Making it harder for Singaporeans to downgrade to monetise their flat for retirement?

Many Singaporeans subscribed to the call for asset enhancement by purchasing HDB flats – only to be hit by the policy change now, which in effect, may result in their inability to cash out of their “enhanced” HDB asset.
The CPF Minimun Sum (MS) was raised from July 1, 2009, for those aged 55 years, to $117,000, up from $106,000. 

This is an increase of 10.4 per cent, much more than the inflation rate for the previous year, which was 6.5 per cent. How can the increase in MS be “an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement?”
Similarly, the MS was increased by 6.4 per cent in July 2008, from $99,600 to $106,000, when inflation was only 2.1 per cent in 2007.
With the current recession, some of those reaching age 55, may have lost their jobs or failed in their businesses, and thus a large increase in the MS, may cause some financial stress to them. 

As last year’s increase is the highest in the history of the MS scheme, at its current quantum of increase, does it mean that by 2013, the MS may be about $161,000 ($117,000 now plus $11,000 increase for 4 years)?
Can anyone afford to retire in Singapore in future?

The Longevity Insurance Committee’s (LIC) CPF Life report last year only projected a MS of $134,000 in 2013 (chapter 4). 

Adding the projected Medisave Required Amount (MRA) of $36,000 in 2013, does it mean that those reaching age 55 may only be able to withdraw $5,000, if they have less than $197,000 (MS $161,000 plus MRA $36,000) in their CPF? 

How many Singaporeans will have more than $197,000 in their CPF in 2013?
The answer can be found in the LIC report: only 60 per cent are projected to have at least $67,000 in their CPF in 2013.
At the current rate of increase of $15,500 per year ($11,000 MS + $4,500 MRA), will the combined MS and MRA be $352,000 and $507,000 in 2023 and 2033 respectively?

In conclusion, is it any wonder why so many Singaporeans may be thinking about migrating overseas?
Furthur more, with the new incentive of $20K for elderly to downgrade their HDB flats, does it mean you will have less CASH because of insufficient money in your CPF Minimum Sum(MS) which you need to topup and locked up for retirement? If so, I think there will be very little participation as most will sell in the open markets to get CASH into their pockets, as they may need to downgrade to a studio/2rm and need to fork out more cash as at their age, they may not qualify for a loan at all.
– Contributed by Oogle. 

Author: Gilbert Tan TS

IT expert with more than 20 years experience in Multiple OS, Security, Data & Internet , Interests include AI and Big Data, Internet and multimedia. An experienced Real Estate agent, Insurance agent, and a Futures trader. I am capable of finding any answers in the world you want as long as there are reports available online for me to do my own research to bring you closest to all the unsolved mysteries in this world, because I can find all the paths to the Truth, and what the Future holds. All I need is to observe, test and probe to research on anything I want, what you need to do will take months to achieve, all I need is a few hours.​

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