Rilek1Corner

Tag: grants

  • HDB Flats For Even Rich Kids’ Children?

    HDB Flats For Even Rich Kids’ Children?

    It’s difficult for a heartland born-and-bred Singaporean like me to imagine, but there are apparently people in Singapore who have never lived in, or even stepped into, a Housing Board flat.

    When I was discussing property purchases with a group of friends, one of my girlfriends confessed she would not buy a HDB flat because she wouldn’t feel safe in one. She grew up in private property and her first purchase was a condominium.

    I got to thinking about this issue, following reports that National Development Minister Khaw Boon Wan wants to make it easier for all couples, including high-earning ones, to own and live in a HDB built-to-order (BTO) flat.

    In a live radio talk show on Chinese-language station Capital 95.8FM, he is reported to have said: “If you ask for my personal opinion … I generally prefer to give every Singaporean couple a chance of living in HDB.

    “You may come from, say, an upper-income group. You do not need an HDB flat. But I feel that it’s good for … almost all Singaporeans to have a chance of living in HDB for five years, and interact with the community.”

    He added: “It’s part and parcel of the Singaporean way of life. It’s just like males go for National Service … If we can give them this opportunity of staying in HDB towns, I think there are more positives than negatives.”

    His remarks were made in the context of raising the income ceiling for HDB flats, which he said could happen by Sept.

    Now, a married couple with a joint monthly income of up to $10,000 can buy a subsidised, new HDB flat. It was raised from $8,000 in 2011.

    This isn’t the first time Mr Khaw made such a comment. In an exclusive interview with The Straits Times in April 2013, he had broached the idea of scrapping the income ceiling to allow even couples with very high incomes to own HDB flats, as living in HDB flats would give people more chances to interact with others of different races and incomes. But the lower-income households ones would still get bigger housing grants.

    Mr Khaw said then: “If a rich man’s kid wants to apply for a BTO flat, provided he stays the five-year minimum occupation period, there’s nothing wrong with that to me”.

    My reaction both times was bemusement.

    For most Singaporeans, HDB living is part and parcel of being Singaporean. Most live in HDB estates. Those of us who grew up in one, and moved on to private property, will probably always hanker after the bustle of HDB life.

    You see all the BMW-driving businessmen in long-sleeved shirts wiping away beads of sweat as they wolf down their bak chor mee or mee goreng at their favourite HDB coffeeshop and hawker centre, and you see the looks of blissful content on the well-dressed women as they buy their cheap laundry baskets or pick up kitchen utensils at the household sundry shop, and you know you can take the boy or girl out of the HDB estate, but you can’t take the HDB out of the boy or girl.

    So the idea that a special policy is needed to encourage people to live in and interact with HDB residents will appear slightly surreal to some. On my Facebook, a friend commented that she felt insulted, as though HDB residents were creatures in a zoo that the rich are being encouraged to visit to see.

    I empathise with that comment. It’s like having a special policy to encourage those who live with a permanent bubble around their heads to take their heads out of the bubble and breathe normal air like the rest of us.

    Breathing normal air is the default, and should be so. But I can see that if segments of our population have become so used to living in that bubble of air, it would take concerted policy action to persuade them to try normal air for a change.

    The truth is that Singapore society is stratifying. Whereas many of today’s middle-aged professionals grew up in HDB flats, it’s probably the case that more of today’s 20-something year old professionals and managers grew up in private housing. So the idea of having them live in and experience HDB life, isn’t a bad one. From the point of view of social cohesion, it makes sense.

    In Singapore, public housing caters to the majority of the population – 80 per cent of Singapore resident households live in HDB flats. The idea is precisely that we would all grow up in mixed neighbourhoods that jumble up people of different races, different income groups, and different socioeconomic status.

    So it makes sense to encourage the small minority who never had a chance to do that when they were growing up, and encourage them to do so in their young adulthood.

    I often wonder how many of today’s young Administrative Service civil servants, and the smart youngsters who enter the banks, the legal profession, and even the media, have lived in HDB flats, and if they have empathy for the average Singaporean who does. These people are future leaders and decision-makers.

    If too many of them come from privileged families, they would never have experienced poverty, or suffered from want or anxiety over money problems. But if they had a friend in school or in their neighbourhood who did, and were close enough a confidant to share vicariously in the friend’s struggles, their worldview will be more rounded than the wealthy child who lives with, plays with and goes to school with only other wealthy children.

    If raising the income ceiling to allow more young couples to live in HDB flats can help reduce the social gap that can exist between the privileged and the masses, then there are reasons to do so.

    I know some readers will argue that HDB flats should be reserved for the lower-income. Let the high-income earners who want to live in HDB estates buy flats on the resale market.

    But the fact is that, with 80 per cent living in HDB estates, HDB flat owners already include the high-income. Increasingly, the subsidised HDB flat is being viewed as the birthright of every Singaporean couple. The HDB gravy train gives them a ticket to an affordable first home – and a firm step up the ladder of financial success, if they are lucky enough enough to make hundreds of thousands of dollars subsequently by selling it on the open market.

    But opening up the floodgates this way will inevitably lead to demands from other groups to be given the same access to HDB subsidised flats. Mature couples who missed out on buying HDB flats earlier will also want to be allowed to buy subsidised flats. And singles will demand more leeway to benefit from housing subsidies too.

    The arguments about the social benefits of having every Singaporean experience HDB living applies equally to them.

     

    Source: http://business.asiaone.com

  • Andrew Loh: Calvin Cheng’s Behaviour Not Befitting Of Media Literacy Council Member

    Andrew Loh: Calvin Cheng’s Behaviour Not Befitting Of Media Literacy Council Member

    Calvin Cheng is an acquaintance of mine. I even had him on my Facebook “friends” list. But not anymore. I removed him after his latest Facebook posting which insinuated that the writings or work of playwright Alfian Sa’at were such a potential threat that “the Government should watch commentators” like Alfian “closely”.

    He then accused Alfian of “irresponsible rhetoric”, and likened Alfian to “domestic agitators”.

    Read in context, these unsubstantiated claims and their insinuations are obvious.

    Many have taken Calvin Cheng to task, and I shall not go into arguing against the points in his posting.

    They are clearly pure nonsense.

    What I am more interested in is Calvin Cheng’s membership in the Media Literacy Council (MLC), a government-appointed outfit which advises the Government on “research, trends and developments pertaining to the Internet and media, and appropriate policy responses.”

    The MLC also “[develops] public awareness and education programmes relating to media literacy and cyber wellness”, and it seeks “to promote an astute and responsible participatory culture.”

    “Through our work, we aim to… encourage users to be more reflective about the ethical choices they make as participants and communicators and the impact they have on others,” the MLC website says.

    The MLC consists of 26 members, headed by professor Tan Cheng Han of the Centre for Law and Business, Faculty of Law, National University of Singapore .

    Calvin Cheng is a council member. (See here.)

    On the council’s “Media Literacy Council Core Values” page, the council states several “key areas” which it “seeks to address”.

    These include “uncivil behaviours online” which, the council says, “refers to behaviours that are anti-social, offensive, irresponsible or simply mean.”

    Do note the last word – “mean” – which the council considers as undesirable “uncivil behaviour”.

    The  Media Literacy Core Values “encompasses a set of values and skills that … are indispensable to conducive and positive living especially in the digital age,” the MLC says.

    “The Media Literacy Core Values will underpin the Council’s public education and outreach programmes.”

    If you turn to the “Best Practices” page on the MLC website, you see a tab titled “Values and Social Norms”.

    What are these?

    They are four sets of advice which, the MLC says, will help you keep your friends and not make enemies.

    One of the ways to achieve this is to “win people over with your objective arguments and logic” because “hysterics will not get you anywhere.”

    “There is no need to make personal attacks as everyone is entitled to their own views,” the MLC says. “Make out your case politely and objectively. You might find that you will get a few converts instead of enemies.”

    It also urges participants to reject and report “bad or bullying behaviour”, as this means “you are helping to create a better cyber space by propagating positive social norms.”

    The MLC uses words such as “empathy and graciousness”, “respect”, “responsibility and integrity” as values and social norms it champions.

    So there. The MLC has laid out, basically, what is good online behaviour which will foster a positive environment for everyone.

    What then of those, especially those in positions of influence (no matter how limited), who behave in ways which run against what the MLC is promoting?

    Indeed, what if the behaviour of MLC members themselves betrays the MLC’s very own core values and best practices?

    Insinuating that someone is responsible for some misguided terrorist group’s potentially harmful actions in Singapore because one raises concerns about minority race issues is just plain irresponsible itself, no?

    And accusing someone of being a “domestic agitator” in that context is not only devious, it is also highly dangerous, for it plays up the racial and religious faultlines here.

    Additionally, if behaviours such as Calvin Cheng’s are allowed to propagate, they may have the effect of silencing those in the minority races from speaking up about genuine grievances.

    So, one would not object if the Internal Security Department (ISD) invites Calvin Cheng for an interview about his posting.

    It is also not unknown that Calvin Cheng also engages in online challenges, such as a recent one where he challenged a poster to meet him and slap him, and also engages in baiting others, such as calling them “ball-less” when challenges are not taken up.

    bait

    Indeed, he is also known and seen as a troll in some quarters.

    “Trolls want to create discord by purposely baiting people to react,” the MLC website says.

    One just needs to peruse his Facebook postings to see the tone of his exchanges with others over any issue.

    To be sure, Calvin Cheng is not alone in engaging in this less than desirable behaviour.

    There is also the other pro-PAP cesspool Facebook page which spews non-stop bile online everyday.

    And it seems that this cesspool is the only site which is supportive of Calvin Cheng’s behaviour – and that says a lot: if all you have is a cesspit to stand on or stand with, you should realise your credibility is in deep shit.

    I wish Calvin Cheng, being a former Nominated Member of Parliament (NMP) – which comes with a certain level of expected public responsibility and decorum – would not resort to such hateful behaviour towards others.

    There are certainly better ways to get your points across than to resort to attempts in dragging someone’s name through the mud.

    Ironically, in 2013, Calvin Cheng wrote – in a letter to the Straits Times Forum page:

    “If there is a terrorist attack or a viral outbreak, and people turn to the Internet for conspiracy theories and advice instead of listening to and trusting the Government, the consequences could be unimaginable.”

    Yes, ironic indeed that he is the one now spewing exactly such conspiracy theories.

    So, I ask myself: what do the MLC members think of this sort of behaviour?

    But personally, I have a deeper, more troubling question, and it is this:

    What kind of person would cause another person more pain at a time when the latter is also grieving over the recent death of his mother?

    I cannot fathom the depths of depravity which would make anyone do such a thing.

    Alfian’s mother had just passed away last week, and Alfian is still in mourning.

    The very fact that Calvin Cheng saw it fit to launch his baseless and unsubstantiated attacks on Alfian at this time speaks of his (Calvin Cheng’s) mental make-up and of how truly oblivious he is.

    Pity, Calvin, that you find it apt to do this to Alfian at this time and betray everything that the MLC stands for.

    I think the MLC, funded by public money, seriously needs to look into the online behaviour of its member.

     

    Source: https://andrewlohhp.wordpress.com

  • AHPETC Expects Grants To Be Released Soon

    AHPETC Expects Grants To Be Released Soon

    I refer to the various news reports of 12th and 13th May on the information and comments released by the Ministry of National Development (MND) to the media, concerning the withholding of the Service & Conservancy Charges (S&CC) operating grant for Financial Year (FY) 14/15 to Aljunied-Hougang-Punggol East Town Council (AHPETC). In order that the public and residents may better understand the matter, it is necessary for AHPETC to respond.

    S&CC operating grants are needed

    First, I wish to set out AHPETC’s position on the annual S&CC operating grant (“the operating grant”).

    Like all Town Councils, AHPETC requires the operating grant to fulfil its obligations under the Town Councils Act. Without the government’s operating grant, all Town Councils would run deficits, and over time would face cash flow problems and financial difficulty. During the MND Committee of Supply debates in 2013, MND Senior Minister of State Lee Yi Shyan had estimated that the government grants accounted for 15% of Town Councils’ annual budgets.

    I wish to state categorically here that there has not been any statement by me nor anyone on AHPETC’s behalf that AHPETC does not require the operating grant.

    MND had indicated in its letter of 28 April 2014 that it would withhold the operating grant till the conclusion of the Auditor-General’s Office (AGO) audit. AHPETC went through the extensive audit. However, after the AGO audit was concluded, a special Parliamentary debate was convened on 12-13 February 2015 to scrutinise the findings. MND’s position there was that AHPETC needed to take various follow up measures or to satisfy the Ministry that the grants would be safeguarded, before the operating grants for FY 14/15 and FY 15/16 could be paid out to AHPETC.

    The next step by MND was the court application filed on 20 March 2015. MND is now asking the court to appoint independent accountants to co-sign cheques drawn on the government grants to be disbursed to AHPETC subject to certain conditions.

    Be that as it may, AHPETC welcomes the intended disbursement of the grants for FY 14/15 and FY 15/16. AHPETC has indicated that under the Town Councils Act, the Minister may impose reasonable conditions as he may determine for the disbursement of the grants, and that no court application was necessary for this.

    AHPETC Manages Cash Flow to Continue Its Operations

    Next, I turn to the circumstances facing AHPETC in FY 2014/15 and how it has managed to continue its operations to deliver services to residents.

    When MND wrote to AHPETC on 28 April 2014 on its intention to withhold the operating grant ($7.1 million) for FY 2014/15, it indicated that it would do so until the conclusion of the audit by the AGO.

    At the time of MND’s letter of 28 April 2014, the AGO audit had just commenced the previous month (March 2014). It was not clear how long the AGO audit would take. As such, AHPETC decided it was premature to reply to MND on the issue, but should continue to devote resources to the audit and monitor AHPETC’s cash flow situation.

    By mid-June 2014, it was still not clear how long more the AGO audit would take, and correspondingly how long more the S&CC operating grant would be withheld. As further delays would affect cash flows, I wrote to MND calling for release of the grant, and subsequent correspondences followed.

    Specifically, MND was also made aware on 30 July 2014 that AHPETC would not be able to make the quarterly transfer to Sinking Funds for the first quarter of FY 2014/15 on time, by 31 July 2014.

    It was the utmost priority that essential services to residents not be disrupted while the grant was withheld. AHPETC thus prioritized the continuity of operations and ensuring cash flow for routine activities. It deferred its quarterly Sinking Fund transfers, which enabled interim management of cash flow through retention of more funds in its Operating Funds.

    Despite AHPETC’s ability to manage its operations in the interim in this way, AHPETC would still require the operating grants to fulfil its obligations under the Town Councils Act e.g. to complete the quarterly Sinking Fund transfers.

    Why AHPETC deferred the Offer of Half-Grant

    On 7 October 2014, MND wrote to AHPETC to offer to release half the operating grant to AHPETC subject to certain conditions. The option was considered carefully right up to November. By then, much progress had been made on the AGO audit, and it appeared that the conclusion of the audit was imminent.   Furthermore, to ensure continuity of operations, AHPETC had decided to earmark the entire sum of the grant, which was withheld, as part of its Sinking Fund transfer for FY 14/15, while it continued to make the quarterly Sinking Fund transfers when it could.

    As AHPETC’s understanding was that MND would consider whether and / or how it would release the entire operating grant upon conclusion of the AGO audit, and the conclusion of the AGO audit appeared imminent, AHPETC decided to defer the decision on the half-grant. AHPETC then wrote to MND on 12 Nov 2014 that it was assessing the situation and would come back to MND should it wish to take up the option of the half-grant.

    AHPETC continued with its interim strategy to manage cash flow while continuing to devote resources to the AGO audit, which was completed end January 2015. The AGO report was released on 9 February 2015 and debated in Parliament on 12-13 February 2015. Parliament was engaged in the Budget and Committee of Supply Debates till 13 March 2015. MND commenced its court action against AHPETC a week later, on 20 March 2015.

    AHPETC’s Position in Court Case

    It is useful to briefly summarise AHPETC’s position in the court case commenced by MND.

    Regarding the grants for FY 14/15 and FY 15/16 which have not yet been received, AHPETC’s view is that the Town Councils Act enables the Minister to impose reasonable conditions on the disbursement of the grants as he may determine. A court application is not needed for the same.

    As for the proposal to appoint independent accountants to inquire into past transactions, AHPETC is advised that the legal basis for such a court order is questionable. AHPETC also does not believe that there is factual justification to mount an oppressive fishing expedition.

    The arguments have been presented in Court and we await the verdict of the Court.

    AHPETC will Prioritise Continuity of Services

    News reports have generated concern about AHPETC’s ability to continue to operate. AHPETC hopes to receive the operating grants soon. In the meantime, AHPETC will continue to prioritize its operations to avoid disruption of services to residents.


    SYLVIA LIM
    CHAIRMAN
    ALJUNIED-HOUGANG-PUNGGOL EAST TOWN COUNCIL

    14 May 2015

     

    Source:www.ahpetc.sg

  • MND Applies For Court-Appointed Accountants To Safeguard Grants To AHPETC

    MND Applies For Court-Appointed Accountants To Safeguard Grants To AHPETC

    The Ministry of National Development (MND) has applied to Court to appoint independent accountants to safeguard Government grants to the Workers’ Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC) and to oversee its use of those grants.

    MND said that the court documents were served on AHPETC on Friday.

    This is a step that MND is taking before disbursing several million in government grants to AHPETC. Grants are disbursed to all town councils, but MND has withheld AHPETC’s grants for FY2014 due to concerns over lapses in governance and compliance at Opposition town council.

    In a parliamentary debate last month over these lapses, found by the Auditor-General’s Office after a year-long audit, National Development Minister Khaw Boon Wan had said that AHPETC would not get the grants, which are about $7million annually, until it sets its house in order.

    In a statement on Friday, MND noted that AHPETC had written to it in June 2014 to request disbursement of the Service and Conservancy Charges (S&CC) Operating Grant for FY 2014 without further delay, stating that ‘the continued withholding of the grant to AHPETC is likely to critically and adversely affect the town council’s cash flow position.’”

    “But before MND does so, there must be adequate safeguards to ensure that AHPETC accounts for and manages these grants properly,” said MND.

    MND has therefore applied to Court to appoint independent accountants to safeguard the grants to be disbursed to AHPETC.

    If the Court grants the order, MND will be able to disburse the S&CC grants for both FY14 and FY15 to AHPETC.

    “AHPETC will have to keep the grants in segregated accounts, and payments out of these accounts exceeding certain thresholds will have to be co-signed by the independent accountants,” said MND.

    MND is also asking the Court to empower the independent accountants to look at past payments made by AHPETC and to “take appropriate action to recover losses suffered by AHPETC and its residents.”

    Government ministers have charged that AHPETC’s managing agent, FM Solutions & Services, over-charged it by $1.6 million a year compared to what other town councils pay their managing agents.

    “But the independent accountants will not take over the operations of AHPETC nor seek to remedy the problems identified at AHPETC. These remain the responsibility of AHPETC’s WP MPs, the MND statement emphasised.

     

    Source: www.straitstimes.com

  • HDB CPF Scheme A Scam?

    HDB CPF Scheme A Scam?

    Once upon a time, when HDB was first started in the 1960s, flats were really sold at close to cost and followed the model of true subsidized housing. In the 1970s, flats were sold on a cost basis, in other words with no mark up by the HDB. You could buy a 3-room flat for as little as $7,000 and 5-room flats were $30,000 apiece.

    In the 1980s, HDB started to include land cost in the pricing, for what reason no one knows as HDB dwellers do not own the underlying land. Prices then went as high as $140,000 for an executive flat. In the 1990s and 2000s, we saw the start of the sharp rise in prices when HDB added “market” price of land valuation to its construction cost, resulting in above $400,000 for the price of new flats today. We will examine the reason for this later.

    In the first couple of decades of the HDB’s existence, you also had to sell the flats back to HDB at the price that you bought from them, if you decided to change residence. This prevented speculation from profit taking on the flats. At its peak, with a population under 2 million, the HDB was building as many as 30,000-40,000 units a year. These were the golden days when HDB was truly affordable.

    The HDB’s formula was very simple. Acquire land from private owners for a fraction of the cost using the Land Acquisitions Act which restricted what the government was liable to pay in compensation to the land owners (my readings have indicated 25 cents on the dollar), then rezone the land to allow for higher density. Tender out the construction of the blocks with the winning companies using cheap labour (usually Thai or Bangladeshi workers), cheap material, and all financed by cheap money from the CPF. On top of this, architectural costs were minimized (they can add up to 10% of a project’s cost) by using the same cookie cutter designs.

    Cheap Land + Cheap Labour + Cheap Materials + Cheap Architectural Costs + Cheap Financing = An affordable Dwelling … as long as the savings were passed on to the end user.

    Fast forward to the 1980s, and the PAP realized that it had a serious problem on its hands. This was the growing mountain of CPF funds under administration. When CPF originally started in 1955, the contribution rate (total) was as little as 10%. Now look at how high it is. Coupled with the higher average incomes over the decades, this higher contribution rate has given rise to hundreds of billions of dollars that the government collects in CPF contributions every year.

    Over the last 5 years, CPF contributions have averaged $22 billion and the amounts are trending higher. These contributions represent a liability to the government, i.e. they have to pay it back to the contributors when the latter retire. Many have suspected the PAP is not interested whatsoever in releasing these billions of dollars to Singaporeans and that they have already used these funds to fund their GLCs, Temasek Holdings, etc. and in many cases have lost substantial amounts of money.

    Can you sense the con?

    So, the question became, “How do we, the government, minimize our liability in the form of CPF, and at the same time increase our investing assets in the form of the 2 sovereign wealth funds?”

    So, some scholar came up with a brilliant idea. What if we decoupled the HDB’s buy back at cost scheme for flats – resulting in an immediate price increase – and then using this price increase as an excuse, we artificially raise the prices of HDB flats drastically. At the same time, we allow the use of CPF not only for the down-payment, but also for monthly payments on the flats, thereby depleting the flat dweller’s CPF account and dramatically reducing the government’s CPF liability exposure.

    So, how it works is that now, HDB has raised its pricing to way beyond what it costs to build a flat. A flat that costs perhaps $150,000 to build is now “sold” for $450,000. The extra $300,000 is profit that goes to the government. Imagine that you are the buyer of such a flat. You use 20% for the down-payment straight from your CPF OA account. That’s $90,000 out of your CPF account right away. And you take a bank loan for $360,000 at 2.5% amortized over 25 years, that’s $1,613 per month in payment. Let’s say that like most Singaporeans, you take the monthly loan payment out of your CPF. After 10 years, you have paid $193,500 in interest and principal. Remember, this is $193,500 that you won’t have any more in your CPF. It has gone to the government which used an overvalued flat to extract it from you. And don’t forget too that the original $90,000 down-payment is also not available, meaning in the first 10 years, you have used up $283,500 from your retirement savings on a flat that is not yours, a flat that you are only renting for 99 years from HDB!!!

    Worst of all, after the first 10 years, you still owe $242,000 on the original purchase price. In one fell swoop, the government has now successfully transferred 75% of your current and future retirement funds into a 99-year prepaid rental flat that you don’t own, thereby reducing their liability to you and at the same time selling you an expensive trinket. How devious is that?

    But wait, you say, I can always sell my flat when I retire and use the money from the sale to fund my retirement. This is the lie that the PAP tells, and let’s examine it.

    a) Well, if you sell your flat, where are you going to live? If you bought your flat 25 years ago for $150,000 and sold it today for $600,000, where will you reside? You can downsize to a smaller flat, but even that will cost you upwards of $300,000. So, what do you net out after you buy a replacement flat? Remember, you have to live in a flat until you die, as nursing homes according to certain Ministers are too expensive unless you relocate to Johor. And forget about renting too. It’s very expensive and will rapidly deplete the capital gains you have made from the above transaction. Don’t forget too that CPF has fixed it such that you can only use your CPF for the monthly payments on a HDB 99-year prepaid rental flat, but does not allow you to use it on monthly short term rent (12 months or so). If you retire and sell your flat, and decide to rent, you must pay for the rent after tax and from non-CPF sources of funds. Which means you can’t do so or you have to go back to work. It’s then a waiting game until you get to the age when you can withdraw all your CPF. So, if you do downsize to a smaller flat, the amount that you net out will not be much, and probably not enough to fund retirement for you and your spouse.

    b) Consider too what happens when your flat gets older. Some banks are not giving loans for flats that are older than 25 years. HDB themselves severely restrict loans for flats that are 34 years and older. This means that when you want to “monetize” or sell your flat for the purpose of funding your retirement, you will find that many potential buyers cannot get a satisfactory bank loan, or even a bank loan at all, to buy it from you. This will result in your flat being less desirable to buyers and hence it will command a lower price than what you had thought possible. In addition, you are dependent on the prevailing housing market conditions. Housing moves in cycles. If you are selling during a downturn, you will get less for it. If you want to wait till the market comes back up, then you have to postpone your retirement. You have therefore been placed in a position where you have to speculate on real estate and where there is no certainty at all what amount your retirement fund will be. This is the opposite of a prudent pension or retirement fund. A prudent retirement fund is one where you know exactly how much money is inside so you can budget and plan for your retirement. This is not possible if you have to rely on the value of your HDB flat at a certain point in time in the distant future.

    c) Selling your HDB flat to fund your retirement is possible if you bought it 30 years ago. Today’s new flats can cost $400,000 plus and a resale flat easily exceeds $600,000. Exactly how much does it have to appreciate as it gets older for you to make a sizeable capital gain from its sale into retirement? You pretty much have to sell it for over a $1 million to fund retirement. What are the odds that a 30-year old flat will sell for $1 million when the time comes?

    Cornered and nowhere to run

    How successful has this manoeuvre been? Consider that CPF withdrawals are roughly 50% of CPF contributions. This is over $10 billion a year on average being withdrawn. The vast majority of that goes towards funding HDB-related purposes. A retirement fund should only be drawn on when you retire. What the government has made you do is something that no prudent financial planner would advise. They have made you pay for your current expenses such as housing-related expenses with your retirement fund. In addition, the PAP has closed all possible loopholes, hence channeling people like lemmings into this “legal con game”.

    For example, by offering a rate of only 2.5% on your CPF (in earlier years it was as low as 1%), your CPF is being eroded at an alarming rate. This is because the inflation rate is much higher than 2.5%, and is in fact double digits in some years. If the inflation rate was 6% per annum, you have lost 3.5% on real purchasing power. Put another way, if you have $100,000 today in your CPF, 20 years from now, your $100,000 would be able to purchase only $70,000 worth of goods and services. So what choice do you have? If you leave your money in the CPF account, you are guaranteed a loss due to the effects of inflation being higher than what CPF pays you in interest.

    So, the PAP wants you to put it into an HDB flat so that at least you have some chance of a capital gain down the road. If CPF paid 10% interest on OA, who would want to withdraw it to buy a flat? Yet, Temasek claims to be earning 17% returns on these same CPF funds that they use to invest. Surely, it’s not unreasonable to give to the original funders 10% return? Singapore bond yields are typically 2.5% over bank deposit rates, and some GLCs like Keppel Corp have long bonds yielding over 5%. Why can’t CPF pay at least these rates?

    And now the government is making it harder and harder for people to access their CPF. They are moving the age limit higher and floating trial balloons about annuities, all in the name of preventing Singaporeans from accessing what’s left of their CPF that has not been pilfered to the HDB.

    Yet another clever device centres on the fact that HDB has no intention of honouring its 99-year lease agreement. In the first place, the flats are not built to last 99 years. So, before the 99 years are up, HDB fully intends to relocate you to another estate into a new flat at a much higher market rate than the one you previously owned. Who knows, you might have been mortgage-free vis-a-vis the old flat but now you have to start with a new mortgage again. In addition, terms in the lease contract enables HDB to transfer ownership cost such as property taxes, upgrading costs, conservancy fees to you, the tenant, thereby further depleting your CPF account.

    Conclusion

    The end result is that in all likelihood in excess of $100 billion has been channeled out of CPF into the government coffers through the sale of a rental agreement for 99 years. Singaporeans literally have nothing to show for it. If this doesn’t make it one of the biggest swindles of all time, then I don’t know what does. This is not some greedy Wall Street wolf doing the fleecing here, but a government using legislature, boldfaced lies and obfuscation to con a gullible populace into buying into a pipe dream.

    BD

    * Submitted by TRE reader.

     

    Source: www.tremeritus.com