to fulfilling bookings from tourists largely from China. For them, Grab rides have been relegated to a secondary source of income.
These drivers shuttle tourists between the airport and their hotels, or to tourist attractions, such as the Merlion, Gardens by the Bay and the National Gallery Singapore.
Linking up with riders via China-based applications such as Hi Guides and Yun Di Jie, drivers said that at peak travel seasons, such as during China’s recent summer school holidays, they earned nearly twice as much as what they drew from Grab rides.
Prices are fixed by the apps, where users can choose from a range of car types, said Mr Koh, who began taking on these bookings about a year ago and knows of 80 to 100 drivers doing the same.
Drivers in five-seat cars earn S$30 to S$35 for a journey from the airport to downtown Singapore, compared with about half (S$18) on Grab, before deducting commission fees, he said.
Mr Koh has cut down on Grab bookings significantly, doing just 20 rides a week now, compared with 80 to 120 trips previously.
He also gets more satisfaction from interacting with the tourists. “We get to know people from overseas, mainly… from different parts of China. We’re like ambassadors (of Singapore) as well,” he said.
Mr Koh said it was “optional” for drivers to show their guests around the attractions and they do not get paid for this, recognising that tourist guides must hold a licence granted by the authorities.
Another driver, who wanted to be known only as Mr Lim, 50, said he gets at least four such chauffeured bookings daily, including airport transfers and trips to take in the sights. He also takes on limousine services for business guests. Apart from China, his customers are from Korea, Japan, Russia, the United States and the Middle East, among other places.
Ms Ong Ling Lee, the Singapore Tourism Board’s director of travel agents and tourist guides, told TODAY that the agency monitors such practices and has contacted some platforms to tell them about Singapore’s legislation on guiding services, where necessary.
Ferrying tourists does not constitute guiding, said Ms Ong, but she added that individuals must hold a valid tourist-guide licence if they provide guiding services to one or more tourists for remuneration.
Mr Koh said that in the longer run, he was mulling over taking up a tourist-guide licence. However, juggling the course, which lasts about half a year, with his driving commitments would be cumbersome, he said.
HELP AVAILABLE
Members of Parliament (MPs) from the labour movement urged drivers to gain new skills even while on the job, so as to prepare themselves for other jobs should the need arise.
Mr Desmond Choo, an assistant secretary-general with the National Trades Union Congress, acknowledged that re-skilling and re-training can be difficult at times for many of these drivers, especially those who are older.
But he urged them to seek help from the National Private Hire Vehicles Association (NPHVA), which can work with organisations such as e2i to help workers gain new skills under the Government’s Adapt and Grow employment-support initiative.
For instance, the Place-and-Train Professional Conversion Programmes, where workers are hired by employers and trained to take on new jobs, will allow drivers to make the transition, said Mr Choo, an MP for Tampines Group Representation Constituency (GRC).
“This process will take some time, so it’s important that the workers have to start this journey earlier,” he added.
Mr Choo said that through the relevant agencies, drivers can also be matched to industries for which they have more “transferable skills”, such as the automotive sector as driving instructors or the public transport industry as bus drivers.
It is also key for younger drivers to avail themselves of career-planning resources such as the NTUC’s Youth Career Network, which helps workers keep in step with industry trends and skills in demand.
“With better career planning, they are able to see other career opportunities rather than just driving for Grab.”
There was also a need to help drivers gain transferable skills, said Mr Choo. In this regard, modular, bite-sized training — conducted online, for instance — that could count towards a diploma or certificate will become increasingly important.
“While they may not be able to go to classes full-time, they can learn during their free time and then (attend) a few days of classes and… over a certain period of time, they can get a certificate,” he said. “This must be the new direction.”
Besides help from e2i and government agencies SSG and Workforce Singapore, Mr Ang Hin Kee, executive adviser to the NPHVA and the National Taxi Association, said that both associations have asked and will continue to call on the LTA to allow private-hire car and taxi drivers to be allowed to deliver parcels, in order to “monetise their time”.
At TransportSG, a division of e2i, drivers are coached on job opportunities and the employment landscape. Employability coaches can also guide them to pick up new skills.
e2i’s spokesperson said drivers stand a much higher chance of landing a job through job matching or career fairs if they are “job-ready”. In July, the institute had 14 employers engage drivers who were seeking other driving-related positions, for instance.
It also designed a new Career Trial-cum-Place and Train Programme to help drivers without the PDVL find jobs. Under the Career Trial, drivers will be placed for a month with employers, who are encouraged to recruit them as full-time staff members at the end of the stint with a wage support scheme.
The programme is not confined to certain industries or job types, although driving-related positions are among the options. “We will assess the applicants’ transferable skill sets and work with them to match job positions according to their best fit,” said the e2i spokesperson.
Mr Choo said the gig economy is a permanent and growing part of the workforce not just in Singapore but globally, as app-based work becomes more common.
“It’s not a bad thing… because it does allow people to transit to industries to find new sources of income more flexibly,” he added, though concerns remain over how to better protect such self-employed workers and ensure their long-term financial security.
Agreeing, Mr Ang reiterated that disruptive technologies will create new job opportunities for workers, but also disrupt existing ones. “As a global phenomenon, we are better off finding a way to manage it than to reject it,” said the MP for Ang Mo Kio GRC.
As for Mr Syahmi, he recognises the benefits of picking up new skills as he looks for a new job. “We’re quite used to being our own boss… (but) we can’t be drivers for our whole life,” he said.
He is thinking of learning another language, such as Mandarin, which will come in handy for jobs in customer service, for example.
However, he will not be approaching e2i for help for now, as he will like to secure a job on his own. “I just want to discover where I should go myself,” he said.
Monday, 5 September 2016
Saving $1m through CPF
Saving $1m through CPF http://str.sg/4p5U
PUBLISHED
SEP 4, 2016, 5:00 AM SGT
Losing around $100,000 of hard-earned savings when the share market crashed in the 1998 Asian financial crisis prompted Singtel employee Loo Cheng Chuan to devise a safer way to build a nest egg.
Mr Loo, 44, went about creating a low-risk line of defence by using the Central Provident Fund (CPF), particularly the Special Account, as his investment vehicle.
"It's simply creating a financial safety net by topping up your Special and Medisave Accounts at a young age, as young as possible, and just letting it compound over a long period of time to over half a million dollars," he says. "Combine that with your spouse, you will reach a million dollars at age 65."
Mr Loo explained his "1m65" strategy in a video clip that was shown during the CPF Retirement Planning roadshow at Suntec City on Aug 27.
Mr Loo, who works in the digital business department at Singtel, noted in the clip that he realised that all the instruments offered by the CPF are risk-free and guaranteed by the Government. Even creditors will not be able to touch your nest egg.
Armed with this knowledge, he started topping up his Special and Medisave Accounts from age 30.
He had already bought a four-room flat in Punggol and used some of his Ordinary Account savings to pay the mortgage. Still, he tried his best to transfer the surplus in his Ordinary Account to his Special Account as often as he could.
"In our early 30s, my wife and I worked very hard and we were very thrifty in managing some of our CPF expenses and that led to a full accumulation of our Special and Medisave Accounts," he recalls.
By the time Mr Loo was 34, he had hit the cap of around $120,000 on both accounts.
Assuming the interest rate remains at 4 per cent, his savings and those of his wife in these two accounts could compound to almost $1 million by the time they reach 65, even if they choose to stop working a few years after they turn 34 and contributions to these accounts cease. And if they continue working until retirement, the combined amount would be much higher than $1 million.
However, Mr Loo admits that his strategy is not without downsides.
"It requires you to take money from the Ordinary Account to quickly top up your Special Account - which means you cannot be buying big houses and big condos. And, of course, as an ordinary Singaporean, I aspire to these things. But between looking rich and being rich, I prefer to be rich."
In addition, once you put money into the Special Account, you cannot withdraw it for housing purchases, as it is meant for retirement. This poses some risk and discomfort to people.
The comfort and the peace of mind that he would have $1 million waiting for him in his golden years is so great that Mr Loo has started sharing his experience with his church groups and friends.
"I realise that for a family, a safety net of $1 million is a wonderful sum of money. It brings a lot of security in my life and because of that, my whole life changed, my risk profile changed. I can be a bit more aggressive in some aspects of my life because I have this safety net," he says.
His wife, Madam Lee Bee Yee, 44, is in the personal shopper trade. They have three children, aged 15, 13 and 12.
WHAT A FINANCIAL EXPERT SAYS
Promiseland financial adviser Wilfred Ling says Mr Loo's method of using his CPF to accumulate $1 million is viable.
In fact, he worked out that it is possible for a CPF member to accumulate $1 million before the age of 57 by starting to top up the Special Account from age 25.
He based his calculations on a few assumptions, including a gross monthly income of $2,500, a one-month bonus and a 5 per cent yearly increase in the member's salary. Other assumptions are that the member transfers all his Ordinary Account savings to the Special Account. This means he would have no CPF savings available for housing loans.
Mr Ling also assumed that the CPF rules and interest rates will remain unchanged. "Individuals who wish to lock in their money in CPF for the long term will need to balance the long-term gain of having a large balance in their CPF when they retire, with their short-term needs, such as children's education and general expenses."
He added that this method is particularly useful for people in business as CPF money is protected from creditors.
"I have advised a number of my clients, who are businessmen, to accumulate as much CPF as possible so that in the event of bankruptcy, their retirement nest eggs remain unaffected," Mr Ling said.
A version of this article appeared in the print edition of The Sunday Times on September 04, 2016, with the headline 'Saving $1m through CPF'.
6 little-known facts about the CPF
6 little-known facts about the CPF http://str.sg/4p53
PUBLISHED
SEP 4, 2016, 5:00 AM SGT
With the Central Provident Fund (CPF) enhancements making headlines in recent months, more CPF members are waking up to the fact that there is a viable investment tool in their backyard.
The low-yield environment makes even the Ordinary Account rate of 2.5 per cent appear attractive, not to mention the Retirement Account (for those above 55), which attracts up to 6 per cent interest.
The chatter these days seem to be skewed towards how people can put more into CPF to grow their nest egg, rather than withdrawing.
To recap, the first slew of recommendations by the CPF Advisory Panel was announced early last year. They involve different payout options and the flexibility of deferring payouts up to age 70 so as to receive more cash later. Last month, the last few recommendations, which include a CPF Life escalating payout option, were announced.
Despite the CPF Board's publicity campaign and articles written about the changes, some still find the CPF schemes complex and difficult to understand, judging from queries to The Sunday Times, as well as those posed during the question-and-answer session at the CPF Retirement Planning roadshow on Aug 27.
Here are six little-known facts about the CPF:
1. TOPPING UP YOUR CHILDREN'S CPF ACCOUNTS
Every Singaporean newborn today has a CPF account set up for him or her by the Government for the purpose of receiving the $4,000 Medisave grant.
For children who are Singapore citizens or permanent residents, a CPF account will be automatically created when a first top-up or CPF contribution is received.
Some wealthier CPF members or those with excess cash have opted to use the CPF as a legacy for their children or grandchildren by topping up their Special Accounts the moment they are born.
In fact, you can contribute up to the prevailing Full Retirement Sum (FRS) of $161,000 into the newborn's Special Account in one go, under the Retirement Sum Topping-Up Scheme.
Some members have already done so.
Imagine the power of compounding over 55 years.
Assuming the Special Account's floor interest rate remains at 4 per cent, your initial contributions would compound to some $1.5 million over the next 55 years.
Another way of topping up your children's CPF accounts is to use the Voluntary Contribution Scheme, currently capped at $37,740 a year.
Contributions can be made to the Medisave Account only (up to the Basic Healthcare Sum) or can be split among the Ordinary, Special and Medisave accounts.
However, bear in mind that unlike cash top-ups to other loved ones like spouses, parents and siblings, you do not receive any tax benefit for topping up your child or grandchild's CPF accounts.
Of course, not everyone will be comfortable with locking up funds for 55 years.
Some financial experts recommend that it would be better to invest the same amount in equities and low-cost index funds - given the very long investment horizon that a young child has - which should reap potentially higher returns.
2. CPF AS A FIXED DEPOSIT OR FIXED INCOME ALTERNATIVE
Some CPF members have taken to actively transferring their Ordinary Account savings to the Special Account to earn the higher interest rates.
But if your Special Account balance - including savings withdrawn under the CPF Investment Scheme - has reached the prevailing FRS, you would be unable to do further top-ups.
In the chase for yields, even the Ordinary Account interest rate of 2.5 per cent a year is not to be sniffed at, particularly if you are comparing it with fixed deposit rates which have fallen to paltry levels. Even the average annual returns of some bonds, such as the Singapore Savings Bonds, have dipped below 2 per cent.
Some insurance policies with guaranteed returns and a fixed tenure - usually three to five years - also pale in comparison with the Ordinary Account interest rate.
If you are below 55 and are confident of setting aside the requisite retirement sums at 55, you can consider the Ordinary Account as an alternative fixed deposit instrument but with less liquidity. Because of the lack of liquidity, this works better for those who are close to 55 and/or are confident they have no need for the cash.
For example, if you are 53 years old, you can park your spare cash savings in the Ordinary Account and consider it as a two-year fixed deposit. This is because if you are able to set aside sufficient savings in your Retirement Account, you can withdraw the rest at age 55 or later, whenever the need arises.
And you can still use the Ordinary Account savings for other investments under the CPF Investment Scheme and to purchase properties, after setting aside $20,000 in your Ordinary Account.
3. CASH REFUNDS FOR CPF SAVINGS USED FOR PROPERTY PURCHASES
One way of putting cash into your Ordinary Account is to do so via a full or partial refund of the CPF savings that you had previously withdrawn for property purchases plus the interest accrued on them.
Some members wrongly believed that they could refund the CPF savings used for their properties only upon the sale of these properties.
Even if the properties are unsold, you can make cash refunds by filling out a CPF form and indicating which property you are making the refund for. However, you should note that such cash refunds are irrevocable.
4. ZERO ORDINARY ACCOUNT BALANCE
Some members wanted to know if it is possible to deplete the Ordinary Account to zero when transferring CPF savings from that account to the Special Account, and still earn the higher interest rates.
This question was raised during the CPF Retirement Planning roadshow. Mr Soh Chin Heng, deputy chief executive officer (services) of the CPF Board, responded that it is possible.
For members below 55, when the Ordinary Account has zero balance, the first $60,000 in the Special Account savings will attract 5 per cent while the remaining balance will enjoy 4 per cent interest.
5. CPF WITHDRAWALS
For members who are 55 and older, have the requisite retirement sums in their Retirement Account, and still have balances in both the Ordinary and Special Accounts, withdrawals will be made from the Special Account first before the Ordinary Account.
CPF said that this is because CPF members may still have commitments such as housing, education and investment after turning 55.
The board says: "As Ordinary Account savings can be used for continued participation in schemes after 55, the withdrawal sequence is catered to the needs of the majority of Singaporeans. Nonetheless, members who wish to benefit from CPF attractive interest rates have the option to top up their Retirement Account under the Retirement Sum Topping-Up Scheme."
6. FREQUENCY OF CPF WITHDRAWALS CPF
Members are not restricted to only one withdrawal a year. Members who have withdrawable balances in their CPF accounts may submit an application any time and the Board will assess the application.
The amount of money that the member may withdraw will still be based on the applicable withdrawal rules and it does not change the amount of savings that can be withdrawn by the member.
A version of this article appeared in the print edition of The Sunday Times on September 04, 2016, with the headline '6 Little- known facts about the CPF'.
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With reference to Point 3 on CASH REFUNDS FOR CPF SAVINGS USED FOR PROPERTY PURCHASES, here is more information extracted from financialfreedomgal https://financialfreedomgal.wordpress.com/2016/08/29/cash-refund-of-cpf-savings-used-for-property/
With reference to Point 3 on CASH REFUNDS FOR CPF SAVINGS USED FOR PROPERTY PURCHASES, here is more information extracted from financialfreedomgal https://financialfreedomgal.wordpress.com/2016/08/29/cash-refund-of-cpf-savings-used-for-property/
Cash refund of CPF savings used for property
Posted by SKO on
When I bought my flat with my spouse, I had utilised a small sum from my CPF Ordinary Account (OA), and to my horror, I have already incurred about $2k in interest. Not happy about this (although it is really my own money).
I wrote to CPF if I could return the principle amount in part of in full, or in full with the interest incurred, without selling the flat. The reply is positive.
I could repay the principle amount in full OR in part, including the interest incurred.
My only concern was that my Home Protection Scheme would be terminated after I repaid my OA amount. I was assured that it would not.
Hence, I shall proactively return this sum to my OA soon. I was told to use this form to process the refund. Cashier’s order or cheque should be made payable to ‘Central Provident Fund Board’. Name, NRIC, and property address should be indicated on the reverse side of cashier’s order or cheque. The completed form and cheque should be mailed to:
Central Provident Fund Board
Public Housing Section – Bank Loan
238B Thomson Road #08-00 Tower B Novena Square
Singapore 307685
Public Housing Section – Bank Loan
238B Thomson Road #08-00 Tower B Novena Square
Singapore 307685
Refund will be credited to my CPF account within 5 working days from receipt of cheque.
The main reason for doing this is that although the sum used for property is not big, the compounded interest is getting higher everyday and I do not want to be the one ‘earning’ this interest. I rather someone pays me the interest.
Before we go and use our cash to invest in risky assets, this might be a better way to use our money.
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With reference to Point 3 on CASH REFUNDS FOR CPF SAVINGS USED FOR PROPERTY PURCHASES, here is more information extracted from CPF Board website: https://www.cpf.gov.sg/members/faq/schemes/housing/private-properties-scheme#faq16644
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With reference to Point 3 on CASH REFUNDS FOR CPF SAVINGS USED FOR PROPERTY PURCHASES, here is more information extracted from CPF Board website: https://www.cpf.gov.sg/members/faq/schemes/housing/private-properties-scheme#faq16644
Q | I am not selling my property. Can I make voluntary refund on the housing amount withdrawn? If yes, how do I go about doing it? |
A |
Yes.
You can refund the following amount via a cheque/cashier's order to the Board:
a) Full principal amount
b) Partial principal amount
c) Full principal amount and full accrued interest
d) Full accrued interest
(You can only refund the accrued interest after you have refunded the full principal amount.)
Please complete the Form HSD/VR and prepare a cheque/cashier's order made payable to "CPF Board". On the reverse side of the cheque/cashier's order, please write your name, CPF Account No. and the property address. Mail both the form and the cheque/cashier's order, before 20th of the month if you wish to earn interest on the refunded amount from the following month, to:
Central Provident Fund Board Housing Schemes Department 238B Thomson Road #08-00 Tower B Novena Square Singapore 307685
Alternatively, you can deposit the cheque/cashier's order and this form at any CPF service centres.
The refund will be credited to your CPF account(s) within five working days from the receipt of your cheque/cashier's order (subject to cheque/cashier's order clearance).
If you wish to use your CPF savings to service the outstanding housing loan after making full cash refund, you will need to submit a fresh application, "Application to Use CPF Savings to Purchase Residential Property" to the Board through your lawyers. You will incur legal costs in the process as we need to lodge a new CPF charge on the Property to secure the refund of new CPF savings used for the Property before we allow your CPF savings to be withdrawn for the Property. |
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