 Photo Credit: The Straits Times CPF – we hear it all the time, and most of us get by pretending to understand what it really means at social gatherings and dinner parties. For a majority of millennials, you may not even know what the individual letters stand for. We know it has something to do with retirement, but how does it help, really? Why is it so important, and why does it sound like a vulgarity when you pronounce it really fast? First of all, we’d like to applaud those of you reading this for taking the leap of faith towards understanding what CPF is. After reading this short guide, you’ll understand why this isn’t just a matter of concern for older people – and how it pays to know why! 1. What is CPF?  The CPF (Central Provident Fund) is basically a default and legally enforced piggy bank. Originally created as a social security system to help Singaporeans save up for retirement, it has now expanded to cover healthcare, home ownership, family protection, and even asset enhancement. As mandated by the CPF board (with some exceptions), all employees and employers are required by law to make contributions to the employee’s CPF account every month, depending on the percentage of their salary. If you’d like, you can also voluntarily top up your CPF account using your own funds. Only Singaporeans and PR are required to contribute to CPF. 2. What Happens to the money?  Photo Credit: CPF Board Your CPF is divided into three accounts – the Ordinary Account (OA), Special Account (SA), and MediSave Account (MA). The money in your OA account can be used for housing, insurance, investment, and education, and your SA account provides for retirement-related needs and products. You can also use your MA to pay for relevant hospital expenses as well as medical insurance products. Here are the current interest rates of the respective accounts (from 1 July 2020 to 30 September 2020): OA: 2.5% per annum SA: 4% per annum MA: 4% per annum Once you accumulate your first S$60,000 across all accounts (including S$20,000) in your OA, the interest rates on your CPF accounts will increase by an extra 1%. Hopefully this will encourage you to start saving up now! 3. Can I use the money in my CPF now?  You can in the future, but not now. Generally, the money in your CPF accounts cannot be touched with the exception of housing, healthcare, and insurance. This means that until you’re 55, you won’t be able to see some of this money. When you finally reach 55, a Retirement Account (RA) will be created for you, and savings from your SA and OA will be transferred to this RA. Knowing that your money will be untouchable for a long time, it’s best to consider other forms of investments so you don’t just have to depend on your CPF. 4. Is my retirement set with CPF?  Unfortunately, there is no straightforward answer to this question as it really depends on your lifestyle, wants, and needs. While the CPF contributions may be sufficient for some in their later years, others may want to live a bit more lavishly. After all, we spend over 70% of our lives working hard, so it’s only fair to want to enjoy as much as we can once we retire. One thing to keep in mind is inflation, as the prices of goods fluctuate with time and 1 dollar today may not be worth 1 dollar in 50 years. We don’t really know what’s going to happen in the future, so just don’t think so much and just remember to start saving ASAP! My advice is to get a Retirement saving plan to supplement the payouts you might get from your CPF Life. 5. What happens to my CPF after I pass on?  Photo Credit: CPF Board If you pass on, the remaining money in your CPF account will be given to your CPF nominees, depending on whether or not you have nominated anyone. Making a CPF nomination is not necessary, and a person without a will would have their assets automatically distributed in accordance with succession rules. We will stress again that a will itself does not cover the distribution of your CPF savings after passing on; if you want to have your CPF monies to be distributed based on your preference instead of intestacy law, you will need to do a CPF nomination. If you want to know more about CPF and how you can hack CPF, you could also check out this video www.facebook.com/FLUXTVSG/videos/345041153154284/ Contact me via this QR Code for more financial Planning advice.
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 If you’ve been planning to buy critical illness coverage but haven’t done so, it’s crucial that you read this article extensively before deciding when to buy it, as you may be affected by the changes to the definitions of critical illnesses that will come into effect on 26 August 2020. In a nutshell, the changes mainly involve the tightening of specific critical illnesses, and this would result in more exclusions. Today we will be sharing 5 ways these revisions may impact you and what you should take note of. 1. To be covered, you must fall under one of the 37 critical illnesses To be categorised as a critical illness (CI), you have to fall under one of the 37 CIs in the list below. The headings have been revised, and the revisions are reflected in red.   2. To be covered, your CI definition has to match accurately To successfully claim pay outs, your definition has to be satisfied. As you can tell from the list above, the changes in headings would directly result in more stringent definitions as well. While we may have the sudden urge to start running for the hills, it is slightly reassuring to know that over 90% of all CI claims are only from these 5 CIs – Major Cancer, Heart Attack of Specified Severity, Stroke with Permanent Neurological Deficit, Coronary Artery Bypass Surgery, and End-Stage Kidney Failure. For more details on the changes, please refer to the LIA Critical Illness (CI) Framework 2019.  3. If you’re an existing policyholder, you won’t be affected So yes – rejoice because you don’t have to do anything! For those of you with existing insurance plans with the “older” CI coverage, you won’t be affected even after 26 August 2020. As per the previous policy contract, the CI definitions will stay the same, so there is more room for interpretation when a claim is made.  4. If you aren’t an existing policyholder but will be buying coverage before 26 August 2020, you won’t be affected Future policyholders buying the CI coverage before 26 August 2020 will still be covered under the 2014 Framework, so go ahead and get covered for some peace of mind! The older CI definitions seem to be less stringent, and that may be an important consideration when deciding whether to buy before or after 26 August 2020.  5. As definitions become narrower, it will be harder to claim pay outs In the event that you or your family members suffer from benign brain tumour, coma, stroke, heart attack, or major cancers in the future, it will be more difficult to claim pay outs due to the exclusions. For deafness, blindness, and aplastic anaemia, the term “irreversible” has also been added, so you can see how the pool of people who can be covered will become smaller. While there’s nothing much we can do about these changes, we can strive to keep ourselves healthy so we won’t be stricken with illnesses and disease as we grow older. Most importantly, go and get yourself an insurance plan so you will be covered in an unforeseen emergency! To find out more about Critical Illness Plans, Feel free to contact me wa.me/6596566947. or Simply scan the QR code below:  The perks of owning a credit card are often accompanied by other financial responsibilities such as paying off monthly fees and checking your card’s expiry date. So yes, being a credit card owner is a tough job, but it doesn’t have to stay that way. Here are 5 hacks even lao jiao credit card owners don’t know about, and we guarantee that they’ll make life a lot simpler for you! 1. Request to have your annual fee waived You’ve heard the term – ask and you shall receive. Most credit cards waive the annual fee for one or two years so new cardmembers won’t have to pay at the start. Eventually, the annual fee will be low-key added into your bill without a heads up whatsoever, and you may overlook some of these fees. To pre-empt these sneaky annual fees, check the expiry date of your credit cards and note it down on your calendar. Hint: the month indicated on your credit card is the month that you’ll be expected to start paying the annual fee. Once you’ve been billed, all you need to do is call the credit card company and request (politely, of course) to have the fee waived. Sometimes they’ll waive it, sometimes they’ll refuse; so it’s best to just cancel the card if the benefits you’ve received in the past year are even less than the annual fee.  2. Sign up when there are attractive bonuses Many credit cards offer juicy sign-up bonuses to lure customers into registering. You know what I’m talking about, e.g. the one offering a free pair of AirPods, or the one giving away a free staycation… If the bonus is really a steal and you don’t have to spend a cent to register for the credit card, go ahead and sign up! You can simply cancel the card later, or if the bank tries to charge you the annual fee at the end of the year.  3. Use GIRO to pay your credit card bills Late payments are the worst – it affects your credit standing, incurs rates of up to 25% per annum, and you even have to pay for late fees. If you’re someone who can’t remember dates well or are just horribly forgetful in nature, set up a GIRO arrangement that’ll automatically pay your credit card bills in full and on time. It’s simple and convenient, and you won’t have to worry about making a late payment ever again!  4. Shop through your bank’s online shopping portal Some banks provide online shopping portals for you to shop from sites such as Agoda or Lazada, and you’ll be rewarded with extra cashback or bonus miles that are much higher than usual. These special portals can be accessed through the bank’s web page for the specific credit card that you use. It may be an additional step in your shopping process, but it’s definitely worth the savings that you can earn back.  5. Avoid paying credit card interest by fully repaying your balance By repaying your balance in full before the next billing cycle, you won’t have to pay any interest rates. Let’s say the interest is 24% of whatever you owe; if you pay off the balance, you then need to pay 24% of zero dollars – which is still, zero dollars. The billing cycle usually lasts 27-31 days, and you can call the credit card company to find out the exact day on which your billing cycle ends. Smart! 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