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Overall Inflation at 5.2% in 2011

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Department of Statistics (DOS) has just disclosed that the inflation for 2011 is 5.2% in 2011. This is a three-year high, driven by higher costs of owning a car and higher rental.

The top 20% of household income earners are worst hit by inflation, with 5.7% inflation, whereas the bottom 20% household income earners are affected by 5.2% inflation.


As more than 87% of our population own their homes in 2010, if the imputed rentals on owner-occupied accommodation is taken out, the overall inflation is reduced to 4.2%, with the top 20% household income hit by 5.1%, while the bottom 20% household suffered only 2.2%.

If the private transport and accommodation are ignored, the overall inflation rate is only 2.2%!

Last Updated on Thursday, 26 January 2012 17:47
 

CPF Medisave Required Amount and latest CPF Interest Rate

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For those who are turning 55 years old on 1 Jan 2012, take note that the CPF Medisave Required Amount (MRA) is now raised from $27,500 to $32,000 now. This means that you will need to top-up the MRA amount of $32,000 before you are allowed to withdraw the excess of your CPF Minimum Sum, which is $131,000 this year.

The interest rate for Special and Medisave Account (SMA) from 1 Jan 2012 to 31 March 2012 continues to enjoy the floor rate of 4% p.a.. Savings in the SMA currently earn either 4% or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is the higher. The average yield of the 10YSGS plus 1%, from 1 December 2010 to 30 November 2011, works out to be 3.19%. Since 3.19% is lower than the floor rate, 4% p.a. interest rate applies.

Retirement Account (RA) continues to enjoy 4% p.a from 1 Jan 2012 to 31 Dec 2012. RA savings are invested in SSGS which earn a fixed coupon equal to either the 12-month average yield of the 10YSGS plus 1% at the point of issuance, or 4%, whichever is the higher, adjusted yearly. Again, the floor rate of 4% applies to RA.

The floor rate of 4% p.a. for Special Account, Medisave Account and Retirement Account is valid till 31 Dec 2012.

An additional 1% interest will continue to be paid on the first $60,000 of CPF member’s combined balances, with up to $20,000 from the Ordinary Account (OA).

Last Updated on Wednesday, 11 January 2012 12:36
 

Financial Care for Special Needs Children

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Source: The New Paper posted in edvantage.com.sgCurrently, there are two financial security schemes for parents with special needs children when they are no longer around to care for them.

The first one is the Special Needs Trust Company (SNTC) Trustee Scheme which provides trust services to beneficiaries who have special needs. However, this requires cash savings with SNTC with a minimum deposit of $5000 and nominal annual fee. For those without much cash outside their CPF, the new Special Needs Savings Scheme (SNSS) managed by CPFB will be a great help.

Photo source: The New Paper, 30 Apr 2010, posted in edvantage.com.sg.
Last Updated on Monday, 05 December 2011 13:15
 

Additional Buyers Stamp Duty from 8 December 2011

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More cooling measure is being introduced to stabilize the property market in Singapore!

From 8 December 2011, Additional Buyer’s Stamp Duty (ABSD) of the purchase price or the market value of the property, whichever is higher, will apply to the following categories of residential property purchases:

  • Foreigners and non-individuals (corporate entities) buying any residential property will pay an ABSD of 10%;
  • Permanent Residents (PRs) owning one and buying the second and subsequent residential property will pay an ABSD of 3%; and
  • Singaporeans owning two and buying the third and subsequent residential property will pay an ABSD of 3%.

This is on top of the current Buyer’s Stamp Duty of 1% of the first $180,000, 2% of the next $180,000 and 3% of the remainder property price.
As long as options are granted on or before 7 Dec 2011 and exercised within 3 weeks (i.e. on or before 28 Dec 2011) or the option validity period, whichever is the earlier, this ABSD will not apply.

This additional ruling will plug the remaining holes in the rising property prices. Foreigners buying actively into Singapore Property Market, Singapore Citizens and PRs register a company to buy property to avoid the Seller’s Stamp Duty, and others who are cash rich in buying 3 or more residential properties.

 

Changes in CPF Act

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The Straits Times, dated 22 November 2011, just published the following 3 changes to the CPF Act.

CPF Top-up
Previously, CPF members could only contribute to their own accounts or those of family members. Employers could also contribute to the accounts of employees. Now, voluntary contributions to a member's account can be made by any person, company or association.

Reversal of CPF SA Transfer
Previously, once the CPF OA money is transferred to CPF SA account, it is irreversible. Now, they can be reversed under special circumstances. For instance, a CPF member who suffers unforeseen financial hardship after the transfer may need the transferred savings to service his housing instalments. The amendment allows CPFB to make exceptions and allows transfers to be reversed in such cases.

Portability of Home Protection Scheme (HPS)
Previously, HPS is not portable. That is to say, if a CPF member sells away current HDB flat and buy a new flat, the old HPS will be terminated. CPF member will then need to apply for new HPS cover, subject to health underwriting. This is not desirable as member's health condition may not be good then. Now, CPFB is able to waive the requirement of good health for members who were insured under HPS for their previous flat.

 
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