CPF Minimum Sum increases to $148,000

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With effect from 1 July 2013, the CPF Min­imum Sum will increase from the cur­rent $139,000 to $148,000.  The amount will con­tinue to increase every year till 2015, when it reaches $120,000 in 2003 dol­lars. So if assum­ing infla­tion rate of 3% p.a. in 2014 and 2015, the CPF Min­imum Sum is expec­ted to reach $166,000 in 2015. By 2025, the CPF Min­imum Sum may increase to $223,000!

The Medis­ave Min­imum Sum will increase from $38,500 to $40,500. At or after age 55, CPF mem­bers can with­draw their Medis­ave funds in excess of this min­imum sum. Accord­ingly, the Medis­ave Con­tri­bu­tion Ceil­ing will be increased to $45,500, $5000 above the Medis­ave Min­imum Sum.

Reduce Income Tax with Supplementary Retirement Scheme (SRS)

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Sup­ple­ment­ary Retire­ment Scheme (SRS) is a vol­un­tary sav­ing scheme intro­duced by the gov­ern­ment to encour­age Singa­por­eans to save more for their old age. Singa­por­eans and for­eign work­ers can open an SRS account at any branches of the 3 SRS Oper­at­ors — DBS, OCBC and UOB. Par­ti­cipants can then con­trib­ute up to $12,750 (for Singa­por­ean and Per­man­ent Res­id­ents, or $29,750 for for­eign work­ers) to SRS at their own dis­cre­tion yearly.

 

Bene­fits

One imme­di­ate bene­fit for par­ti­cip­at­ing in SRS is that you can claim tax relief for con­tri­bu­tions made to SRS. Each dol­lar of SRS con­tri­bu­tion will reduce your income chargeable to tax by a dol­lar. This works out to be a total sav­ings of up to $2,550, depend­ing on your Income Tax Bracket and the SRS con­tri­bu­tion. You will need to con­trib­ute to the SRS account before 31 Dec of each year in order to enjoy the tax relief in the next year of assess­ment of income tax.

Before end of this year, you can reduce your income tax by con­trib­ut­ing to your Sup­ple­ment­ary Retire­ment Scheme (SRS). And read on NTUC income products that will help to grow your SRS money that beat the silent thief, i.e. inflation.

Let’s look at the two examples below. Con­tinue read­ing →

Income launches LP Revosave (5 pay 10), a short-term savings plan that allows you to withdraw cashback

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NTUC Income has just launched a new short-term sav­ings plan, LP Revosave (5 pay 10) with the fea­ture of allow­ing you to with­draw cash­back (5% of Sum Assured) from the end of 2nd year onwards.

This plan provides a very good altern­at­ive to sav­ings in a bank. Not only it offers bet­ter interest rate, it provides pro­tec­tion against death, Total per­man­ent Dis­ab­il­ity (Lost of sight, two legs etc.) regard­less of your cur­rent health. It is 100% guar­an­tee to be accep­ted. You will be covered for 105% of the premium paid-to-date through­out the term.

This is how LP Revosave (5 Pay 10) works.

1. You save a fixed sum of money to NTUC Income for 5 years.
2. At the end of second year, NTUC Income will return part of the premium back (called cash­back) to you. You can choose to:

(a) Spend it.
(b) Save with us at cur­rent 3.5% per annum interest in deposit account issued by Income

3. At any point in time, you can with­draw the money from the Deposit account.

The policy will mature in 10 years’ time. An example for a Male age 40 years old with Sum Assured $23,850 is as shown in the table below:

Pay­ment Term Monthly Sav­ings Yearly Premium Yearly Cash­back (From 2nd year onwards) Total Premium Paid Total Cash upon matur­ity (Non-withdrawal) Total Cash upon matur­ity (With yearly withdrawal)
5 years $500 $5769 $1,192.50 $28,845 $36,179 $34,547
($1,192.50 yearly plus $25,007 upon maturity)

Property Tax to increase for both Owner-occupied and Investment Residential Properties

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In the latest Budget 2013 announced by the Fin­ance Min­is­ter, the prop­erty tax rate for invest­ment prop­erty will increase pro­gress­ively for those prop­er­ties with Annual Value (AV) above $30,000, instead of flat rate of 10% cur­rently. The new tax rates range from 10% to 19% in 2014 and 10% to 20% in 2015. Please see table below.

Invest­ment  Res­id­en­tial Prop­erty Tax Rate

Annual Value Tax Rates
from 1 Jan 2014		 Tax Rates
from 1 Jan 2015
First $30,000 10% 10%
Next $15,000 11% 12%
Next $15,000 13% 14%
Next $15,000 15% 16%
Next $15,000 17% 18%
In excess of $90,000 19% 20%

So it seems that if you want to invest in res­id­en­tial prop­erty to earn the rental income, it is bet­ter to get a small unit with AV less than $30,000. Then your tax rate will still stay at 10% bracket.
There is one more risk now. Even if the prop­erty is left vacant, you are still liable for the prop­erty tax from 1 Jan 2014, instead of seek­ing prop­erty tax refund for vacant prop­erty.
And for owner-occupied res­id­en­tial prop­er­ties, the tax rate will increase sub­stan­tially for the top 1% of the house­holds. The cur­rent max­imum tax rate is only 6% but will become 16% in 2015. Please see table below.

Owner-Occupied Res­id­en­tial Prop­erty Tax Rate

Annual Value Tax Rates
from 1 Jan 2014		 Tax Rates
from 1 Jan 2015
First $80,000 0% 0%
First $47,000 4% 4%
Next $5,000 5% 6%
Next $10,000 6% 6%
Next $15,000 7% 8%
Next $15,000 9% 10%
Next $15,000 11% 12%
Next $15,000 13% 14%
In excess of $130,000 15% 16%

With all the many rounds of cool­ing meas­ures on prop­er­ties and the new tax rate, it is prob­ably good to diver­sify your invest­ment to over­seas prop­er­ties or REITS that are lis­ted in Singa­pore Exchange. REITs are not sub­ject to the hassle of enga­ging agent to find ten­ant, main­tain­ing the prop­er­ties and also pay­ing higher prop­erty tax.

Major Revision to NTUC Income’s IncomeShield Hospitalisation Plans

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With effect from 1 March 2013, NTUC Income will enhance its exist­ing Hos­pit­al­iz­a­tion Plans

  • IncomeShield MA, MB
  • Stand­ard IncomeShield Plan A, B, C
  • Enhanced IncomeShield Pre­ferred, Advant­age, Basic and C

This is due to the MediShield Reform in March 2013, which affects IncomeShield plans since Medishield is the under­ly­ing plan of all shield plans.

The changes are

  • Improve lim­its for Room & Board, ICU, Sur­gical  and Out­pa­tients treat­ment bene­fits for Stand­ard IncomeShield Plans.
    The policy year lim­its for all IncomeShield plans will also be increased as follows:
Plan Cur­rent Limit New Limit
Pre­ferred $600,000 $700,000
Advant­age $400,000 $500,000
Basic $150,000 $250,000
Enhanced C $100,000 $150,000
Plan P $260,000 $300,000
Plan A $130,000 $200,000
Plan B $100,000 $150,000
Plan C $70,000 $100,000
  • New Organ Donor Trans­plant Bene­fit only for Enhanced IncomeShield Pre­ferred Plan.
  • New Pros­thesis Bene­fit, range from $3000 to $10,000 annu­ally for all IncomeShield Plans.
  • New Short Stay Ward benefit.
  • Extra bed bene­fit under Assist Rider and Plus Rider of $80/day, up to 10 days for insured child aged 18 years or below.
  • Increase of $500 in deduct­ibles in most IncomeShield plans
  • Premium rates will also increase for all IncomeShield plans and Assist/Plus riders.
  • All exist­ing IncomeShield MA and MB plans will auto­mat­ic­ally be upgraded to Stand­ard IncomeShield Plan A and Plan B-SG respect­ively, without any under­writ­ing. Good news to those who were unsuc­cess­ful in their upgrade attempt previously.

 

For more inform­a­tion, askGinny.

Seventh Round of Cooling Measures to Residential Property

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The Singa­pore Gov­ern­ment has again intro­duced meas­ures, this time major, to cool the res­id­en­tial prop­erty mar­ket, which took effect on 12 Janu­ary 2013.

The Loan-to-Value (LTV) is now lowered fur­ther for indi­vidual with second and third hous­ing loans and also for non-individuals. The min­imum cash down pay­ment will also be increased from 10% to 25% for indi­vidu­als who are get­ting their second and sub­sequent hous­ing loans.

The sum­mary of changes is as shown in the table below:

Hous­ing Loan 1st Loan 2nd Loan From 3rd Loan
Exist­ing Revised Exist­ing Revised Exist­ing Revised
LTV Limit 80%; or 60% if the loan ten­ure is more than 30 years or extends past age 65 No change 60%; or 40% if the loan ten­ure is more than 30 years or extends past age 65 50%; or 30% if the loan ten­ure is more than 30 years or extends past age 65 60%; or 40% if the loan ten­ure is more than 30 years or extends past age 65 40%; or 20% if the loan ten­ure is more than 30 years or extends past age 65
Min­imum Cash Down Payment 5% (for LTV of 80%)
10% (for LTV of 60%)		 No change 10% 25% 10% 25%
Non-Individual Bor­row­ers 40% 20% 40% 20% 40% 20%

How­ever, a bor­rower will not be sub­ject to the lower LTV limit and higher min­imum cash down pay­ment require­ment when he obtains another hous­ing loan for the pur­chase of a prop­erty which is an Exec­ut­ive Con­domin­ium (EC) pur­chased dir­ectly from a prop­erty developer or a HDB flat.

Next, Addi­tional Buyer’s Stamp Duty (ABSD) will be raised and also imposed on Per­man­ent Res­id­ents (PRs) pur­chas­ing their first res­id­en­tial prop­erty and Singa­por­eans buy­ing their second res­id­en­tial prop­erty.
The new ABSD struc­ture is as follows:

ABSD Rate 1st Purchase 2nd Pur­chase 3rd and Sub­sequent Purchase
Exist­ing Revised Exist­ing Revised Exist­ing Revised
Singa­pore Citizens NA NA NA 7% 3% 10%
Per­man­ent Residents NA 5% 3% 10% 3% 10%
For­eign­ers and non-individuals (cor­por­ate entities) 10% 15% 10% 15% 10% 15%

Singa­por­ean first-time buy­ers of HDB flats will not be affected by the new meas­ure. How­ever, ABSD can be remit­ted for pur­chase of HDB flat/new EC by a Singa­pore Cit­izen house­hold only, upon the dis­posal of the first prop­erty. Mar­ried couples with at least one Singa­por­ean spouse will also be eli­gible for the refund of ABSD when the exist­ing prop­erty is dis­posed of.

An addi­tional meas­ure will take effect on 1 July 2013 to tighten the terms for grant­ing HDB loans and the use of CPF funds for the pur­chase of HDB flats with remain­ing leases of less than 60 years.

Source : http://www.mas.gov.sg/News-and-Publications/Press-Releases/2013/Additional-Measures-To-Ensure-A-Stable-And-Sustainable-Property-Market.aspx

More cash for senior citizens to monetise their HDB flats

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There are cur­rently two schemes avail­able for eli­gible Singa­pore Senior Cit­izen to unlock cash from thier private prop­erty or HDB flat.

  1. Sil­ver Bonus Scheme for eld­erly home owner (55 years and above) who choose to down­grade from either lar­ger HDB flat or private prop­erty of annual value $13,000 or less to a 3-room flat or smaller.
  2. Lease Buy­back Scheme which allows eld­erly flat owner (63 years old and above) to live in his 3-room or smal­ler flat for the next 30 years, but sell the remainder tail end of the 99-year lease back to HDB.

From 1 Feb 2013, a major change to Sil­ver Bonus Scheme will see more cash pro­ceeds to be given to the flat owner. Pre­vi­ously, all the pro­ceeds from the sale of the flat has to be used to top up the CPF Retire­ment Accounts of the flat own­ers. This usu­ally res­ults in leav­ing the eld­erly flat own­ers with the $20,000 cash bonus given by the gov­ern­ment for down­grad­ing thier prop­erty. Under the new scheme, only $60,000 is required for top­ping up the Retire­ment Accounts of the flat own­ers in the house­hold at first. The own­ers can keep the next $100,000 of the net pro­ceeds from the sale of the flat. The excess amount bey­ond $160,000 will then be used to top up the Retire­ment Accounts further.

Under the Enhanced Lease Buy­back Scheme, which also take effect from 1 Feb 2013, the cash bonus from the gov­ern­ment will increase from $10 000 to $20 000, as long as the top up for the Retire­ment Accounts of the flat own­ers total to $60,000 or more. Oth­er­wise, the cash bonus will be tagged to $1 for every $3 top up. The net pro­ceeds from the sale of lease will be used to top up the less­ees’ Retire­ment Accounts to the amount shown in the fol­low­ing table before up to $100,000 cash can be withdrawn.

Lessee’s Age To Top Up till CPF Retire­ment Account has:
≤70 Pre­vail­ing MS (cur­rently $139,000)
71 – 79 Pre­vail­ing MS — $10,000 (cur­rently $129,000)
≥80 Pre­vail­ing MS — $20,000 (cur­rently $119,000)

Amount in excess of $100,000 will be used to help the less­ees with the low­est Retire­ment Account bal­ance to meet the pre­vail­ing Min­imum Sum (i.e. $139, 000 currently).

For more details on Sil­ver Bonus Scheme and Enhanced Lease Buy­back Scheme, please visit www.hdb.gov.sg.

Minimum Sum Topping-up Scheme from 1 Nov 2012

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From 1 Nov 2012, the many dif­fer­ent CPF top-up schemes will be merged to Min­imum Sum Topping-up Scheme (MSTS). This will make the cal­cu­la­tion on how much can be con­trib­uted towards the fam­ily mem­bers’ Spe­cial Account (SA) or Retire­ment Account (RA) easier.

Under the MSTS, you can use cash or CPF money to top-up the fam­ily mem­bers’ SA/RA up to the pre­vail­ing CPF Min­imum Sum, cur­rently at $139,000. The fam­ily mem­bers include par­ents, grand­par­ents, spouse, sib­lings, parents-in-law (from 1 Jan 2013) and grandparents-in-law (from 1 Jan 2013). Each qual­i­fy­ing giver can enjoy tax relief of up to $7,000 for cash top-ups to your own CPF and another $7000 to your fam­ily mem­bers’ accounts. To qual­ify for tax relief for cash top-ups for spouse and sib­lings, they must not have income exceed­ing $4,000 in the year pre­ced­ing the year of top-up or they are handicapped.

There is a limit to the top-up that the recip­i­ent can receive in his CPF SA/RA. For those who are below 55 years old, it is the dif­fer­ence between the pre­vail­ing Min­imum Sum and the net bal­ances in his SA account, includ­ing the amount with­drawn for invest­ments. For those age 55 and above, the limit is the pre­vail­ing Min­imum Sum and the net bal­ance in his RA account, exclud­ing the interest earn since age 55, Gov­ern­ment grants received and any amount withdrawn.

Employer can also claim tax deduc­tion of up to $7000 by top­ping the staff’s CPF RA/SA account, while the staff can claim the equi­val­ent amount of tax relief.

MediShield Enhancement from March 2013

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With effect from 1 March 2013, the Min­istry of Health (MOH) will make the fol­low­ing changes to the cur­rent MediShield Plan more comprehensive.

a) Remove the max­imum entry age of 75 years old. This will help the healthy unin­sured eld­erly to apply for MediShield

b) Increase the max­imum cov­er­age age from 85 to 90 years old.

c) Increase the Medis­ave with­drawal lim­its for MediShield and Integ­rated Shield Plans premi­ums from $800 to $1,000 for those aged 76 to 80 and from $1,150 to $1,200 for those above age 80.

d) Increase the deduct­ible for B2 ward from $1500 to $2000 and C ward from $1000 to $1500.

e) Extend cov­er­age to include short-stay wards in Emer­gency Departments.

f) Extend cov­er­age to inpa­tient psy­chi­at­ric treat­ment at $100 per day up to 35 days per year.

g) Increase the policy year limit from $50,000 to $70,000 and life­time limit from $200,000 to $300,000.

With the above enhance­ments, the annual premium will increase too. The private Medisave-Approved Integ­rated Shield Plans from AIA, Aviva, Great East­ern, NTUC Income and Pruden­tial will also increase their annual premi­ums too, as MediShield is the under­ly­ing integ­rated basic plan. For those aged 65 and below, the annual premium increase will be up to $120, and for those above 65 years old will face increase of up to $252 annu­ally. To min­im­ise the fin­an­cial premium impact of this increase in 2013, the Gov­ern­ment will provide one-off top-up to the MediS­ave Account, which ranges from $50 to $400. For those who are 66 years old and above, they will enjoy addi­tional Medis­ave top-up of $250-$450 under the Annual GST Voucher program.

Source : http://www.moh.gov.sg/content/moh_web/home/pressRoom/pressRoomItemRelease/2012/enhancing-medishield-better-coverage-for-singaporeans.html