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Tuesday, 2 April 2013

Remember when CPF was 25/25%?

I was lucky to be working in the late 80s when our CPF personal contribution was 25% and employer's contribution was 25% too.

The unfortunate thing I was earning less than $600 per month then. Would have benefitted more if it's based on my last drawn pay.

Imagine if your employer would be contributing 25% CPF on your salary, would you be happier? Of course the catch is you have to deduct 25% from your take home pay too.

Some will miss the good old days; some will be happier to see more take home pay even if the employer's CPF contribution is also cut accordingly.

I guess it may depend whether you go for instant gratification, how you manage your monthly cashflows, and lifestyle choices.

CPF hurrah!

There are those "luckier" ones (I've learnt that it's better to use luck so as not to sound arrogant or offend) who don't view or have to depend on CPF as a retirement/financial freedom tool - it's more a temporary place to park their funds while waiting for the next investment opportunity. 

Let's put it this way, the elite will not come up with schemes and policies that do not benefit themselves; especially if you belong to the higher tax bracket. 

Some of these luckier ones even do voluntary contributions to CPF! 

CPF boo!

Then there are those who "fear" CPF. 

I'll never see my money they say. Which can be true.

If you have plans to utilise a big chunk of CPF to pay for your home mortgage, pay for your children's tertiary education, and other DIY "investments" - then you know now that come your retirement, you'll likely be asset rich and cash poor. (Education is also an investment right?)

The fear is not whether the official retirement age will be pushed back.

Its whether your market timing is good or "lucky" on the day you call it quits.

Not fun to retire in 2001/02 or 2008/09 when your CPF is heavily invested in stocks and mutual funds. 

Nor was it fun to if you retire with multiple properties during 2002 to 2006, especially if you had bought them during 1996.

On children's education I better don't touch upon. Every family have their own "bible".

Something do not add up

I would have assumed those that depend or have lots of plans for their CPF before retirement would prefer a higher CPF contribution rate  - both from themselves and their employer.

It's ironic the CPF boo crowd prefers to hold cash outside CPF; while the CPF hurrah crowd are putting their cash in!?





  1. Archoo!


    Er... let me see. How many times did I actually sneeze before I read this? Aiyoh, my poor nose. SMOL, you soooo bad lor.

    sniff... sniff...

    1. AK,

      I bad!

      Of course you got a cold! You don't hold back and strip totally naked each time you have the urge to post. At least hold on to that thong of yours mah!

      But then, that what's makes me respect!

      I am less brave. I hide under cryptic messages. I'm more a peek-a-boo kind of guy.


  2. CPF OA after 55 even better as holding place for investment opportunities.

    1. CW,

      Ha ha! I am observing and learning from what you do too ;)

      Listening to what others do is a lot more productive than listening to what they say ;)

      Hey! That makes me a monkey! Oh well... LOL!

    2. i have "hold" CPF & CPFIS for my wife for 7 years already. i made a mistake i didn't hold mine. But lately we are getting a bit worried. If Papies lose 2/3 majority in 2015/16 election , what happens then? Even if Papies still hold > 2/3 majority, what then? Papies can just shift the CPF's goal post anytime. Which has been shifted many times already. What doy'a think?

    3. temperament,

      Like my post above, those that are fortunate (and those that believe in self-help or small government) don't depend on CPF - so whatever changes won't affect them much. They already have saved and grown their OWN networth OUTSIDE of CPF.

      Those that depend on CPF, well, like what you've said, have to make sure they vote for the right people in lor!

      If we vote in charlatans and goons - no NS, CPF get at 55 in full, free medical, free transport, free this, free that. We (or our children and grand children) have to bear the consequences...

      No free lunch.

  3. SMOL,

    I think your timeline salah, during the recession in 1985, the CPF was reduced to 10% for employers and employees 20%. It should be early 80s when the contribution was 25% each.

    1. Thanks Matt!

      You are right :)

      Early 80s; not late 80s. My agar agar off the mark!

      I remember when I started working in Dec 83, the 2 years before NS I got the 25% CPF employer contribution.

      Then after NS in Dec 87, I found I got a "pay cut"; and the strange thing is, no one else seem to mind that it was never fully restored?

      Should have started working even earlier!!!

    2. One more thing about CPF that was much better in the past. Today, there is a monthly wage ceiling(5k) on CPF contributions which are payable. In the past, there was none.


      In the past, people can really use CPF for retirement. Today, lots of people deplete their CPF and depend on the property market for retirement. I prefer the past model.

    3. hyom hyom,

      It still amazes me how we Singaporeans accept "austerity" with so much understanding and trust whenever the economy needed some "bail-outs" to remain competitive.

      Having said that, that's why we have the "hard earned" reputation of being a "disciplined" workforce that investors find so appealing.

      All this for more take home pay as sweetener?


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