CPF
March 4, 2005Ha ha, today’s Economics lesson is quite a comical one. We are discussing about CPF (Central Provident Fund or if you like, you can call it as Cash Prior to Death) and my teacher got so worked up that we need to tell him to relax. Actually, I understand why he’d gt so worked up about the topic and first, let me explain the CPF system in Singapore.
-We must contribute 20% of our meagre salary to our CPF account (that leaves us with a pathetic amount of money to spare)
-Of that amount of money, 22% goes to the Ordinary account, 5% goes to the special account and 6% goes to the Medisave account. (btw, we cannot withdraw the money in our special account until we are about to die and we can only use the money in our Medisave when we are hospitalised)
- We must have at least $84,500 in our CPF account before we can withdraw some money to pay for our house or investments and that amount will increase until $120,000 in 2013. ( that also means that we cannot touch $120,000 of my life savings until I’m 55, I don’t know if I’ll have the chance to live up to that age)
-The interest rate is a pathetic 2.5% p.a. for ordinary account and 4.5% for the other accounts
-We cannot take the money when we die, it will be transferred to our next of kin’s CPF account(TAKE NOTE! your next of kin also needs to live up to that age to take the money!!)
That marks the end of my explanation of the CPF system. So what do you think? Is the so called financial planning for your future a good one or a stupid one that is bound to eat up your life savings? Ha ha hopes that it’s not a very long article!
