Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Thursday, 28 July 2016

Thoughts on the Singapore Government Audits

While this has not generated as much buzz as the "sexualized enacted scenes" of the NUS orientation camps (which I do not understand why this entire spectacle is a piece of international news), this article definitely caught my attention and made me think further. The Auditor-General's Office (AGO) released a statement publishing their findings of the Government Financial Statements, after their audit of the Government Financial Statements. It was stated that there are numerous occurrences of inadequate finance controls, resulting in financial loss and revenues to the Government.

*Fun Fact: In case you didn't know what is this Auditor-General Office, just a short background. Basically, it is a government auditor to keep the statutory boards and ministries in check.

First of all, it is certainly assuring that there are independent organisations keeping checks on the financials of the Government, ensuring that public funds are not wasted unnecessarily. This has proved that the founding fathers' progressive and bold implementations are sound and important. However, this is not an excuse to make all these lapses despite having checkers in place.

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The current generation of Singaporeans has not encountered many sufferings except maybe having to cope with the "tremendous stress" of succeeding in their education. Even faced with "reducing" competition from foreign talents as compared to yesteryears, Singaporeans are lamenting and complaining more. Many are neglecting of the common good but rather, what is in it for me? Probably it was due to the excessive competition and "kiasu" mentality, hence resulting in a more realistic and selfish perception. As such, as long as it is "Ah Gong's" money, we can just "anyhow spend la".

This has perhaps contributed to an uprising apathetic attitude among young fellowmen. Thus, I am not surprised that the current governing institutions are also plagued with a more laid-back perspective. After all, we have accomplished so much in 50 years, what is there to lose if we rest for a few years? As the army song goes, "Tell my mama I've done my best, now it's time for me to rest!"

This is a dangerous attitude manifesting among young Singaporeans.

There are several sectors, ranging from a collection of toll fees to administering study loan, highlighted to be having obvious loopholes.

Recommended Post: REIT Symposium 2016 Key Take Aways

Education
The Ministry of Education seems to be in the spotlight for this year's audit report as it was highlighted that there were numerous administrative lapses. Or rather, I would say the one with the highest amount of quantum involved due to mistakes.

To state a few:
- Poor enforcement of scholarship penalties
- Late recovery of tuition fee loans and study loans which totalled S$228.04m as at June 30, 2015
- Multiple administrative negligences and improper approval of processes resulting in loss of public funds
Since I am a student, I am able to find relevance to this and to be honest, I am not entirely pleased to know about the handling of the scholarships. Having to be rejected from a scholarship thrice after applying for 3 consecutive years, it is certainly disappointing to learn that scholars, who were required to serve the bonds, did not fulfil their obligations. (Individual performance is obviously in play here as well, and to be honest, I did not perform) Furthermore, little or no actions were done in the immediate term. Not much details were revealed in the statement.

It was also stated that "$36.32 million was disbursed for a scholarship scheme in FY2014/15", but due to "the lack of proper over-sight meant there was no assurance the grants were used optimally for the intended purpose". 


Yet again, minimal details are given. However, what I do know is that a quantum of $36.32 million could possibly be used more appropriately and given to students that needed these scholarships. The opportunity costs and positive repercussions of this amount, if used appropriately, are now lost.

Others
Besides this, in my opinion, serious loophole, there are multiple ministries which have fund wastage and blaring overpayment of redundant services.

Just to name a few:
- Overpayment on telecommunications lines totalling $109,868 and wastage totalling S$80,744 on mobile lines that were no longer needed
- A computer system worth $432,407 but left it to rot since November 2014 because it could not be integrated with the ministry’s legacy system
- Paying close to $83.20 as consultation for a $100 product (just an illustration)
___________________________________________________________________________________


Just let it sink in for a while.

Ok, moving on. While the audit report gave us some crucial insights on the status of the ministries, it also stated some "good-to-haves". One such point is the enforcement of toll charges and parking charges. No doubt, these are definitely government incomes. However, I feel that to enforce it where there is 100% payment collection simply demands superior technology where data and information can be sent to end users which can rectify the issues. 

An example can be where the carpark gantry machine is not functioning (probably due to some bad driver who accidentally destroys the barrier), hence resulting in it not collecting any payment. How would one ensure 100% functional gantry machine with minimal downtime? It might be possible if there are some programs that would be alerted if one gantry is down and the guy monitoring it will then react accordingly.

Conclusion
Well, to conclude this "too long to read" post, the AGO has definitely done a fantastic job in exposing the vulnerabilities of the investigated ministries. This has to be the way where Singapore can progress as a nation in line with the notion of the founding fathers, where independent checkers are not afraid to disclose clear and sensible findings.

As we are to celebrate a new age soon, one where Singapore has to shed its past glories of being under a notable leader and capable team, we should start to evaluate internally, whether we are indeed worthy of carrying the torch forward.

*You can find out more information on the AGO findings in this link here: https://www.todayonline.com/singapore/auditor-generals-report-fy-201516-audit-observations

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Monday, 18 July 2016

Startupbootcamp FinTech Demo Day: Key Take-aways

As you can see from our financial events calendar, we were invited to the Startupbootcamp FinTech Demo Day on 14 July. This event was held at Gardens By the Bay in the Flower Dome, Flowerfield Hall. It was definitely a fancy affair with good ambience, innovative solutions and a great crowd.





















The event started with an introduction of how Startupbootcamp has come along with its first expansion into Asia and making it the first few regional FinTech accelerator programme. With its multinational cohort of startups this year, the performance of the previous cohort did not fail to impress either! 8 of the 11 startups successfully raised seed fundings and all are still surviving. To add spice to the boring and usual presentation style, Startupbootcamp began the show by having a 1-minute pitch from prominent mentors and all the 10 selected startups. After which, we were told to select 5 of our own favourite startups. Here comes something different.

It was termed as "Silent Disco". When we first enter, we were given a red radio set each. Each startup was assigned to a specific radio channel, of which we can tune in to listen to a longer and more detailed insight. We would go to the assigned booth, sit in and listen. This is certainly a way more active and interactive method to sit in so many presentations. Accompanied by healthy pitch timeslots and a well-placed break, the entire 2 hours did not feel lengthy at all. However, there was a drawback. The "silent disco" was not too silent as some presenters were so loud that they could be heard across the booth, even though we were plugged into the radio sets.

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More of the startups introduced in this boot camp offered solutions and services in India. Some of which includes Connaizen and Supertext. As the regulatory environment is different, India presents different types of opportunities. Something more relevant to the local context would definitely be BanhJi.

BanhJi is an accounting solution for SMEs which do not wish to pay for expensive software but still wish to exploit the advantages of technology. The founder of BanhJi, Sim Chankiriroth, explained that the most important reason why SMEs was due to costs and he hopes to remove this gap via BanhJi. While it is similar to all accounting software in the market, it is based on a freemium model where some modules are a free-for-all and advanced modules need to be paid. Furthermore, it bridges SMEs and banks together to allow companies to obtain loans and financing more easily. This is done by providing the financial institutions with the transactional and accounting data derived from the entries made from the company. Instead of just relying on credit score and perceived financial strength from basic financial reports, financial institutions can get a more detailed and clearer view of the company. BanhJi is going to be launched in Cambodia first in September with plans of expansion to Singapore soon. We will certainly look forward to it!

Recommended Post: REIT Symposium 2016 Key Take Aways

All in all, the event has been a great one and we certainly enjoyed it. It is definitely heartening as all innovations come together to solving problems in the community and we hope that there can be more of such events to promote entrepreneurship where more locals can take charge and make improvements to our existing environment.

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Thursday, 14 July 2016

What happens if my OA+SA is below BRS?

Today, we would like to address this question:

What happens if my OA+SA is below the BRS?

Answer: NOTHING HAPPENS!*

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1) You do not need to personally top up your CPF accounts with your cash to reach your BRS

2) No penalty involved if you fail to meet your CPF BRS

3) It is not compulsory for you to meet your CPF BRS

*4) You will still be eligible to join CPF LIFE and receive a monthly payout when you reach the payout eligibility age.
There is an amount that will automatically make you participate in a CPF LIFE plan.
However, if you fall below the amount and wish to join CPF LIFE, you would need to submit an application to CPF to join.

Join CPF LIFE Turn 55 between 1 Jan 2013 to 30 Apr 2016Turn 55 on 1 May 2016 and after
Automatically $40,000 in RA when you reach 55 NA
Automatically $60,000 in RA when you are near your payout age $60,000 in RA when you are near your payout age
via Application Fail to reach the above requirements Fail to reach the above requirement


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Notes
BRS: Basic Retirement Sum
OA: Ordinary Account
SA: Special Account
RA: Retirement Account


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Tuesday, 12 July 2016

Can I Opt Out of CPF LIFE?

For an updated version, refer to the article HERE.

Everyone has a goal of retiring comfortably after working more than half their lives out for money.
We all hope to get a lump sum retirement fund when we reach our retirement age.
But, in Singapore, our money is instead secured away and we are given a monthly income from that pool of money.
Today, we will be sharing how you can get that pool of money out of your CPF!

There are 2 ways to do this:

1) Buy a Life Annuity Plan
We talked about what an annuity plan is and how it can help you withdraw your retirement sum from the CPF.
You can find the post here: How to Escape Retirement Sum? 

2) Own a Pension
By owning we do not mean you go out and buy a pension.
A pension is usually a retirement payout paid by the company you worked for.
It is usually a fixed amount of money paid from the day you retire to the day you pass away.
It is rarely (if not no longer) seen in Singapore (except if you are from the really old days of Singapore).
If you are paid or going to be paid by a pension, you can apply to be exempted the setting aside the full retirement sum!

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You will be exempted (fully or partially) based on the monthly income you draw from either/both sources.

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Thursday, 7 July 2016

Can I use my CPF to pay for my housing after 55?

For an updated version, refer to the article HERE.

We have got many readers asking us if they can utilise their CPF to pay for their homes after they reach the age of 55.
We have found the answer for you!

Answer: YES YOU CAN!

When you reach the age of 55, the money in your CPF Ordinary Account (OA) and Special Account (SA) gets transferred into a new CPF Retirement Account (RA).
2 points to note when using your CPF money to pay for your house after you reach age 55.

1) You may use the money in your Retirement Account in excess of your cohort's Basic Retirement Sum (BRS).
Eg; you turn 55 in the year 2018. Your cohort's BRS is $85,500.
This means you can withdraw your RA savings above $85,500 to pay for your house.

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2) You may use the money in your OA to pay for the remaining outstanding amount (or loan).
After setting aside money into your RA, if your OA still has money to cover your outstanding housing amount, it will be used to pay for it.
However, if there is an insufficient balance in your OA currently, your monthly OA contribution will then be used to pay for the monthly instalment for the housing loan.

Recommended Post: What if I can't meet my CPF Retirement Sum?

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Tuesday, 5 July 2016

What if I can’t meet the BRS/FRS?


We got many readers asking about what happens if they failed to meet their CPF Retirement Sums (or minimum sum).
Today, we would like to address this question.

What happens if I can't meet the BRS/FRS?

Answer: NOTHING HAPPENS!

Recommended Post: What are the Retirement Sums?

1) You do not need to personally top up your CPF accounts with your cash to reach your Retirement Sums

2) No penalty involved if you fail to meet your CPF Retirement Sums

3) It is not compulsory for you to meet your CPF Retirement Sums

4) You will still be eligible to join CPF LIFE and receive a monthly payout when you reach the payout eligibility age.

Recommended Post: What is CPF Basic Retirement Sum?

5) You can still draw out $5,000 from your CPF when you reach 55 years old even though you did not meet the Retirement Sums

6) If you turn 55 from the year 2013 onward, you may withdraw out 20% of your savings in your Retirement Account at age 65.
PS: the $5,000 you withdraw at age 55 will constitute part of the 20% you can withdraw at age 65.

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