CPF changes from budget 2011 is good news..... right?

chezball · Post by **chezball** » Sat Feb 26, 2011 10:29 am

2 key changes to the CPF contribution took place in the recent 2011 budget announcement. Generally good news for employees and not so good news for employers (see table below for details). Here is are the changes:
1) Increase contribution ceiling from $4500 to $5000
2) Increase contribution from employer from 15.5% to 16%

So in general good news? well.. lets see..

1) With the changes your employer will now need to pay ($5,000 X 16%) $800 to your SA account compared to $697.5 ($4500X15.5%). So you gain $102.5 assuming you reached the max contribution ceiling.
2) But with increase of contribution ceiling means you will also need to contribute more. You used to contribute ($4500X20%) $900, but now is ($5000X20%) $1000. which means you are $100 down on your disposable income (cash flow)!

So net net, your disposable income is down $100, but your CPF account gained by $202.5. Whether it is good news or not really depend on what you were doing with your excess cash. But one thing is for sure, I think we better look closer at our CPF accounts and how we can make our CPF money work harder for us. Any ideas on the best way to invest CPF monies?

You see the table at my blog:
http://passiveincomesg.weebly.com/new-blog.html

TanKS · Post by **TanKS** » Sat Feb 26, 2011 12:07 pm

Our government explained that they are doing this because Singaporeans are getting higher salaries. If this is really true, why is the income cap for buying HDB flats remains at $8k for so many years without moving? I feel that this government looks at issues in isolation. They need to look at things holistically. This way is tougher, but hey, they are paid handsomely.

wemakebread · Post by **wemakebread** » Sat Feb 26, 2011 12:10 pm

Thanks for sharing chezball & TanKS.

One of our fellow forumer, Alvin has a website called bigfatpurse.
He did an update of SGX stocks which can be bought via CPF in Jan 11
http://www.bigfatpurse.com/2011/01/you- ... cpf-funds/

For latest update, can check from SGX directly
http://www.sgx.com/wps/portal/marketpla ... dices_list

Cheers!

lootster · Post by **lootster** » Sat Feb 26, 2011 9:15 pm

At a glance, it is not a bad thing for employee as their CPF contribution increases..... thanks to the "not so happy" employers.

BUT, the ultimately the funds still flows into the special account which cannot be touch until a person reaches the official retirement age.....

Guess who benefit the most in the end??? Hmm......

chezball · Post by **chezball** » Sat Feb 26, 2011 11:13 pm

TanKS wrote: Our government explained that they are doing this because Singaporeans are getting higher salaries. If this is really true, why is the income cap for buying HDB flats remains at $8k for so many years without moving? I feel that this government looks at issues in isolation. They need to look at things holistically. This way is tougher, but hey, they are paid handsomely.

Hi TanKS,

Not sure if you know, but HDB just (last year) increased the income ceiling for DBSS flats.

Quote: "Your gross monthly household income must not exceed $10,000 if you are applying for a DBSS flat from Yishun PH1 and Tampines PH2 onwards."

link: http://www.hdb.gov.sg/fi10/fi10321p.nsf ... omeCeiling

It is limited to the 2 areas and is limited to DBSS. But I think it will expand the scope over time.

Now that you know this, will I see you queing outside HDB hub?