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Monday, March 31, 2014

MAS Broadens Exemption from TDSR Threshold for Refinancing of Owner-Occupied Residential Properties Purchased before the Implementation of TDSR Rules

MAS Broadens Exemption from TDSR Threshold for Refinancing of Owner-Occupied Residential Properties Purchased before the Implementation of TDSR Rules

Singapore, 10 February 2014… The Monetary Authority of Singapore (MAS) has received feedback from borrowers who face challenges refinancing loans for owner-occupied properties which were bought before the introduction of the Total Debt Servicing Ratio (TDSR) rules. MAS has decided to broaden the existing exemption from the TDSR threshold of 60 per cent for such loans to ease the debt servicing burden of these borrowers.

Refinancing of owner-occupied property loans

2   Under the revised rules, a borrower who bought a residential property before the TDSR rules were introduced – i.e. the Option to Purchase (OTP) of the residential property was granted before 29 June 2013 – will be exempted from the TDSR threshold as long as he occupies the residential property that is being refinanced.1 This is a concession compared to the current rules, which also require that he does not own any other property, or have any other outstanding property loan.

3   The Mortgage Servicing Ratio (MSR) will also not apply to the refinancing of loans for HDB flats and Executive Condominiums (ECs) that are owner-occupied and were purchased before their respective MSR implementation dates.2

4   A similar concession will apply with regard to loan tenures, for residential properties purchased before the respective implementation dates for the loan tenure limits.3 In such cases, borrowers whose loan tenures for their owner-occupied residential properties exceed the current regulatory limits4 will be allowed to maintain the remaining tenures of their loans at the point of refinancing.

Refinancing of investment property loans

5   The TDSR threshold of 60 per cent will continue to apply to the refinancing of all investment property loans. This is to encourage borrowers to right-size their loans and thereby reduce their vulnerability to adverse economic conditions or changes in interest rates. However, MAS recognises that some borrowers may face challenges in right-sizing their debt obligations in the short term; the starting level of debt may be too high and there may be significant costs involved if they had to sell their properties to reduce their leverage.

6   Therefore, MAS will allow a transition period until 30 June 2017, during which a borrower may refinance his investment property loans above the 60 per cent threshold, provided he meets the following conditions:

(a) the OTP of the property was granted before 29 June 2013;

(b) the borrower commits to a debt reduction plan with the financial institution (FI) at the point of refinancing; and

(c) the borrower fulfils the FI’s credit assessment.

7   The changes are intended to help borrowers ease their immediate debt servicing burdens, while encouraging those who have taken on high leverage on their investment properties to right-size their loans as early as possible. 

8   Borrowers should be aware that the current low interest rate environment will not persist indefinitely.  When interest rates rise, borrowers will face higher mortgage repayments. Borrowers engaging in refinancing should therefore exercise prudence and review their debt commitments. 

9   The revised rules will take immediate effect.

***

1 Financial institutions will be required to obtain documentary evidence to verify that the OTP was granted prior to 29 June 2013 and that the borrower occupies the property.
2 The OTP was granted before 12 January 2013 for HDB flats and 10 December 2013 for ECs purchased directly from a property developer. 
3 Where the OTP was granted before 28 August 2013 for HDB flats and 6 October 2012 for other residential properties.  
4 30 years for HDB flats and 35 years for other residential properties.

http://www.mas.gov.sg/news-and-publications/press-releases/2014/mas-broadens-exemption-from-tsdr-threshold.aspx

MAS Introduces Debt Servicing Framework for Property Loans


MAS Introduces Debt Servicing Framework for Property Loans

Singapore, 28 June 2013 … The Monetary Authority of Singapore (MAS) will introduce a Total Debt Servicing Ratio (TDSR) framework for all property loans granted by financial institutions (FIs) to individuals1.  This will require FIs to take into consideration borrowers’ other outstanding debt obligations when granting property loans. They will help strengthen credit underwriting practices by FIs and encourage financial prudence among borrowers.

2   MAS will also refine rules related to the application of the existing Loan-to-Value (LTV) limits on housing loans.  These refinements seek to ensure the effectiveness of the LTV limits that were put in place to cool investment demand in the housing market.  In particular, they aim to prevent circumvention of the tighter LTV limits on second and subsequent housing loans.  

Introduction of TDSR framework

3   MAS conducted a thematic inspection of banks’ residential property loan portfolios in 2012.  While banks generally had in place sound policies to assess the credit worthiness of borrowers, the inspection and subsequent surveys revealed uneven practices with respect to the application of debt servicing ratios and highlighted areas for improvement in credit underwriting practices.

4   The TDSR framework will provide FIs a robust basis for assessing the debt servicing ability of borrowers applying for property loans, taking into consideration their other outstanding debt obligations.  FIs will be required to compute the TDSR, or the percentage of total monthly debt obligations to gross monthly income, on a consistent basis.2

5   The coverage of the TDSR framework will be more comprehensive than FIs’ current practice.  The TDSR will apply to loans for the purchase of all types of property, loans secured on property,3 and the re-financing of all such loans.4
  
6   The methodology for computing the TDSR will be standardised.  FIs will be required to:

  • take into account the monthly repayment for the property loan that the borrower is applying for plus the monthly repayments on all other outstanding property and non-property debt obligations of the borrower;
  • apply a specified medium-term interest rate or the prevailing market interest rate, whichever is higher, to the property loan that the borrower is applying for when calculating the TDSR;5
  • apply a haircut of at least 30% to all variable income (e.g. bonuses) and rental income; and
  • apply haircuts6 to and amortise the value of any eligible financial assets taken into consideration in assessing the borrower’s debt servicing ability, in order to convert them into ‘income streams’ in computing the TDSR.

7   FIs will be required to verify and obtain relevant documentation on a borrower’s debt obligations and income used in the computation of the TDSR.

8   MAS expects any property loan extended by the FI to not exceed a TDSR threshold of 60% and will regard any property loan in excess of a 60% TDSR to be imprudent.7 The threshold is set at 60% for a start to allow both the FIs and borrowers to familiarise themselves with the TDSR framework and its computation methodology.  MAS will monitor and review the 60% threshold over time, with a view to further encouraging financial prudence.      

Refinement of rules related to application of LTV limits

9   MAS will refine certain rules related to the application of the existing LTV limits on housing loans granted by FIs.  In particular, MAS will require:

  • borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken;
  • “guarantors” who are standing guarantee for borrowers otherwise assessed by the FI at the point of application for the housing loan not to meet the TDSR threshold for a property loan to be brought in as co-borrowers; and
  • in the case of joint borrowers, that FIs use the income-weighted average age of borrowers8when applying the rules on loan tenure.9

Measures for the long term

10   The new rules will take effect from 29 June 2013.

11   The TDSR framework and refinements to the rules relating to the application of LTV limits are structural in nature, and will be in place for the long term. They aim to encourage prudent borrowing by households and strengthen credit underwriting standards by FIs. 

12   They do not involve changes to the LTV limits on housing loans themselves, which were last tightened in January 2013 as part of the government’s package of measures to promote stable and sustainable conditions in the housing market.10 The current LTV limits are not permanent, and will be reviewed depending on the state of the property market.

13   Please refer to the FAQs on MAS’ website for further details.

***

1 This includes sole proprietorships and vehicles set up by an individual solely to purchase property. 

2 In the case of a joint application for a property loan, the TDSR shall be computed based on the aggregate total monthly debt obligations and aggregate gross monthly incomes of the joint borrowers.

3 Where a loan is secured by a pool of collateral including property, the TDSR rules will apply if the market value of the property is 50% or more of the value of the total pool of collateral.

4 Existing borrowers who are seeking to refinance their housing loans will be exempted, provided they meet the specific conditions set out in MAS’ Guidelines on the Application of TDSR for Property Loans under MAS Notices 645, 1115, 831 and 128.

5 3.5% for housing loans and 4.5% for non-residential property loans.

 Eligible liquid assets which are pledged for at least 4 years with the FI from which the borrower is taking the property loan will not be subject to any haircut.

7 Property loans in excess of the TDSR threshold of 60% should be granted only on an exceptional basis.  The board of directors of the FI (or senior management in the case of an FI incorporated outside of Singapore) will have to approve policies and procedures relating to such exceptions.  In addition, cases exceeding the threshold will need to be approved by the FI’s credit committee.

8 The income-weighted average age will be based on the borrowers’ gross monthly income.

9 Lower LTV limits apply to a loan granted for the purchase of a residential property, where the loan period extends beyond the retirement age of 65 years or the tenure exceeds 30 years.

10 In January 2013, MAS lowered the LTV limits for housing loans to individuals with one outstanding housing loan from 60% to 50%, and to individuals with two or more outstanding housing loans from 60% to 40%.  Loans with longer tenure faced even tighter LTV limits.  The LTV limit for housing loans to non-individuals was also reduced to 20%.

http://www.mas.gov.sg/news-and-publications/press-releases/2013/mas-introduces-debt-servicing-framework-for-property-loans.aspx

Saturday, March 15, 2014

http://www.singnet.com.sg/technical/wireless/hardware/mioboxguide_unfolded.pdf

http://www.squidoo.com/mio-home-security

Thursday, March 13, 2014

PSY - GENTLEMAN + Gangnam Style

PSY - GENTLEMAN + Gangnam Style @ Singapore Social Live




PSY - GENTLEMAN 

Original Lyrics:
Alagamun-lan, weh, wakun, heya, hanun, gon
Alagamun-lan, weh, makun, heya, hanun, gon
Alagamun-lan, ari, gari, hanon, kari, he
Alagamun-lan, we-like, we like party, hey
Ichiba, varriya, is hara moru, mashi sondori, yama, varriya
Yougun, pegi, tur, equa, machen, varriya
Noga, onku, pega, haga, kunge, nande, varriya
Damn girl, you’re so freakin sexy 

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

Alagamun-lan, weh, mikuneya, hana, gon
Alagamun-lan. weh, sikuneya, hana, gon
Alagamun-lan, pali, pali, wasa, nelly, neh
Alagamun-lan, nali, nali, nasa, pali, hee
Ichiba, varaniya, nori, moli, holy, daddy, chunga, ri
Varriya, get feeling, feeling good, brutake
Varriya, gachu, gunya, sorinage, sorinage
Varriya, damn girl, I’mma party, morphine

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

Gonna make you sweat
Gonna make you wet
You know who I am, west side
Gonna make you sweat
Gonna make you wet
You know who I am, west side

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

I-I-I I’m a, I-I-I I’m a
I-I-I I’m a, mother-father-gentleman

Full Translation:
I don't know if you know why it needs to be hot
I don't know if you know why it needs to be clean
I don't know if you know, it'll be a problem if you're confused
I don't know if you know but we like, we we we like to party

Hey there
If I'm going to introduce myself
I'm a cool guy with courage, spirit and craziness
What you wanna hear, what you wanna do is me
Damn! Girl! You so freakin sexy!

Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a mother father gentleman

Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a mother father gentleman

I'm a, ah I'm a
I'm a mother father gentleman
I'm a, ah I'm a
I'm a mother father gentleman

I'm a, ah I'm a
I'm a mother father gentleman
I'm a, ah I'm a
I'm a mother father gentleman

I'm a, ah I'm a
I'm a mother father gentleman
I'm a, ah I'm a
I'm a mother father gentleman

I don't know if you know why it needs to be smooth
I don't know if you know why it needs to be sexy
I don't know if you know darling, hurry and come be crazy
I don't know if you know, it's crazy, crazy, hurry up

Hey there
Your head, waist, legs, calves
Good! Feeling feeling? Good! It's soft
I'll make you gasp and I'll make you scream
Damn! Girl! I'm a party mafia!

Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a mother father gentleman

Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a...
Ah Ah Ah Ah I'm a mother father gentleman

I'm a, ah I'm a
I'm a mother father gentleman
I'm a, ah I'm a
I'm a mother father gentleman

Gonna make you sweat.
Gonna make you wet
You know who I am Wet PSY

Gonna make you sweat.
Gonna make you wet.
You know who I am
Wet PSY! Wet PSY! Wet PSY! Wet PSY! PSY! PSY! PSY!
Ah I'm a mother father gentleman

I'm a, ah I'm a
I'm a mother father gentleman
I'm a, ah I'm a, I'm a mother father gentleman

Mother father gentleman
Mother father gentleman

PSY - Gangnam Style



English Translation:

Oppa is Gangnam style
Gangnam style
A girl who is warm and humanle during the day
A classy girl who know how to enjoy the freedom of a cup of coffee
A girl whose heart gets hotter when night comes
A girl with that kind of twist
I’m a guy
A guy who is as warm as you during the day
A guy who one-shots his coffee before it even cools down
A guy whose heart bursts when night comes
That kind of guy
Beautiful, loveable
Yes you, hey, yes you, hey
Beautiful, loveable
Yes you, hey, yes you, hey
Now let’s go until the end
Oppa is Gangnam style, Gangnam style
Oppa is Gangnam style, Gangnam style
Oppa is Gangnam style
Eh- Sexy Lady, Oppa is Gangnam style
Eh- Sexy Lady oh oh oh oh
A girl who looks quiet but plays when she plays
A girl who puts her hair down when the right time comes
A girl who covers herself but is more sexy than a girl who bares it all
A sensable girl like that
I’m a guy
A guy who seems calm but plays when he plays
A guy who goes completely crazy when the right time comes
A guy who has bulging ideas rather than muscles
That kind of guy
Beautiful, loveable
Yes you, hey, yes you, hey
Beautiful, loveable
Yes you, hey, yes you, hey
Now let’s go until the end
Oppa is Gangnam style, Gangnam style
Oppa is Gangnam style, Gangnam style
Oppa is Gangnam style
Eh- Sexy Lady, Oppa is Gangnam style
Eh- Sexy Lady oh oh oh oh
On top of the running man is the flying man, baby baby
I’m a man who knows a thing or two
On top of the running man is the flying man, baby baby
I’m a man who knows a thing or two
You know what I’m saying
Oppa is Gangnam style
Eh- Sexy Lady, Oppa is Gangnam style
Eh- Sexy Lady oh oh oh oh

Romanized:

Oppan gang-namseutayil
Kang-namseutayil
Naje-neun ttasaroun inkanjeo-gin yeoja
Keopi hanjanye yeoyureuraneun pumkyeok i-nneun yeoja
Bami omyeon shimjangi tteugeowojineun yeoja
Keureon banjeon i-nneun yeoja
Naneun sana-i
Naje-neun neomankeum ttasaroun geureon sana-i
Keopi shikgido jeone wonsyas ttaerineun sana-i
Bami omyeon shimjangi teojyeobeorineun sana-i
Keureon sana-i
Areumdawo sarangseureowo
Keurae neo hey keurae baro neo hey
Areumdawo sarangseureowo
Keurae neo hey keurae baro neo hey
Chigeumbu-teo kal dekkaji kabol-kka
Oppan gang-namseutayil
Kang-namseutayil
Oppan gang-namseutayil
Kang-namseutayil
Oppan gang-namseutayil
Eh- sexy lady
Oppan gang-namseutayil
Eh- sexy lady
O-oo-o
Jeongsu-khae boijiman nol ttaen noneun yeoja
Ittaeda shipeumyeon mukkeot-deon meori puneun yeoja
Karyeot-jiman wen-manhan nochulboda yahan yeoja
Keureon gamkakjeo-gin yeoja
Naneun sana-i
Jeomjanha boijiman nol ttaen noneun sana-i
Ttae-ga dwehmyeon wahnjeon michyeobeorineun sana-i
Keunyukboda sasangi ul-tungbul-tung-han sana-i
Keureon sana-i
Areumdawo sarangseureowo
Keurae neo hey keurae baro neo hey
Areumdawo sarangseureowo
Keurae neo hey keurae baro neo hey
Chigeumbu-teo kal dekkaji kabol-kka
Oppan gang-namseutayil
Kang-namseutayil
Oppan gang-namseutayil
Kang-namseutayil
Oppan gang-namseutayil
Eh- sexy lady
Oppan gang-namseutayil
Eh- sexy lady
O-oo-o
Ttwiineun nom keu wiie naneun nom
Baby baby
Naneun mwol jom aneun nom
Ttwiineun nom keu wiie naneun nom
Baby baby
Naneun mwol jom aneun nom
You know what i’m saying
Oppan gang-namseutayil
Eh- sexy lady
Oppan gang-namseutayil
Eh- sexy lady
Oppan gang-namseutayil
more:http://www.kpoplyrics.net/psy-gangnam-style-lyrics-english-romanized.html#ixzz2vqlnPdO6 
Follow us: @kpoplyrics_net on Twitter | kpoplyricsnet on Facebook

German Next Top Model

PSY - GENTLEMAN @ GNTM 2013 Finale

)


GNTM 2009 FINALE [HQ] - TOO YOUNG _ QUEENSBE

)

Robin Thick

Robin Thicke - Feel Good

)

Robin Thicke - Blurred Lines ft. T.I., Pharrell



Give It 2 U (Explicit)


)

Miley Cyrus

Miley Cyrus ft. Robin Thicke - We Can't Stop & Blurred Line


Miley Cyrus Twerking on Robin Thicke LIVE - 2013 MTV Video Music Awards Performance HD Miley and (&) Robin Thicke Uploaded by
)

Miley Cyrus - Adore You



Miley Cyrus - Wrecking Ball

 



Miley Cyrus - We Can't Stop

)



Wednesday, March 12, 2014

 
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Follow these 3 steps...
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The trading system shown here is based on trend following, a strategy widely used by many professional traders and recognized for its effectiveness. An asset rises or falls when pushed in that direction by large financial institutions that influence the financial markets such as investment funds and banks. The principle of this method is very simple: 

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Obviously, the same logic applies in the case of a decline. Here are the 3 different trends that can be spotted on charts: 

Upward Trend: 
Click « UP »
Downward Trend: 
Click « DOWN »
Neutral Trend: 
Do not open a position.
Even if you follow the system perfectly, it is definitely normal to lose some of these trades you get into. Indeed, you just can't expect to win all the time, as no trader in the world can do that! 

The method of trend following will enable you to make more winning trades than losing ones, which enables you to make significant gains on your account in the long run. There may be a bad day where you will make several losing trades, that is why it is important to follow this strict rule of investment: each position you open should not represent more than 5% of your capital. 

If you have $200 on your account, each open position should be $10 tops 
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Monday, March 10, 2014

How Much Do You Need To Earn To Survive In Singapore?




How Much Do You Need To Earn To Survive In Singapore?

Do you earn enough to survive in Singapore?
I did some calculations to try to find out. (Note: This is by no means a scientific study. You can also do your own calculations to draw the conclusions.)
A Low-Income Earner Won’t be Able to Save And Retire In Singapore
First, I looked at someone who earns a low income of $800 monthly (Chart 1).
Slide1
Chart 1
I had used these assumptions about the person’s expenditure:
  • Around $100 goes to CPF monthly
  • Spends $10 everyday on food ($300 monthly)
  • Spends about $3 everyday on transport ($100 monthly)
  • Spends about $200 monthly on rental (if able to apply for subsidised housing)
  • Pays bills of around $100 monthly
You can see that if a person spends on the most basic things, and if he/she earns only $800, he/she would not be able to save at all.
But there’s more. The real incomes of low-income earners are likely to keep falling, as they had over the past decade (Chart 2).
Uneven Real Income Growth
Chart 2
Also, over a person’s lifetime, if he/she is a low-income earner, his/her income will also fall as he/she ages (Chart 3).
Incomes Of Low Income Earners Drop Over Lifetime
Chart 3
So, for a low-income earner, he/she won’t have enough to save, will most probably fall into debt, won’t have enough to pay for the debt, won’t be able to retire and will be scared for his/her life if he/she falls sick. If he/she gets hospitalised or needs an operation, he/she will have no money at all to pay for the bills.
So, for a low-income earner, they will never be able to save and retire (Chart 4).
Slide2
Chart 4
A Middle-Income Family Wouldn’t Be Able to Save And Retire In Singapore Either
What if we look at another scenario, of a family with 2 children?
In Chart 5, we see Zheng Tian Zhen, who starts work at 25 and earns a starting salary of $2,500. Her boyfriend, Ye Bei Pian, also earns a starting salary of $2,500 at 25.
Slide3
Chart 5
I had worked with these assumptions:
  • Their salary increases 4% annually until they are 39. At 40, their salary increases by 1% annually. At 55, their salary decreases by 1% annually (Chart 6). (In comparison, this is already better than the income growth pattern of a low//middle-income earner as in Chart 3.)
  • 20% of their salary is deducted for the employee CPF contribution monthly.
  • All expenses (food, transport, bills, miscellaneous things) increase by 2% annually, to account for inflation.
  • They spend 20% of their monthly salary on insurance.
Slide 20
Chart 6
Based on what they each spend in Chart 5, assuming that they are very thrifty, they should be able to save $500 monthly in the first few years.
Say 5 years later at age 30, they get married and buy a flat for about $300,000. After another 5 years, at age 35, they give birth to a set of twins. Assuming that they use their CPF to pay for the down payment of the flat, and a proportion of their housing loan, they will pay $500 every month, from their salaries, on the housing loan. Their expenses on food will double for each of them (for each children), and they will start spending 25% of each of their salaries on insurance, to buy insurance for their children. Their expenses on transport will also double in a few years’ time.
Chart 7 will be what their expenditure will look like in 2023, at the age of 35, 10 years from now (note that the figures are after accounting for inflation). From now onwards, they wouldn’t be able to save for the next 25 years, until their children reach adulthood, graduate and start working. Hopefully, the insurance that they buy will be able to cover for their children’s education.
Slide4
Chart 7
Chart 8 shows what their expenses will look like in 2048, at age 60, when their children finally graduate (note that the figures are after accounting for inflation). They will be able to start saving again for the next 5 years before they retire at 65, but most of the new savings will go towards paying the accumulated loans over the past few years. They would also move to start paying 35% of their salaries into insurance, to purchase the more expensive hospitalisation plans – which Medishield wouldn’t fully cover.
Slide5
Chart 8
So, at the end of it all, Zheng Tian Zhen and Ye Bei Pian would not be left with any savings. They would have spent most of their CPF paying for the housing loan that they would have so little left that they wouldn’t be able to meet the CPF Minimum Sum, and wouldn’t be able to take their money out.
Looking at Chart 9, assuming that a person would need to spend $1,000 to $1,500 every month in 2013, by 2053, this would be around $2,200 to $2,300 every month, which means annual expenses would be between $27,600 to $39,600. If a person lives until the life expectancy of 81 years old, he/she would need enough savings for another 16 years, which means that when he/she retires, he/she would need to have saved $450,000 to $640,000.
Slide6
Chart 9
So, assuming that Zheng Tian Zhen and Ye Bei Pian have no savings but each receives a payout of $100,000 from their insurance, this might only last them for only a few years before they have to start working again. Or they might have to delay their retirement until past the age of 70 or 75.
So, you can see that for low to middle-income earners in Singapore, it would be very hard for them to survive in Singapore with their low pay.
Most Singaporeans Won’t Have Enough In Their CPF To Retire
But that’s not all.
In 2013, Singaporeans need to set aside $148,000 in their CPF before they would be able to take their CPF out. According to the CPF Board, “cash balances can only be withdrawn after setting aside both the CPF Minimum Sum and Medisave Required Amount.
Not only that, there is also the Medisave Minimum Sum of $38,500 that a Singaporean needs to also set aside. In total, together with the CPF Minimum Sum, a person would need to set aside $186,500. Working backwards, does this mean that if you don’t earn $884, you won’t be able to meet the minimum sums at all?
However, currently, 16% of Singaporeans earn less than $1,000 – which means that around 15% of Singaporeans will never be able to meet the CPF Minimum Sum and will never be able to take their CPF and Medisave out. Also, considering that the incomes of the low-income earners drop over time, would more than a quarter then not be able to meet their CPF Minimum Sum? Will this figure be 20% or 25%?
It is stated by the CPF Board that, “the Minimum Sum was set at $80,000 in 2003 and will be raised gradually until it reaches $120,000 (in 2003 dollars) in 2015 (Chart 14). These amounts will be adjusted yearly for inflation. ” What happens after 2015? What if the government decides to keep raising the Minimum Sum again? Then would we need to earn minimally $1,500 or $2,000 now to be able to meet the Minimum Sum when we retire in 40 years’ time?
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Chart 14
This throws up some questions:
  • Why did the government make the CPF and Medisave minimum sums so high that at least 15% would not even be able to meet these minimum sums in the first place, no matter how hard they work?
  • Why does the government insist that Singaporeans need to have a minimum sum in their CPF if the money gets locked in and trapped inside, and at least 15% of the people would never be able to get their own money back?
  • Why does the government not implement a minimum wage, knowing that the low-income earners won’t be able to meet the minimum sums without a minimum wage paid to them?
  • Why does the government continues to call the CPF a retirement fund or a golden nest, when at least 15% of Singaporeans can forget about the money that they set aside in the CPF?
  • Why doesn’t the government implement a more progressive contribution structure on the CPF where the rich pay more and the poor pay lesser, so that the poor would be protected by the so-called “national insurance scheme”?
  • How does the government expect the large proportion of Singaporeans to be able to retire if they wouldn’t have any savings or retirement funds? If so, what is the government’s responsibility to the people?
Singaporeans Need At Least $2,000 To Live Even A Basic Lifestyle In Singapore
So, all in, how much would Singaporeans need to earn so that they would have enough to save and retire (if they were to spend on the most basic things).
Based on my rough calculations, for a person who is single, he/she would need to earn at least $2,000 every month in order to be able to do so (Chart 15). And this is if he/she lives a very basic lifestyle, with no holidays, no further education and no upgrading.
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Chart 15
For a family of 4, each parent would need to earn at least $3,500 every month, and that is if both of them are very thrifty, and again, on a very basic lifestyle (Chart 16).
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Chart 16
But how many Singaporeans currently would be able to earn these amounts? As can be seen in Chart 12, nearly 40% of Singaporeans are not even earning $2,000. And if they have children, the $2,000 wouldn’t be enough at all.
Also, as can be seen in Chart 17, around 65% of Singaporeans are earning less than $3,500, which means that only a third of Singaporeans earn more than $3,500 and can afford to have children somewhat comfortably.
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Chart 17
So, Is The Government Helping? 
Question is, does the government know that Singaporeans would need to have at least $2,000 to be able to even have a basic standard of living in Singapore? The answer lies in the Workfare Income Supplement.
According to the CPF Board, “The Workfare Income Supplement (WIS) Scheme was announced during the 2007 Budget Speech as a permanent scheme … to supplement the wages and retirement savings of older low-wage workers as well as to encourage them to stay employed.” To qualify for the WIS, the worker must be a Singaporean who “earn(s) an average gross monthly income of not more than $1,900″. And note that the definition of “average gross monthly income” refers to the “basic salary and additional wages like overtime pay and bonuses”.
So, indeed, the government has calculated and knows that someone earning less than $2,000 would face massive difficulties surviving in Singapore. But, how much is the government actually helping? To be fair to the government, let’s look at the worker earning $1,000, because this is the wage range where the WIS payout is the highest. If you are 60 and above and earns $1,000, the government will give you $3,500 for one year. But out of this $3,500, $2,100 will go into CPF. The worker will only receive $1,400 in cash. What does this mean on a monthly basis? This means that the worker will only receive $116.67 every month. So, in total, the worker will receive a grand total of $1116.67 in cash every month.
What about a 35 year old who earns $1,000? He/she will receive only an addition of $46.67 every month, which will amount to only $1046.67 every month. A worker below age 35 won’t receive anything under the WIS.
Is this even enough? A Singaporean would need to earn at least $2,000 monthly to be able to have a most basic standard of living in Singapore. But even with the WIS, even with the highest financial assistance, a person would still earn only $1116.67 montly, and this is only when you are pass 60. But this is no where near $2,000!
Prof Lim Chong Yah Was Right. Wages for Low-Income Earners Need to Grow By At Least 50%
Do you remember Prof Lim Chong Yah’s Shock Therapy to our wages last year? I haven’t seen his actual proposal, but according to Yahoo! Singapore, he had “urged the raising of salaries of workers earning less than $1,500 by 50 per cent over three years while imposing a moratorium on the country’s highest wages during the same time”.
And you know what, Prof Lim was right. His proposal is exactly what needs to be done in Singapore.
In Chart 18, I tried to do a rough calculation of our wages if we had followed this proposal.
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Chart 18
If we follow Prof Lim’s recommendations, there would be a lot more Singaporeans who would be able to save and retire. If you are earning $1,300 now, your wages would at least increase to nearly $2,000, which would at least allow you to be able to save and retire, if you live on a shoestring budget.
If you earn $2,500 now, with the uplifted wages, you would be able to earn $3,500 and it would be more affordable for you to have children.
Also, as wages spike at the bottom, and the growth at the top remains small, as Prof Lim had recommended, this will have the effect of equalising the wages across the board and reducing the income inequality. Prices might rise a little but with more people having higher incomes, the effects would be more manageable.
So, instead of nearly 40% of Singaporeans who earn less than $2,000, this would be reduced to a quarter. Instead of 65% of Singaporeans earning less than $3,500, this would be reduced to about half of Singaporeans.
What this also means is that there will also be an increase in the number of Singaporeans who would be better able to afford to have children and who would be more likely to do so (Chart 19). This will have the effect of increasing Singapore’s fertility rate as well.
So, now do you also know why Singapore’s fertility rate has been dropping? There’s really no point in bringing a child into this world if you cannot provide adequately for the child, let alone for yourself.
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Chart 19
From this article, you would see that far from it, Prof Lim’s proposal is necessary. If anything, Prof Lim had also been conservative in his proposal. To be able to protect all Singaporeans, wages for the poorest in Singapore would need to be increased by 100%, not just 50%!
Clearly, the wages of Singaporeans and the workers in Singapore have been depressed for far too long. As Chart 2 had shown, the real incomes of low-income earners have actually dropped over the past decade. Also, for the majority of Singaporeans, they have seen very slow growth in their incomes. However, the incomes for the rich have shot up.
There is clearly very uneven growth in incomes in Singapore, such that a growing number of Singaporeans are no longer able to live adequately in Singapore. A growing number of Singaporeans are not able to save and retire and that means that YOU will also very likely have to work until you are pass 70 or 75, or even until your death. Is this what you want?
Meanwhile, healthcare continues to be very expensive because the government spends the lowest on healthcare, as compared to all other developed countries. So, when the government says that they believe in self-reliance, they are pretty much saying, “We have not paid you well but from what we are paying you, you better learn how to make ends meet by yourself. Not that we want to make life difficult for you, but life will be – because too bad, you are poor, and there’s not much we are willing to do to help you.”
In Singapore, if you are single, you should minimally be able to earn $2,000. If you want to start a family, you and your partner should at least earn an average of at least $3,500 each. If not, life will be tough. Yet, the government and businesses lament that Singaporeans do not want to take up service jobs that pay $1,300 when it’s obviously not enough to survive in Singapore. Yet, the government tells us that it is not necessary to get a degree. If we don’t get a degree, who’s going to pay us $3,500, or even $2,000, at the current state of our policies?
So, before the government makes fanciful suggestions that degrees are not important, they should take a look at their policies and change it to ensure that even if a person doesn’t have a degree that they would be able to earn enough. If the government doesn’t believe people need to be paid higher wages, then they should to increase the interest paid to the CPF of the low-income earners so that they would be able to accumulate even that little amount of wealth.
Clearly, what needs to be done in Singapore is to drastically increase incomes for the low-income earners in Singapore, increase public spending, especially on healthcare, and to also increase the CPF interest rates, at least for the poor and elderly, so that they would be able to live and retire respectably.
But then, this is nothing new, is it? This is what we have been telling the government for many years now. But why hasn’t the government acted on it? And if so, why does the government continue to think that it is acceptable that we would need to work till our deaths or that life would be difficult for us?
You had voted for this ruling party for the past few elections, despite the many reminders and warnings that had been given. You have another chance to set things right in 2015/2016. It’s all up to you now. It’s in your hands. Whether you will be able to live adequately and retire comfortably, it’s all up to you now.
*****
Following this article, do you know that not only are Singaporeans paid the lowest wages among the high-income countries, what Singaporeans actually have to fork out of our pocket to pay for taxes, CPF and for basic necessities (healthcare, education, transport etc) is actually almost the same as what the Nordic citizens pay?
But do you know that because Singaporeans earn only half the wages that the Nordic citizens earn, this means that we deduct a much heftier proportion of our wages into paying for these things and have a much lower purchasing power after that.
In fact, for the poor in the Nordic countries, they can still save enough to retire. However, in Singapore, not only the poor but a large part of Singaporeans will never be able to save enough to retire.
You can read more in this 10-part series written by Leong Sze Hian and I on the tax that Singaporeans are paying here, and how we are actually getting the short end of the stick. We voted for this ourselves.