Common Complaints About CPF Accounts

[Maxus-MIFA9]

yahoo news: An Ex-CPF Employee Exposes the 3 Biggest Complaints Singaporeans Have About Their CPF Accounts

 

Few questions divide Singaporeans as much as this one – What is CPF used for? As you process your own answer to that question, chances are the words “retirement,” “housing,” healthcare” and maybe “Ponzi scheme” are running through your head.

 

But no matter what function(s) you think CPF serves, everyone faces the reality of having to pay their “dues” to keep the system going. That means contributing 20% of your salary (up to age 50) every month to a scheme that only benefits those who vastly surpass the current minimum balance of $148K. Sadly, more Singaporeans who have money in CPF and need it can’t even touch it.

 

An ex-CPF employee named “Brian” (who wishes to remain anonymous for very obvious reasons), who deals with the valid concerns of Singaporeans daily, was kind enough to help us shed some light on what Singaporeans complain about most when it comes to their CPF accounts.

 

Here are Singaporeans’ 3 biggest complaints about their CPF accounts:

 

1. It’s Nearly Impossible to Access Your Retirement Account (RA) Funds

The biggest limiting factor people have when it comes to their CPF accounts is the fact that their Retirement Account (RA) funds are about as inaccessible as Area 51 until you reach the drawdown, which varies from 62 to 65 depending on your year of birth.

 

The problem with having an inaccessible RA account is that it leaves Singaporeans still servicing their home loan with their CPF in a helpless situation because:

1. Retrenchment: No income means they can no longer make contributions into his/her Ordinary Account (OA).
2. Contribution level: The contribution level decreases significantly after 55, making it harder to meet the minimum cash component in RA.

“It’s sad, there were several occasions when we had to direct Singaporeans to HDB or the banks because our hands were tied – we couldn’t release their funds to them even though they may have thousands in their RA to help with their home loan repayments,” says Brian.

 

Ironically, the only exceptions for using your RA funds involve purchasing property under the following conditions:

1. You can only use the excess in your RA AFTER setting aside the minimum cash component, which is currently $148K.
2. Of that $148K, you’ll need to maintain $74K in your RA, with the excess (excluding annual interests) being available for the purchase of property.

*Note on property purchases: According to Brian, there is a way for you to use your OA towards purchasing property. If you have booked a BTO flat before turning 55, you can write in to CPF to have funds from your OA reserved for the purchase. In fact, Singaporeans have been successful in having these requests approved.

 

2. You Can’t Withdraw As Much from CPF at Age 55

Just a few years ago, if you turned 55 before 2009, you could have withdrawn 50% of your combined OA and Special Account (SA) funds! So if you had today’s current minimum sum of $148K, you could withdraw $74,000.

 

Then in 2009, the limit dropped to 40%. And then… well, I think you know where this is going right? Let’s just say that CPF reduced the withdrawal limit faster than an Indonesian palm plantation owner reduces forestland.

 

Today, if you don’t have the full minimum sum of $148K – you ONLY get $5K. The rest gets sent over to your RA, which you probably won’t see for another 7 to 10 years.

 

The biggest complaints Brian received about the inability of some Singaporeans to get more than $5K were:

• Couldn’t pay off debts: Singaporeans who were financially troubled and had debts to pay off could not pay them even though they had thousands of dollars in their RA.
• In danger of home repossession: Singaporeans who were having trouble keeping up with their home loan repayments due to retrenchment or financial difficulty couldn’t access the money they needed to maintain their repayments even though they might have had $50K in their RA.
• Couldn’t go on pilgrimage: Many elderly Muslims who were waiting till age 55 to use their funds to go on pilgrimage (Hajj) were left disappointed when the amount they could withdraw wasn’t enough.

 

*Note on pledging your property: Brian points out that if you’ve used your CPF to purchase a home, you can opt to pledge or increase the pledge of your property. So if you just turn 55 this year and you’ve got the full minimum sum of $148K, you can pledge your property up to $74K, freeing up the “excess” $74K in your CPF for withdrawal.

 

3. There Are Times When You CAN’T Use CPF for Housing

When you buy a home, there’s a limit to how much CPF you can use to purchase a home, called the Valuation Limit (VL). The VL is determined by the lower value of either the market price or the valuation price of a home, and you cannot withdraw more than 120% of the VL, which is called the Withdrawal Limit (WL).

 

So what happens when you reach the VL of your home?

 

If you’re below 55, you’ll need to maintain either half the prevailing minimum sum cash component (Your OA+SA+SA investments) or the minimum sum cash component in your RA if you’re over 55 (and you can only use your RA excess to service your home loan). If you don’t follow these conditions, you CAN’T use your CPF to service your home loan.

 

Not knowing when you can’t use your CPF to service your home loan is a huge reason why people contact CPF, especially when Singaporeans:

• Reach their VL before age 55 and haven’t maintained half of their prevailing minimum sum cash component (OA+SA+SA investments).
• Reach their VL after age 55 and haven’t maintained their minimum sum cash component in their RA (only RA excess can be used!).
• Surpass their WL.

CPF Staff Are There to Help, But They Don’t Make Policy

“We understand that CPF needs to be more flexible in allowing Singaporeans to use their funds. What’s the point of having thousands of ‘untouchable’ dollars set aside for retirement when Singaporeans are dealing with financial difficulty now? But we do our best to help people out as much as possible,” says Brian.

 

Brian also stated that the complaints above made up about 70% of their total communications. That’s A LOT of daily gripes to deal with.

 

Most Singaporeans have their reasons to complain about CPF. If you’ve read Dear CPF: Give Me Back My Money, you know just a few of the many grievances people have with the scheme. But before you call up or email CPF to give them a piece of your mind, please remember that the hard working employees don’t set policy – they’re there to help you as best as they can.

 

Link: http://sg.finance.yahoo.com/news/ex-cpf-employee-exposes-3-160000084.html

 

 

So.............. thats what peoples had been saying all this while. Can See The Money But Cannot Touch ....

 

 

[Andylkkg]

Your bet and my bet that the CPF monies are only on paper only, and probably not there for you when the withdrawal age mature faster that your age can climb! Can see is there but may not be there afterall.

[Maxus-MIFA9]

quote:

 

"When you buy a home, there’s a limit to how much CPF you can use to purchase a home, called the Valuation Limit (VL). The VL is determined by the lower value of either the market price or the valuation price of a home, and you cannot withdraw more than 120% of the VL, which is called the Withdrawal Limit (WL).

 

So what happens when you reach the VL of your home?

 

If you’re below 55, you’ll need to maintain either half the prevailing minimum sum cash component (Your OA+SA+SA investments) or the minimum sum cash component in your RA if you’re over 55 (and you can only use your RA excess to service your home loan). If you don’t follow these conditions, you CAN’T use your CPF to service your home loan.

 

Not knowing when you can’t use your CPF to service your home loan is a huge reason why people contact CPF, especially when Singaporeans:

• Reach their VL before age 55 and haven’t maintained half of their prevailing minimum sum cash component (OA+SA+SA investments).
• Reach their VL after age 55 and haven’t maintained their minimum sum cash component in their RA (only RA excess can be used!).
• Surpass their WL."

 

Didn't know got VL to apply for home loan when reaching 55.....

 

Edited February 17, 2014 by Picnic06

[Maxus-MIFA9]

Your bet and my bet that the CPF monies are only on paper only, and probably not there for you when the withdrawal age mature faster that your age can climb! Can see is there but may not be there afterall.

 

hee...hee...hee .....

 

I just collected last year minus the RA of $148k ....

 

The amount collected not even 1/4 of a COE certificate ....

[Knoobie]

source: http://asingaporeanson.blogspot.sg/2014/03/the-open-letter-to-cpf-board.html?m=1

 

Dear CPF Board,

You are the appointed agency to manage my retirement fund, which comes from my monthly contribution from the day I started working. I had no options to self manage my fund, or to appoint better fund manager. In short, I was forced to work with you. Nonetheless, I thank you for the hard work all these years to provide me an impressive 2.5% interest on my contribution. I ought to be grateful that my money is still there. If not, don't tell me about it. Don't drop hints either. That is a bad habit you have acquired over the years and I am highlighting it today as feedback.

When we first began, we agreed for a complete withdrawal when I get to 55 years old. That would be more than 3 decades from my first contribution. It was an absolute peach to you. Even the worst local bank would offer me more than 2.5% for a crappy structural deposit on a 10 year term, capital guaranteed. If I use them, I would be able to do an early withdrawal my funds before maturity, albeit with a penalty charge. You could certainly do better than 2.5% for a complete lock in for no withdrawal option for 3 decades. Never mind about the yield. We are friends and it hurts our relationship if we get too calculative. That is why it is unacceptable for you to charge me an interest for any loan I take from my own money. We should give and take but unfortunately, you are the only one enjoy the taking till now.

Things turned a nasty corner when you begin to think it is rightful for you to dictate my retirement age and how to live my life. We agreed on a complete withdrawal at 55 years old at the beginning of our contract. You revised it, because you told me you cared for me. So you suggested 60, then 63 and now you are urging me to stretch my non-withdrawal to 65 years old, by giving me a bonus of $1,200 for a 2 year extension. that would amount to a total of more than 40 years of keeping my money with you. Oh, is that how things work around here? I would have offered you $12,000, to withdraw my money 20 years earlier. I would if I could, if you have the money to return me in the first place.

I'm must apologise for my lack of faith in you but that has been lost ever since you told me I would not be withdrawing my retirement fund at whatever age you decided, and the goal post is still shifting as we speak. Instead you told me I will receive only payouts like an unemployed working receiving handouts from Centrelink in Australia. The key difference is, the Australian Government pays the unemployed from tax receivables and the money I left with you, come from my pocket. Despite that, you think you have the right to hold a bulk of my money in which you called Minimum Sum, and even tell me I will receive no payouts if I fail to accumulate enough money beyond your Minimum Sum. Thus, I cannot help but wonder if the Minimum Sum is created to keep me alive or to keep you afloat.

Over the last 15 years, you have dropped too many hints to suggest things are not exactly in a pink of health within. I do not want to interfere with your affairs but do not make me pay for your mistakes. I entrusted my money in you because I was not given a choice. It is more than a privilege for you, an entitlement in fact. Do not abuse it. This is not a warning, just a simple advice from a friend.

Sincerely,

Your friend

 

[Watwheels]

All these from ppl who are desperate for cash?

 

Look at it this way. If the CPF system didn't exist these ppl would spent all of what they earned w/o much savings on their own. They would be in debt anyway. Problem doesn't quite lie in the CPF policy. Problem lies with the way ppl manage their money.

 

Look at the way young ppl spent now. Recent report, earn 17k/mth but still in debt. It baffles ppl but the fact is the more a person earn the more he/she will spend.

 

The question is why ppl get themselves into large debt?

[Knoobie]

All these from ppl who are desperate for cash?

 

Look at it this way. If the CPF system didn't exist these ppl would spent all of what they earned w/o much savings on their own. They would be in debt anyway. Problem doesn't quite lie in the CPF policy. Problem lies with the way ppl manage their money.

 

Look at the way young ppl spent now. Recent report, earn 17k/mth but still in debt. It baffles ppl but the fact is the more a person earn the more he/she will spend.

 

The question is why ppl get themselves into large debt?

well, not everyone is earning 17k/mth and still in debt..

 

Infact, the article was not saying that the idea of having CPF was bad..

 

there are some points raised by "Your Friend" which really does makes sense.

 

especially the moving of the "goal posts" part...

 

besides, it may not be that the pple are desperate for cash.. just that one will feel happier and able to do better planning knowing that they have the cash on hand..

Edited March 17, 2014 by Knoobie

[RadX]

Extracted from another forum....

singaporean in australia

http://asingaporeans....board.html?m=1

Dear CPF Board,

You are the appointed agency to manage my retirement fund, which comes from my monthly contribution from the day I started working. I had no options to self manage my fund, or to appoint better fund manager. In short, I was forced to work with you. Nonetheless, I thank you for the hard work all these years to provide me an impressive 2.5% interest on my contribution. I ought to be grateful that my money is still there. If not, don't tell me about it. Don't drop hints either. That is a bad habit you have acquired over the years and I am highlighting it today as feedback.

When we first began, we agreed for a complete withdrawal when I get to 55 years old. That would be more than 3 decades from my first contribution. It was an absolute peach to you. Even the worst local bank would offer me more than 2.5% for a crappy structural deposit on a 10 year term, capital guaranteed. If I use them, I would be able to do an early withdrawal my funds before maturity, albeit with a penalty charge. You could certainly do better than 2.5% for a complete lock in for no withdrawal option for 3 decades. Never mind about the yield. We are friends and it hurts our relationship if we get too calculative. That is why it is unacceptable for you to charge me an interest for any loan I take from my own money. We should give and take but unfortunately, you are the only one enjoy the taking till now.

Things turned a nasty corner when you begin to think it is rightful for you to dictate my retirement age and how to live my life. We agreed on a complete withdrawal at 55 years old at the beginning of our contract. You revised it, because you told me you cared for me. So you suggested 60, then 63 and now you are urging me to stretch my non-withdrawal to 65 years old, by giving me a bonus of $1,200 for a 2 year extension. that would amount to a total of more than 40 years of keeping my money with you. Oh, is that how things work around here? I would have offered you $12,000, to withdraw my money 20 years earlier. I would if I could, if you have the money to return me in the first place.

I'm must apologise for my lack of faith in you but that has been lost ever since you told me I would not be withdrawing my retirement fund at whatever age you decided, and the goal post is still shifting as we speak. Instead you told me I will receive only payouts like an unemployed working receiving handouts from Centrelink in Australia. The key difference is, the Australian Government pays the unemployed from tax receivables and the money I left with you, come from my pocket. Despite that, you think you have the right to hold a bulk of my money in which you called Minimum Sum, and even tell me I will receive no payouts if I fail to accumulate enough money beyond your Minimum Sum. Thus, I cannot help but wonder if the Minimum Sum is created to keep me alive or to keep you afloat.

Over the last 15 years, you have dropped too many hints to suggest things are not exactly in a pink of health within. I do not want to interfere with your affairs but do not make me pay for your mistakes. I entrusted my money in you because I was not given a choice. It is more than a privilege for you, an entitlement in fact. Do not abuse it. This is not a warning, just a simple advice from a friend.

Sincerely,

Your friend

[Wt_know]

structured deposit cannot buy property ... cpf can

 

having said that, keep moving goal post by increasing minimum sum and withdrawal age

Edited April 3, 2014 by Wt_know

[Sabian]

http://thehearttruths.com/

 

I don't really have a lot of issues with the CPF.

 

Just the accrued interest, which doesn't make sense especailly if you see it from the point of view where funds are sitting in your bank and you decided to buy private property with it.

 

Minimum sum has to increase because it tracks inflation. If the minimum sum to be set aside remains the same as when it was first started, you can buy jack shat with that sum.

 

Then you get folks who will kpkb why the minimum sum set aside cannot pay for anything.

[1fast1]

Then you get folks who will kpkb why the minimum sum set aside cannot pay for anything.

It can. It can "pay" into your beneficiary's bank A/C.

 

For now.

[Wt_know]

accrued interest is like kena penalised for using own money.

 

1. you put money in the bank ... bank give you interest

2. you don't put money in the bank (buy property) ... bank don't give you interest. full stop.

 

1. you put money in cpf ... cpf give you interest

2. you don't put money in cpf (buy property) ... you must pay interest to youself for your money

 

hmm, like that must buy property with full cash$ liao

 

 

http://thehearttruths.com/

 

I don't really have a lot of issues with the CPF.

 

Just the accrued interest, which doesn't make sense especailly if you see it from the point of view where funds are sitting in your bank and you decided to buy private property with it.

 

Minimum sum has to increase because it tracks inflation. If the minimum sum to be set aside remains the same as when it was first started, you can buy jack shat with that sum.

 

Then you get folks who will kpkb why the minimum sum set aside cannot pay for anything.

 

Edited April 3, 2014 by Wt_know

[1fast1]

accrued interest is like kena penalised for using own money.

 

1. you put money in the bank ... bank give you interest

2. you don't put money in the bank (buy property) ... bank don't give you interest. full stop.

 

1. you put money in cpf ... cpf give you interest

2. you don't put money in cpf (buy property) ... you must pay interest to youself for your money

 

hmm, like that must buy property with full cash$ liao

And this is precisely why the gahmen, despite all pretence of "cooling measures" simply cannot, repeat CANNOT, let property market drop significantly. Too much is tied up in it for too many.

 

If it's a bubble and it bursts, habes already liao. It'll make the US subprime bloodbath look like a shaving nick.

Edited April 3, 2014 by Turboflat4

[Wt_know]

cpf accrued interest is 2.5% per annum

this means the property must at least generate 2.5% "return" per annum ... property price can only go up!

if one buy a hdb at $400k and sell at $400k need to top up "cash" for accrued interest?

one sell hdb because no money ... in this case, can't even sell because got no money to pay accrued interest

Edited April 3, 2014 by Wt_know

[Knoobie]

 

Extracted from another forum....

singaporean in australia

http://asingaporeans....board.html?m=1

 

Dear CPF Board,

 

 

You are the appointed agency to manage my retirement fund, which comes from my monthly contribution from the day I started working. I had no options to self manage my fund, or to appoint better fund manager. In short, I was forced to work with you. Nonetheless, I thank you for the hard work all these years to provide me an impressive 2.5% interest on my contribution. I ought to be grateful that my money is still there. If not, don't tell me about it. Don't drop hints either. That is a bad habit you have acquired over the years and I am highlighting it today as feedback.

 

 

When we first began, we agreed for a complete withdrawal when I get to 55 years old. That would be more than 3 decades from my first contribution. It was an absolute peach to you. Even the worst local bank would offer me more than 2.5% for a crappy structural deposit on a 10 year term, capital guaranteed. If I use them, I would be able to do an early withdrawal my funds before maturity, albeit with a penalty charge. You could certainly do better than 2.5% for a complete lock in for no withdrawal option for 3 decades. Never mind about the yield. We are friends and it hurts our relationship if we get too calculative. That is why it is unacceptable for you to charge me an interest for any loan I take from my own money. We should give and take but unfortunately, you are the only one enjoy the taking till now.

 

 

Things turned a nasty corner when you begin to think it is rightful for you to dictate my retirement age and how to live my life. We agreed on a complete withdrawal at 55 years old at the beginning of our contract. You revised it, because you told me you cared for me. So you suggested 60, then 63 and now you are urging me to stretch my non-withdrawal to 65 years old, by giving me a bonus of $1,200 for a 2 year extension. that would amount to a total of more than 40 years of keeping my money with you. Oh, is that how things work around here? I would have offered you $12,000, to withdraw my money 20 years earlier. I would if I could, if you have the money to return me in the first place.

 

 

I'm must apologise for my lack of faith in you but that has been lost ever since you told me I would not be withdrawing my retirement fund at whatever age you decided, and the goal post is still shifting as we speak. Instead you told me I will receive only payouts like an unemployed working receiving handouts from Centrelink in Australia. The key difference is, the Australian Government pays the unemployed from tax receivables and the money I left with you, come from my pocket. Despite that, you think you have the right to hold a bulk of my money in which you called Minimum Sum, and even tell me I will receive no payouts if I fail to accumulate enough money beyond your Minimum Sum. Thus, I cannot help but wonder if the Minimum Sum is created to keep me alive or to keep you afloat.

 

 

Over the last 15 years, you have dropped too many hints to suggest things are not exactly in a pink of health within. I do not want to interfere with your affairs but do not make me pay for your mistakes. I entrusted my money in you because I was not given a choice. It is more than a privilege for you, an entitlement in fact. Do not abuse it. This is not a warning, just a simple advice from a friend.

 

 

Sincerely,

 

Your friend

 

mod.. same as at I posted what ~

[RadX]

mod.. same as at I posted what ~

 

Thks.. Thot I saw it swh

 

So jus add on instead of starting new thread

[Jman888]

mod.. same as at I posted what ~

 

 

this morning Kezg1 posted the same one hence Radx re-post it here.

Edited April 3, 2014 by Jman888

[Loki]

Something fundamentally wrong with how we are treated. First, people are seen to be not smart/wise enough to look after their own money. Hence, CPF locks up your money in the RA. At the same time, those in power are happy to be voted in by these very people with no brains to look after themselves. At best, it makes the electoral victories hollow. At worst, it makes the election results "unsound/invalid" since the voters are supposed to be idiots.