Sunday, August 26, 2007

Up To $10m More A Year For Private Estates’ Upgrading

Source : The Straits Times, Sunday, 26 Aug 2007

CHANGES to the seven-year-old Estate Upgrading Programme (EUP) for private estates will further improve the living environment for private estate residents.

New measures announced yesterday by National Development Minister Mah Bow Tan and Minister of State for Finance and Transport Lim Hwee Hua will see private housing estates get better coordination in major upgrading works as well as access to extra funding.

The scope of the Estate Upgrading Committee, which currently manages projects in private estates, will be widened to oversee and coordinate all major upgrading works across the different public agencies.

The committee, which is chaired by Parliamentary Secretary for National Development Mohamad Maliki Osman, will also see senior representatives from public agencies such as the National Parks Board and the Land Transport Authority on it.

These will help tackle the problem of a lack of coordination - a complaint residents from private estates have raised.

Another change will give private estates access to the Community Improvement Project Committee (CIPC) funds, something which only HDB estates are allowed to touch at the moment.

These funds can be used for minor improvement projects such as a playground, ramp or barbecue pit, or for maintenance works.

‘When we did the survey, not many private estate residents wanted big upgrading plans,’ said Mrs Lim, referring to studies done by the Committee on Private Estates, which she headed. ‘They just wanted things to work.’

Soon, newer private estates will be able to tap on these funds without having to wait for the EUP, which is typically open to estates aged at least 30 years.

A $700,000 pilot programme will be initiated in three GRCs: Aljunied, Holland-Bukit Timah and Tanjong Pagar to test out the effectiveness of these changes.

Since the EUP started in 2000, about 23,000 homes in 30 private estates - out of more than 200,000 private homes - have been upgraded. These include Serangoon Gardens, Hoover Park and Opera Estate.

The Government sets aside about $20 million each year for EUP projects. Mr Mah, who was given a tour of Braddell Heights, said it will bump up the EUP budget by $5 million to $10 million each year. This amount will come from CIPC funds.

Braddell Heights is one of five estates in the latest batch chosen for EUP. It will undergo a $5.5 million upgrading over a two-year period starting early next year.

How Do I Protect My Assets If Husband Goes Bankrupt?

Source : The Straits Times, Sunday, 26 Aug 2007

Q. MY HUSBAND has not been living in our matrimonial home, a condominium, for the past two years although we are not divorced.

The condominium was bought with my Central Provident Fund (CPF) money and some cash many years ago. It is under my sole name.

The only joint account we have is an overdraft account, against the mortgage of this condominium, which was taken out to help him start his business a long time ago.

He has his own credit cards and personal accounts. My other bank accounts are either in my name or jointly-held with my grown-up children.

My husband is addicted to gambling. I am very worried he will become a bankrupt.

Should this happen, will the Official Assignee (OA) be able to touch the money in my accounts or my children’s accounts?

If we are divorced, will my assets and those of my children be better protected? What is the best way to protect our assets?

A. THE OA acts for your husband in the event he becomes a bankrupt and will administer your husband’s assets to best satisfy the debts he has incurred.

It is your husband’s creditors who would make a claim for all his assets. The creditors cannot touch the money in your sole accounts or money in your joint accounts with your children.

They can only go after the money held in the name of your husband, whether it be solely held by him or jointly with any other person.

Since you say he has his own accounts separate from yours, the creditors cannot look to your bank money to satisfy the debts. They cannot take your condominium since it is in your sole name.

The only joint account appears to be the overdraft account secured by the condominium. This overdraft account is not an asset but a liability, so the creditors will not get any money out of it.

However, you are liable for the debts incurred on the joint account (the amount that has been overdrawn to date) and your condominium is the collateral, so make sure you do not default on payments to the overdraft. Otherwise, the bank is able to foreclose on the condominium.

The bank is usually also entitled to withdraw your overdraft facilities if your husband is made a bankrupt so you need to have a contingency plan for this.

The only advantage of being divorced is to determine the amount of matrimonial assets your husband is entitled to. The condominium is one of the matrimonial assets capable of division by the court.

However, since you are both already maintaining separate bank accounts and assets, there is no advantage to be gained from a divorce unless there are joint assets of which you wish to carve out your share before the creditors get to the assets.

The best way to protect your assets is to keep them strictly separate. You should not have any joint credit cards, bank accounts, properties or fixed deposits.

You seem to already have such separation of assets so that is sufficient to protect your assets.

Lim Choi Ming Partner Khattar Wong

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Tips On Buying A flat (What Your Agent Won't Tell You)

Source : The Straits Times, Sunday, Aug 26, 2007

1. Get armed

READ up on the facts. After deciding what type and location of flat you want to buy, go online to the Housing Board website - - and follow the links under 'home seekers' to 'HDB housing market statistics' - to find out the median resale prices and average amount people paid above valuation for the flats.

If you are eyeing flats in a particular block, you could also call up agents marketing flats in nearby blocks to find out what kind of prices they are seeking, said Mr Albert Lu, managing director of C&H Realty.

Visit the location at different times of the day, to get a feel of what it's like to live there, suggested Mr Eugene Lim, an assistant vice-president of ERA Singapore. Some people, he said, buy a flat near MRT stations because it is convenient to get around, but realise too late that it comes at a price: The frequent rumbling audible from their flats as trains roll by.

2. Set the rules of the game

DECIDE if you want to hire a housing agent to help you with your purchase, or if you want to go it alone.

Although commission structures are not fixed under the law, buyers typically pay their housing agent a 1 per cent commission for HDB transactions.

If you are doing it yourself, check out the HDB website to find out the procedures involved, or attend its monthly resale seminar.

Most agents representing sellers charge buyers the 1 per cent fee if they are not represented by another broker. This practice has been called into question by the Consumers Association of Singapore because of the possible conflict of interest that may arise, when an agent represents both buyer and seller in the same transaction.

Some agents turn down requests from independent buyers to view the flats that they are marketing if the buyer says he will not be paying the 1 per cent fee.

These agents argue that there is a higher chance of an independent buyer tripping up a transaction if he does not use the services of a broker.

Whatever you decide to do, it is best to make it clear upfront if you are opting to go it alone.

A senior division director of PropNex, Mr Eric Cheng, advised independent buyers to state clearly when they first contact brokers marketing the flats they are considering, that they will not be paying them a fee.

3. Act the Sherlock

LIVING in high-rise, densely packed public apartments has its own quirks. You never know, for example, if an owner is selling the flat because he has been harassed for repayment by loansharks at his home. If you buy his flat, you may end up being harassed yourself even if you had nothing to do with the debt.

To avoid this, Mr Cheng suggests taking a walk down the staircase closest to that flat. If loansharks have left graffiti there ('0$P$' - which means 'owe money pay money') or at the void deck, it could indicate that the flat is being targeted.

Another problem, more common in older resale flats, is leaky ceilings. This happens when shoddy renovation upstairs or age creates kinks in the waterproofing layer in your ceiling.

To spare yourself the hassle of living with this or trying to fix the leak, look out for watermarks on the ceiling when viewing flats.

4. Be shameless

DON'T give up if one agent turns down the price you offer for a flat. You may get lucky with another agent marketing the same flat.

Some flat owners do not give exclusive marketing rights to one agent, preferring instead to pay a commission to whoever gets them a deal. This means that if Agent A thinks that your offer of $200,000 for the three-room flat you are looking at is too low, Agent B might find it a worthy offer to discuss with the owner.

Agents, however, are unlikely to disclose that they are marketing a flat which they have no exclusive rights over. C&H's Mr Lu suggests you suss that out by looking up property advertisements. If there are three or more ads for a unit in that particular block in one day, chances are, that flat you are eyeing is being peddled by more than one agent.

5. Keep your cool

IT IS common for agents to arrange viewings for as many as 10 to 20 interested parties within a half-hour slot, to heighten the sense of competition among buyers. Some agents will tell you they already have offers for the flat - when they don't - just to get you interested.

There's an easy way to call their bluff, according to Mr Chandran Pillay from Global Real Estate Services. If an agent tells you that someone has already offered $480,000 for a flat, make him an offer of, say, $460,000 on the spot. If he tries to negotiate with you, that $480,000 offer is most likely a fake. If it had been genuine, he would have turned your lower offer down immediately.

Some agents, said PropNex's Mr Cheng, arrange for potential buyers to view a unit, but cancel it at the very last minute on the pretext that the buyer has changed his mind about selling the flat. After a few days, they call buyers to say that the flat is back on the market, and tell them they will have 'first priority' at the viewing. This creates a sense of urgency by making the buyer feel that he had almost missed out on a good deal.

Whatever you are faced with, keep your sense of perspective - in this case, the prevailing market price of the flat you have in mind.

6. Watch out for upgrades

IF A flat you are interested in is being upgraded by the Housing Board, find out who is paying for the work. Upgrading could range from changing doors and toilets to adding lifts to every floor of a block. The HDB bills owners for upgrading after the work is done, and the owner of the flat at the point of billing is responsible for payment.

If the seller wants to factor the upgrading cost into the price, ask for a receipt to show that he has paid the upgrading bill, or check with the relevant HDB office, suggests Global Real Estate's Mr Pillay.

7. Take your time

BUYERS and sellers of HDB flats must use the standard HDB Option to Purchase form for the resale transaction. Under this arrangement, the buyer gets 14 days to consider his purchase after paying the seller a non-refundable option fee not exceeding $1,000.

Once a seller grants an option, he is not allowed to sell the flat to another person within that same period. If, after 14 days, the buyer decides not go ahead with the deal, he forfeits the option fee. If he goes ahead with it, he signs on the same form and pays another fee to the seller to exercise his option.

Do not feel pressured to exercise an option on the spot, unless you are very sure about your decision and your ability to finance it. If, for example, you abandon the purchase after exercising the option, the seller can claim damages from you.

8. Don't even think about it!

ABOUT two years ago, it was common for buyers and sellers to collude to artificially inflate the price of a flat, such that the buyer could get a bigger housing loan than he was allowed.

This illegal 'cashback' arrangement is no longer rampant, after the Government clamped down on the practice in April 2005.

Another under the table practice, however, still exists - 'cash down'. This usually involves someone who bought a flat at a high price during the property peak of the 1990s and is selling at a loss now because valuations since then have fallen.

If he had used a lot of his Central Provident Fund (CPF) savings to buy the flat, the sale proceeds from that flat would have to be refunded into that retirement savings account.

However, by underdeclaring its sale price, he can get some cash in hand.

For example, someone who bought a flat for $380,000 in the 1990s may find that it can be sold for only $300,000 now. He may offer to sell it to you at a discount - at, say $290,000.

In return, he will ask you to declare the sale price of $270,000 and pay him the difference of $20,000 in cash. This way, he gets some cash out of the sale, instead of having the entire sales proceeds end up in his CPF account.

Avoid getting entangled in such illegal arrangements. Under the Housing and Development Act, you can be fined up to $5,000 and jailed up to six months for giving such false information.

9. Be a busybody

DON'T be afraid to ask all the questions that you need to know about a flat before deciding on your purchase.

A housing agent acting for the seller may not voluntarily disclose information that may hurt the chances of the unit being sold, but he is obliged to tell the truth when asked, said Mr Cheng.

If, for example, you cannot bear the thought of living in a flat in which someone has died, be sure to ask the agent at point blank whether it happened in the flat you are inquiring about.

How CPF Changes Affect Life After Retirement

Source : The Straits Times, Sunday, Aug 26, 2007

SINGAPOREANS are waking up to a grim reality - they have to work longer and retire later. And it's not hard to find the reason: Most are in danger of outliving their savings.

The Government has proposed a multi-pronged plan to meet the challenge of ensuring that retirees have enough cash for old age.

It includes several adjustments to the Central Provident Fund (CPF) scheme, such as higher returns on a portion of CPF savings, delaying the draw down on the Minimum Sum and a compulsory annuity scheme.

The plan, announced by Prime Minister Lee Hsien Loong in his National Day Rally speech last Sunday, also proposed a new law that would require employers to offer jobs to workers who have reached the retirement age of 62 but want to keep working.

This is aimed at ensuring that there will be a continuous income stream to support these workers as the drawdown age for the CPF Minimum Sum is delayed to 65.

Financial experts say the proposals reinforce the need for Singaporeans to be more self-sufficient and to start planning for their retirement. Relying solely on government initiatives to fund their golden years is not enough.

Here are the proposed CPF-related changes and their possible impact on retirement planning.

Higher interest rate

THE CPF interest rate will go up by 1 percentage point for the first $60,000 in combined CPF accounts, with not more than $20,000 from the Ordinary Account.

Account holders can still use this first $60,000 for housing and medical needs but they may not withdraw any of it to make their own investments.

It means that more than half the people making regular contributions will receive higher returns on their entire balances.

But the timing required to accumulate the $60,000 will differ for each individual. It depends on the salary and the age when the person starts working.

Alpha Financial Advisers chief executive Arthur Lim said: 'For younger Singaporeans entering the workforce, they will have the advantages of compounding interest rates and time to increase their CPF account balances.'

However, the manager of wealth management firm New Independent, Mr Chong Kok Peng, noted that it is unlikely that those in their 20s will accumulate enough CPF money to maximise the additional 1 per cent interest rate as they will likely use their Ordinary Account to purchase a home.

Mr Chong calculated that for a 35-year-old male with $120,000 in his CPF account, the additional 1 per cent on the first $60,000 yields $33,651 when he reaches 65. Assuming a 2 per cent inflation rate, the additional 1 per cent works out to $18,578 at today's value at age 65.

'Individuals should treat this as a bonus from the Government instead of relying heavily on it. In today's value, the purchasing power of $18,500 can only last a few years of expenses,' he said.

On Tuesday, the Government said it will look at pegging the CPF interest rates on Special, Medisave and Retirement Accounts to appropriate long-term bond yields.

For the initial years, the rates may be below the current 4 per cent Special Account guaranteed rate but over time, it should be more than 4 per cent.

Delay in draw down

THE age that CPF members can start drawing down from their Minimum Sum will rise progressively from 2012, from 62 now until it hits 65 in 2018.

Both the draw-down age and the re-employment age will first be raised to 65, and later to 67.

By 2012, people who want to retire at 62 will no longer be able to draw down their Minimum Sum. They must wait until they hit 65.

'They will need to save more money to make up the difference,' said Mr Chong.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, said this difference worked out to be $32,411.

Saving this sum will allow for a monthly payout of $954. This would have been the payout for a 62-year-old based on the Minimum Sum of $120,000 in 2013.

The earlier a person starts saving, the less he needs to save.

Based on a return of 4 per cent a year, Mr Leong calculated that for a 30-year-old male, the monthly savings would be $42, or an annual figure of $504, until he reaches 62.

For a 40-year-old man, $77 needs to be put away a month and $158 for a 49-year-old.

The savings will allow members to build a lump sum of $32,411 and so be able to withdraw $954 a month for the three years between 62 and 65. They can then draw down the Minimum Sum over the next 20 years.

Compulsory annuity

THE Government wants to make it compulsory for CPF members to buy a deferred annuity to ensure that they will get a monthly payout from age 85 until their death.

An annuity is an insurance cover purchased by paying a lump sum to an insurer. The cash is invested and used to provide a monthly income.

Current CPF rules already give members the choice of buying a life annuity from one of eight insurers with their Minimum Sum when they reach 55. But only 4 per cent of CPF members who turned 55 last year did so.

Some of those who opt to leave the money with the CPF Board say it is a 'no-brainer' as they can draw a higher monthly payout of $790 for 20 years.

By comparison, the life annuity products on the market now pay about $470 to over $500 a month for an initial investment of $99,600 - the current CPF Minimum Sum - although the payments last for life.

Delaying the draw down of the Minimum Sum to age 65 means that members who opt to leave their Minimum Sum with the CPF will start to draw their monthly payouts for 20 years, until age 85.

To ensure that members' savings last their lifetimes, the proposed compulsory annuity scheme will entail deducting a portion of the Minimum Sum to pay for monthly annuity payouts after the age of 85.

As it works on the principle of risk pooling, CPF members who die early may not live to see the benefits of the compulsory annuity scheme as the premiums may go towards paying the annuity payouts of other members.

Based on the assumption that an annuity monthly payout of $300 should last members until the age 100, Mr Leong calculated that the lump sum annuity premium at age 55 works out to $8,527.

If this sum is deducted at age 55, and compounded at 5 per cent for 30 years, it will provide a monthly payout of $300 starting at age 85 and go on for 15 years.

In reality, the actual premium for the compulsory deferred annuity may be lower as the current estimation is that only half of those at age 62 will still be alive at 85.

This means the amount to be deducted need only be at most half of $8,527 or $4,263.50, Mr Leong added.

For those who have the full Minimum Sum of $120,000 in 2013, $4,263.50 accounts for just 3.55 per cent.

For those with less than $120,000 at age 65, the estimated annuity premium of $4,263.50 will be a higher percentage of their Minimum Sum. Hence, it may have a greater impact on the monthly amounts they can draw down from age 65.

These people could consider buying a three-room HDB flat to qualify for the proposed 30-year leaseback scheme from the Government.

Based on the current $150,000 value of these flats, someone who buys one at 30 and enters the leaseback scheme may receive an estimated $30,000 in 35 years' time, said Mr Leong.

Another option is to rent out a room while still occupying the flat.

Retirement tips

NOW is a good time to start planning for your retirement, whether it is years away or just around the corner.

It starts with knowing what you want to do when you stop work and taking stock of what is required.

To get an idea of the estimated retirement amount, the Life Insurance Association has said that based on a life expectancy of 82, a person needs savings of at least $250,000 to maintain a 'reasonable' living standard.

This figure was based on the median earnings of Singaporeans of about $2,500 a month. So if a person needs 60 per cent of pre-retirement earnings when he retires, this would work out to $18,000 a year or $1,500 monthly.

With a longer life expectancy of beyond 82, one needs more savings. Here are some retirement tips from Alpha Financial Advisers.

-Live within your means.

-Start saving early and make time work for you.

-Get out of debt as early as possible.

-Realise that expenses are earnings minus savings.

-Plan and save for long-term objectives like retirement and buying a home.

-A protection strategy is just as important as an investment strategy.

'They will have the advantages of compounding interest rates and time to increase their CPF account balances.'

On younger Singaporean workers. 'They will need to save more money to make up the difference.'

On those planning to retire at 62 from 2012 onwards, who now have to wait longer to draw down their Minimum Sum

The Secret To A Happy Old Age

Source : The Straits Times, Sunday, Aug 26, 2007

Work till 67 and live till 80? Instead of jumping for joy, why does the thought of that depress me so?

ALTHOUGH the Prime Minister's National Day Rally speech last Sunday contained good news, I found myself feeling alarmed, then depressed, as I listened to it.

Two things got me feeling blue - the fact that I'll be able to work till I'm 67, up from the current retirement age of 62, and that the life expectancy for Singaporeans has risen dramatically to 80, with many living even longer.

Yes, I do realise I sound ungrateful.

Who would not be happy to be assured of being gainfully employed up to his late 60s, and so still have an income stream to pay for life's necessities not to mention a few treats? And who does not want to live up to a ripe old age?

Thing is, the reality might not be so rosy.

The living-past-80 scenario got me really worried.

It's just a general statistic, of course, and does not necessarily apply to me.

But I've always worked on the assumption that I won't live beyond, at most, 70. In fact, given the prevalence of diseases, especially female-related ones, I'm aware that I might even have to bid this world adieu in my 60s or even 50s.

And when it comes to work, the currently mandated 62 has always seemed a good time to say goodbye to a cubicle existence.

I've been planning my life and finances based on these scenarios.

Recently, I employed the services of a financial adviser to chart my 'financial roadmap'. She gave me a list of questions to answer, among them when I hoped to retire or 'achieve financial freedom'.

I thought hard about it.

While I enjoy my work, there will be a time to call journalism quits.

I could take my leave at 62, but between leaving when I'm still performing and wanted, and waiting till I hit 62 and getting that letter telling me to go, isn't it better for my ego to opt for the former?

Fifty-eight, I reckoned, would be a good age to retire. I could walk out with my head held high and have another 12 years or so left of my life to pursue other interests.

As to the income I'd need, I told the adviser that I'd want to maintain my current standard of living.

A few weeks later, I received my 'comprehensive financial plan'. The prognosis was bad.

To retire at 58 and continue living the way I do, I'd need to accumulate much, much more money than I now have to my name.

And if I took into account expenses should I fall sick or become permanently disabled, I was looking at a mind-blowing shortfall.

And that is a scenario based on me conking out in my 70s. To be now told there was a chance I could live beyond 80 wasn't good news at all.

And while a later retirement age would help financially, must so much of one's life really be devoted to the baleful boredom and nasty politics that constitute the bulk of working life?

I went to bed last Sunday feeling disturbed.

TRUTH be told, it isn't really the burdensome financial aspects that keep me awake. Nor is it the thought of toiling away at the keyboards for more years on end.

Basically, I'm just afraid of old age.

Maybe it's because of the way Singapore society regards the old.

There is concern for them, even pity, but when a person no longer contributes economically, his value in society dives. Unless you are (or were) an important or rich person, old people tend to get short shrift.

There's also no running away from how age brings inexorable mental and physical decline. It's enough to sometimes make me think that it's better to live fast, die young and leave a beautiful corpse, like James Dean and Marilyn Monroe.

The ideal would be what the PM described as a 'rectangular' life - to have a happy and meaningful life for as long as you live and then a quick and painless end.

But life isn't so neat and I've seen enough examples of harrowing old age to be afraid. My father was bedridden for seven painful years, hooked to a feeding tube, before he died.

So what is one to do? How does one confront old age with the right attitude?

Then again, maybe it won't be that bad. Maybe the prospect of growing old is more horrifying than actually growing old.

When I was in my 20s and 30s, the idea of ever hitting 40 horrified me. Would there be anything worth living for at that age, I wondered.

But to be completely honest - and I'm not being defensive or self-deluded here - I'm actually happier and more at peace today than I was in my 30s and definitely in my 20s.

Yes, my skin was tauter and hair more lustrous back then, but I was also insecure, full of tantrums, overly sensitive and too demanding of everyone, everything and myself. It's not a place I'd want to revisit.

The issue is whether this equanimity I feel now at 43 can continue when I hit 53, 63 or, heaven forbid, older. Or will there come a time when the good vibes just die?

In the end, it's back to that old chestnut, the meaning of life, isn't it?

Everyone - young and old - is searching for validation and happiness. Some do it via others (a spouse, mate or children). Others seek material goods for fulfilment (a snazzier car, a nicer apartment). Yet others rely on religion and acts of altruism.

How does one be happy?

Perhaps a key could lie in the ability to find joy in what you already have right here and right now, rather than hankering for something grander in a future that will never come.

Maybe it's about appreciating the moment and finding happiness in what you might otherwise take for granted - an SMS from someone you're deeply in love with, say, or discovering a song that speaks to you, or just soaking in the beauty of a rainy day.

Then again, perhaps I've got it all wrong. I've probably not eaten enough salt to know the answers on how best I should brace myself for that journey towards old age.

If you who are older and wiser have the answers, please let me know.

PM: CPF Annuity To Be Flexible, Basic And Cheap

Source : The Straits Times, Sunday, Aug 26, 2007

Manpower Ministry to form committee, including experts, to draft proposals

PRIME Minister Lee Hsien Loong gave his assurance yesterday that the new compulsory annuity scheme will be flexible, basic and cheap.
Responding to concerns that the policy would be forced through, he revealed that the Manpower Ministry is forming a committee to come up with proposals.

The committee will include unionists, social workers, insurance industry experts and other financial figures.

The goal: a longevity insurance or annuity scheme 'with as much flexibility in it as possible'. An annuity works when a person invests a lump sum with an insurer, which then pays him a monthly sum for life.

'I don't want to have anybody who's 85 or 90 years old saying, 'My CPF is finished, I have no insurance, and now I need to live and I have nothing, nobody to look after me, medical care, house, food, everything',' Mr Lee said at a dialogue with about 150 members and guests of the National Trades Union Congress at the Ang Mo Kio Hub.

He announced plans for the compulsory annuity scheme last Sunday in his National Day Rally speech. Questioned about it by anxious unionists yesterday, he said that he would leave insurance experts to work out the details.

However, he outlined the conditions that the ultimate solutions will have to satisfy: 'I think that we want to allow as much flexibility in the scheme as possible, keep it basic, keep it cheap, low cost.'

In his Rally speech, he said that annuities will be made compulsory for Central Provident Fund members aged below 50.

They will buy an annuity at age 55 using a small portion of their CPF Minimum Sum. The annuity will give them a monthly payout of about $250 to $300 once their Minimum Sum runs out at 85. This is meant to cover members' needs when they outlive their CPF savings.

Said PM Lee: 'Normally when people take up insurance, they buy in case 'I die early, I will collect'. This is the opposite - 'I buy, in case I live longer, then I will collect'. And I think that is a fair way to do it in principle.'

The idea has been controversial because it forces CPF members to lock up part of their CPF savings in an annuity that their families will not get back if they do not live to see 85.

Hence, the PM's assurance yesterday that the sum to be invested in the annuity will be small. Manpower Minister Ng Eng Hen made the same promise early last week.

Asked by labour MP Josephine Teo why the scheme has to be compulsory, Mr Lee replied that a large insurance pool will be needed to keep costs low.

He added that most people would not plan for their long-term old age needs if it were left to them.

Bank employee Ng Mei Yen, 32, told Mr Lee that the key was still to educate people on retirement planning.

Mr Lee replied: 'I agree with you. If everybody is like you I don't need a Minimum Sum!'

The insurance, he added, will also help Singapore retain its young people and not place too heavy a burden on them.

Without it, the Government would have to take care of the elderly through heavier taxes on the young.

He said: 'If I were you, belonging to that generation of children or grandchildren, and I had to pay taxes for the senior citizens in Singapore, I think I'd be looking for other places to work where the taxes are less and the burden is less.'

My Money Will Go To Charity

Source : The New Paper, August 26, 2007

He makes paper loss of $100m in stock market turmoil, but says of his wealth: 'It makes no difference after a point'

Mr Lim at Brewerkz on Wednesday. - Picture: KUA CHEE SIONG

WHEN the Singapore stock market took a sharp dive lastweek, it wiped out more than $100million of his stock's value.

But former remisier king Peter Lim did not lose sleep over it.

Why? 'I've been a stock broker for all my life - I've seen all the crashes, financial crisis, where really, it's only a paper loss,' replied the self-made billionaire.

'Just make sure you are not jammed with cash flow.'

Mr Lim was referring to his almost 5 per cent investment in Wilmar International which saw its share price move from a high of $3.78 to a low of $2.89 in the space of a month. The share price last closed at $3.

To him, his wealth is less important than his family and philanthropy. His attitude towards money is almost casual. It reflects his philosophy on investing and wealth.

For those who feel they are badly mauled by the current share doldrums, Mr Lim has this piece of wisdom to share: 'I used to say to my friends, 'When you are holding stocks, if it goes up, don't be too happy; when it goes down, don't be too sad'.

'Otherwise, how? Your life will also be fluctuating and you'll die of a heart attack.

'If you really lose sleep over it, maybe the best way is to keep the money in thebank.'

So what does he lose sleep over?

He replies with a laugh: 'My kids. Like other parents, I worry about what they're doing and whether they'll pass their exams.'

On Thursday, he made his debut in Forbes' latest rankings as Singapore's seventh-richest man, with a reported net worth of US$830m illion.

Mr Lim revealed that he intends to give a large part of his money to society later. How will Singapore benefit?

Through his pet cause: Education.

He made this revelation quite casually, as if he were talking about the weather.

He said: 'I think it's very likely (that) a big part of my wealth will be directed towards education.'

'It will be either a straight donation towards assisting educational institutions or maybe I'll set up a foundation.'

He supports Prime Minister Lee Hsien Loong's call at the recent National Day Rally for more Singaporeans to make charitable contributions.

Mr Lim echoed PM Lee's views that it is happening all over the world, and especially in the US.

'Asia is a bit behind because generally, when you have money, you think of your sons and your daughters when you die.

'But I think it has changed a lot here, principally because now, the wealth isbigger.'

He was reluctant to reveal his charitable contributions over the years, except to say that much of it was anonymous and that in the early '90s, he was one of the earlier donors to the National Kidney Foundation.


His friend, Mr Dennis Foo, chief executive of St James Power Station, later told The New Paper that Mr Lim not only donates money, he also takes it upon himself to deliver food, like rice and cooking oil, to needy families in one-room flats and old folks' homes.

Why education?

Mr Lim said: 'Education must be cheap and accessible to anyone.

'For me, I was the son of a fishmonger, but I could still go to the best school. I had the opportunity to make money. There's no discrimination.

'I think this policy of meritocracy actually works. It's very very fair and nobody cancomplain.'

The New Paper managed to get hold of Mr Lim last Wednesday, after his meetings and before he left for a short trip overseas.

The publicity-shy tycoon was extremely reluctant to talk about his wealth. It didn't help that he again made news recently with his involvement in one of Singapore's largest reverse takeover bids, with his investment vehicle Rowsley buying up a chunk of a China solar power company.

But he agreed after some persuasion. He met us at Brewerkz, which he also has a stake in, at Riverside Point two hours before his flight.

Dressed in a polo T-shirt which has seen better days, a pair of cargo pants and trainers, he certainly didn't seem to wear his wealth on his sleeves.

Why so casual? He replied that he plans to sleep on his flight.


Ironically, Mr Lim, who was one of Singapore's leading stockbrokers and is now a private investor, does not monitor the stock market every day.

He goes through the financial reports of companies; he watches financial news to get a summary of what is happening, but he does not track the daily ups and downs of the stock he owns.

He said: 'I only check in intervals, depending on the company.

'If it's a structured company, then (I check) when the results come out. For the bigger ones, quarterly results; for smaller ones, twice a year. But if it's a start-up, I'll check it more regularly.'

Mr Lim made headlines in the late-'80s as a star remisier, in the mid-'90s in his divorce battle and in early 2000 for his involvement in the first instalment of the Raffles Town Club court saga.

Much of his wealth now comes from a single investment: Palm oil.

In the early '90s, he invested about US$10 million in a start-up Indonesian palm-oil company, Wilmar. Today, his almost-5 per cent stake is worth more than US$700 million.

This is a far cry from his humble beginnings. When he was young, he said, he did not even have his own room in the two-bedroom government flat he shared with 11 others.

He grew up, with three brothers and four sisters, in one of Singapore's oldest public housing estates, Bukit Ho Swee.

His father was a fishmonger and his mother a housewife and the size of the flat was the equivalent of a three-room HDB flat today, hesaid.

He slept in the living room, or wherever he could find space to lay his mattress down for the night.

On his wealth now, he said: 'It's no different from what it was before I had the money. It makes no difference after apoint.

'Like what they say, you can only talk louder. You can only eat so much and fly so many trips.

'Money lets you enjoy a lot of things, but I don't think I'll die without money.

'I don't think I'm eating a lot better than when I was a lot poorer than now. I don't really go for very special kinds of food. I'm still very local. I like my mee siam, mee rebus and lontong.'

When his father died in the late '60s, when Mr Lim was 22 years old.

Mr Lim completed his secondary school education in Raffles Institution and was an officer in National Service.

It was then, at the age of 18, that he bought his first lot of shares.

Did he make a killing?

'In fact, I lost money,' he laughed.

But not much.

'I was only paid $385 a month, so I can't have bought, or lost, very much.'

He then went to Perth to further his studies at the University of Western Australia.

To fund his university education, he said, he worked part-time doing odd jobs as a taxi-driver, cook and waiter.

It was one of these jobs - in the Australian fast-food chain Red Rooster - that opened his eyes to how business was done.

'I watched how they started, how they grew, and how they scaled up.'

It was also in university where he honed his instincts and skills as an investor.

He graduated with a degree in accounting and finance and stepped out into the working world.

'My first job was as an accountant. It lasted three months,' he said with a chuckle.

He did some tax consultancy before he went into stocks, he said.

Mr Lim is in his element when dealing with numbers. 'It's something I'm very comfortable with, something I understand.

'Give me any numbers. I look at (them) and I'm happy. It can be in any industry. You give me the numbers; somehow I can figure it all out.'


His secret to investing is...

WHAT is Peter Lim's secret to successful investing?

Prospect, he replied.

He looks at sectors.

'Like if I think solar is good, I go into solar; if I think palm oil is good, then palm oil.

'Share prices go up because the sector grows. So if I think this sector is going to be good in the next 10 years, then I'll just invest in it.'

Another key reason for his success, he said, is patience.

Mr Lim, who also acts as a consultant to companies and helps them find multi-million-dollar investors, does not subscribe to buying one day and selling the next to cash in.

His advice to young investors: 'You have to invest with a longer-term mindset. You buy a good stock, leave it there for 10 years. Come 10 years, this dollar can be many, many multiples.

'I think the trick is really to think long-term.

' You may not have a lot of money, but you have a lot oftime.'

'The minimum length of my investments are five to six years, if not 10 to 12 years.'

He cites the example of his condominium.

He owns an entire 11-storey block at prestigious Ardmore Park, near Orchard Road. He and his wife, with his 85-year-old mother, live in one apartment, while three other maisonettes and the penthouse sits empty.

'I bought it in 1994 for $13m and I just hold there and wait. With the current property market, it is worth more than $100m.'

Same with Wilmar, which he invested in in the early '90s. It was then a US$10m investment. Now, his stake is worth some US$700m.

Avoiding Those Blind Spots In Making Decisions

Source : The Straits Times Forum News, Aug 24, 2007

NO ONE can possibly say no to more money.

So when I first heard that the Central Provident Fund (CPF) rate of return was to be increased, I thought: 'Oh good!'

But another reaction that came as swiftly was to wonder: 'Just like that? So does it mean the CPF has been underpaying us all this while?'

Like any CPF member, I'm happy with the promise of an extra 1 percentage point return for the first $60,000 of CPF funds.

But as a journalist who writes on political issues, I could not help feeling a sense of deja vu when hearing the news about changes to the CPF, which also include plans to delay the draw-down of the Minimum Sum, and to make annuities compulsory for the under-50s.

It brought to mind the way the hike in goods and services tax (GST) was announced last November: without much fanfare, taking people by surprise.

Because of the lack of 'ground' preparation, many people are uncertain about the impact of the changes.

At a policy level, some big questions have not been answered adequately.

The biggest question of all is what has changed for the Government to be able to announce an increased 1 percentage point in the CPF rate of return overnight.

Was it the performance of stock markets? But no, CPF does not invest its funds in stocks. Also, equities markets took a beating in the week running up to the Aug 19 announcement by Prime Minister Lee Hsien Loong in his annual National Day Rally address.

If market conditions cannot explain the sudden increase, what can?

Has the CPF Board been given a wider mandate to invest in higher-yield, higher-risk funds that would justify giving the higher return? It isn't clear.

Manpower Minister Ng Eng Hen may clear the air when he speaks on this next month.

There have been calls to raise CPF returns for years, with the Government having hinted recently it's a priority issue. So the question really is why now?

Maybe the Government reckoned it's a good move for social and political reasons. In the words of the Nike advertisement, maybe the Government decided: 'Just do it!'

If so, this begs the question of whether the return could have been raised sooner.

Singaporeans have complained for years about the low 2.5 per cent a year return on their Ordinary Account balances. If the Government decided this August to raise the rate, could it be that actually the rate could have been raised one, two, three or more years previously?

It may sound churlish to quibble over this in the face of promised higher returns.

But the question really addresses the process by which the decision to revamp the CPF is reached.

Neither PM Lee nor Dr Ng said much about how the Government arrived at the decision to raise the rate. They only said that the 1 per cent figure was not 'tikam-tikam' (by chance) but was financially feasible and would need the President's approval.

The CPF change is not the only recent policy surprise to be announced recently.

Last November's news that the GST will go up from 5 to 7 per cent was also a shocker.

To be fair, the Government does consult widely before some policy changes, for example, on whether to allow integrated resorts with casinos.

More recently, the public's input was sought on the draft Mental Capacity Bill, which lets people state who they wish to appoint to care for them if they are mentally unsound.

In the case of the recent CPF and GST changes, however, the impact is so wide that maybe more effort should have gone into engaging citizens.

To be sure, the changes are sound, both in fiscal terms and in enhancing overall welfare.

But taken together, they can cause citizens to wonder if the Government could have done more to engage them in the decision-making process: to share relevant information explaining the need for such a change, discuss the pros and cons, get people used to the idea, and then make a firm decision.

Now, policies seem to be announced as fait accompli; so that what remains is to convince citizens of the merit of these policies and iron out implementation details.

Such an attitude may have been appropriate for the People's Action Party in an earlier era with a less educated population comfortable with leaving big decisions to 'zhenghu' (Hokkien for government).

But it appears increasingly outmoded for a society that wants to foster a sense of belonging and cohesion, with citizens who are among the best educated, most electronically well-connected and globalised in the world.

In their book Dynamic Governance, academics Neo Boon Siong and Geraldine Chen survey the public sector in Singapore and highlight a few 'systemic risks'. One of these is what they call the 'intellectual elitism' of the public service.

The root of the problem, they argue, is the perception that 'policy elites often do not expect the same quality of thinking and ideas from others who are not like them'.

As a result, 'consultation' may be viewed as a waste of time, attracting complaints rather than substantive suggestions. 'At best they expect feedback that may result in fine-tuning and marginal amendments to the implementation process but not fundamental changes to their well-thought-through and laid-out proposals.'

If such a perception is true, there is a risk that policy leaders develop blind spots intellectually, closing themselves off to alternative ways of seeing things. Also, citizens get put off by the lack of openness to their ideas and may slowly stop giving ideas, say the authors.

The way the GST and impending CPF changes have been decided on and announced suggests that the Government may still be operating in that 'we know best, just accept that this is good for you' mode.

Yes, the policies including the changes to the CPF are solid ones which will give younger Singaporeans like myself that much more retirement security.

I am also sure dialogues galore will be conducted to help Singaporeans 'understand' the policies.

But share critical information, include citizens in the decision-making process, get their buy-in before changes are finalised?

It is done sometimes now, but could be done more often, especially for policies that have wide impact.