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Tag: interest

  • Upgrading To Bigger Motorbikes? Maybe Not With Latest Taxation System

    Upgrading To Bigger Motorbikes? Maybe Not With Latest Taxation System

    He was planning to replace his current five-year-old Ducati 848 with a new Ducati Panigale this year, but Mr Kevin Liew now has to consider cheaper options instead.

    The change of plans came after Finance Minister Heng Swee Keat announced a new tiered tax system for motorcycles while delivering the Budget on Monday (Feb 20) in Parliament.

    Under the new system, the 15-per-cent Additional Registration Fee (ARF) will stay for motorcycles with an open market value (OMV) of up to S$5,000. The subsequent S$5,000 of its OMV will incur an ARF of 50 per cent, and the remaining OMV above S$10,000 will come with an ARF of 100 per cent.

    The Ducati Panigale that Mr Liew was eyeing was estimated to cost around S$40,000, but with the changes, it would cost “around S$50,000 or S$60,000”, the 27-year-old marketing manager said.

    “Bikes are already overpriced in Singapore compared to other countries because of the COE (Certificate of Entitlement),” Mr Liew added. “With this new scheme, they are only going to get even more expensive.”

    Mr Heng said that a small but rising number of buyers are getting expensive motorcycles, with OMVs similar to those of small cars. To address this, the tiered ARF would be introduced for motorcycles registered with COEs obtained from the second February bidding exercise onwards.

    He added that, going by current registration trends, more than half of new motorcycle buyers would not have to pay more.

    Although the new tax scheme is meant to target luxury-bike owners, some owners of “working class” motorcycles said that they would be affected as well. And the bikers community is upset over the move, lamenting that it would cause a spike in motorcycle prices.

    Mr Justin Khaw, 25, who rides a Honda Trial Bike and was planning to switch to a Honda Africa Twin, said: “Nowadays, most bikes in the open class 2A category cost close to S$10,000 and above.”

    With the new ARF, instead of paying S$32,000 for the Honda Africa Twin, Mr Khaw, an undergraduate, will have to fork out around S$36,000 to S$40,000. He has since decided to look for something cheaper.

    Mr Khaw remarked that the move would do little to reduce vehicular traffic. “If Singapore’s goal is to curb congestion on the roads, then perhaps alternative transport such as motorcycles should be considered. So why are the taxes for motorcycles increasing? Shouldn’t it be decreasing instead?”

    Given that cars and motorcycles do not contribute to congestion equally, he said, he wondered why bikers are “taxed and subjected to the same vehicle control policies as cars”.

     

    Source: www.todayonline.com

     

  • Leong Sze Hian: $324.2b Owed To CPF Members?

    Leong Sze Hian: $324.2b Owed To CPF Members?

    I refer to the article “Why does Singapore have an external debt of US$1.766 trillion?” (Straits Times, Dec 28).

    Govt “invests all the proceeds which it has borrowed”

    It states that “A Government article on the subject explains that Singapore does not borrow to spend. Instead, it invests all the proceeds which it has borrowed.

    Total outstanding Government borrowings is S$436b

    The income which it earns from its investments is also more than sufficient to cover the debt servicing costs. As of March this year, the total outstanding Government borrowings stood at S$436 billion.

    The Government issues three types of domestic debts:

    * Singapore Government Securities to develop the domestic debt market;

    CPF is part of domestic debts

    * Special Singapore Government Securities to meet the investment needs of the Central Provident Fund, and

    * Singapore Saving Bonds to provide individual investors with a long-term saving option that offers safe returns.

    What is also important to note is that unlike some other countries which have to raise funds in currencies such as the US dollar or euro to balance their books, the Government does not have any foreign currency debts.”

    Amount due to CPF members is $324.2b

    According to the Department of Statistics’ Monthly Digest of Statistics – the Amount Due to (CPF) Members is $324.2 billion in October, 2016.

    This has been increasing steadily annually from $150.9 million in January 1961.

    % credited to CPF members – “na” from 1961 to 2001?

    The Interest Credited to CPF members is shown as “na” from January 1961 to December 2001.

    % in 2002 was 2.6%?

    For January 2002 – the Interest Credited was $238 million over the Amount Due to Members of $92.9 billion.

    This works out to an annual interest of only about 2.6 per cent.

    % in 2006 was 3.1%?

    Similarly, for October 2016 – the Interest Credited was $1.02 billion over the Amount Due to Members of $324.2 billion.

    This works out to an annual interest of about 3.1 per cent (up to October).

    Real % was 0.5% from 2001 to 2015?

    Since inflation from 2001 to 2015 was about 2 per cent per annum (CPI 2015 99.461 divided by 2001 75.568) – does it mean that the real annualised rate of return on our CPF Ordinary Account is only about 0.5 per cent (2.5 – 2.0) per annum?

    Lowest real % of all national pension funds in the world?

    Is this the lowest real rate of return of all national pension funds in the world since 1999 – the year that I understand that the CPF Ordinary Account interest rate has remained at 2.5 per cent until now?

    Returns from investing our CPF?

    What is the annualised rate of return derived from investing our CPF funds since 1999?

    In this connection, I would like to quote again – “A Government article on the subject explains that Singapore does not borrow to spend. Instead, it invests all the proceeds which it has borrowed“.

    Cumulative returns from investing our CPF vs % to CPF members?

    What is the cumulative difference between the annualised rate of return derived from investing our CPF funds since 1961 (when CPF started) to today, and the annualised rate given to CPF members?

    In absolute numbers on a cumulative basis with interest – how much money are we talking about over the last 55 years?

    No transparency and accountability?

    Are we the only developing or developed country in the world that is arguably non-transparent, as there is no disclosure on the rate of return derived from our pension funds relative to the weighted average interest rate paid on all our CPF accounts (Ordinary, Special, Medisave and Retirement accounts)?

    $324.2b owed to CPF members?

    Also, does it mean that our domestic debt owed to CPF members is $324.2 billion?

     

    Source: http://leongszehian.com

  • Admin Executive Paid Yearly Insurance Premiums Higher Than Annual Pay

    Admin Executive Paid Yearly Insurance Premiums Higher Than Annual Pay

    An endowment insurance plan bought two years ago by Madam Corinne Han has proved a costly mistake.

    The Prudential policy, which Madam Han, 57, bought at United Overseas Bank (UOB), requires her to pay yearly premiums higher than her annual pay.

    She told The Straits Times that her intention in visiting UOB in 2013 was to open an account and inquire about fixed deposits. Instead, she ended up purchasing the policy that came with freebies like an air-fryer and a steamer.

    Madam Han, an administrative executive with O-level education, earns about $30,000 a year, but the policy requires her to fork out an annual premium of $40,000 for five years, translating to total premiums of $200,000. So far, she has paid $80,000.

    Back in 2013, when she visited UOB, she had $350,000 on hand due to a divorce settlement.

    But after accounting for legal fees and loan payments, she would be left with about $100,000, insufficient to pay for the total premiums of $200,000.

    As she was staying with her mother at the time, she rented out three rooms in her HDB flat. This gave her a combined monthly rental income of $2,000 in 2013. It has since dropped to about $1,000.

    This is how the PruSave Max Limited Pay plan works.

    At the end of the 10-year maturity period, Madam Han is projected to receive a maturity benefit of $236,000 – that is, a potential gain of $36,000 – if Prudential can earn 4.75 per cent on its investments.

    By then, the value of the accumulated premiums, based on the illustrated rate of 4.75 per cent, would have grown to $291,172.

    However, the “Effect of Deduction” (EOD) would amount to about $55,000, which leaves a non-guaranteed maturity sum of $236,000 to Madam Han. The EOD – which is due to Prudential – includes the cost of insurance, distribution cost, expenses and surrender charge.

    If Prudential’s investment return is 3.25 per cent, the maturity benefit is projected to be $217,768.

    However, both the projected maturity figures of $236,000 and $217,768 are non-guaranteed.

    The figures are used by the insurer for illustrative purposes, something that may be the source of confusion as the maturity benefits may be misconstrued to be between these two rates of returns.

    The figure that is guaranteed, as indicated in the policy’s benefit illustration, is actually $181,000 – a sum that is lower than the total premiums Madam Han would have coughed up for the plan.

    The plan she has comes with a death benefit of 105 per cent, which means the policy provides negligible protection.

    Endowment plans typically are savings plans that come with insurance protection which, in this case, is nominal. Customers pay premiums over a fixed period and, typically, a small portion of the premiums is deducted to pay for insurance cover. The rest is invested. So most customers would expect to get their money back, plus interest, when the endowment policy expires.

    “I didn’t know that I may get back less than $236,000, which I believed was guaranteed,” says Madam Han.

    The policy documents state that it is not a savings account and that the actual benefits are not guaranteed.

    There is still the question of how Madam Han ended up buying this plan.

    After paying for two years, she now faces financial difficulty in paying future premiums. UOB has informed her that the annual premiums could be reduced, but she would have to forgo the excess premiums that were paid in the first two years.

    This means that if she pays a reduced annual premium of, say, $20,000 for the remaining three years, she will forgo the excess $40,000 that was paid in the first two years.

    Madam Han has complained to UOB and wants to surrender the policy and recover her premiums.

    A UOB spokesman told The Straits Times: “We will be arranging a meeting with Madam Han to clarify and address the matter with her.”

    Madam Han has four children, aged 20 to 27. Two of them have not completed their formal education.

     

    Source: www.straitstimes.com