Monday, May 30, 2016

[Hong Kong 2016] Riding on Ding Ding Trams!


Photo By: Elin Chow
Website: Hong Kong Tramways

During my recent trip to Hong Kong, we decided to hop onto the double decker trams to get around and see the city in a leisurely way.

Ding Ding, the tram slowly approaches the station. The tram is affectionately known as "Ding Ding" by the locals. When approaching a station, the double bell on the tram rings, Ding Ding, hence the name. The purpose of the bell is to warn traffic and pedestrians of its approach.

Ding Ding trams have been traversing the busy streets of Hong Kong since 1904 and is the earliest and oldest form of transportation in the metropolis. The Hong Kong Tramways own and operate a fleet of 163 double decker tramcars, making it the world's largest fleet of double decker trams still in service. It is the only tram system that runs exclusively on double decker trams.

The Ding Ding trams run between the east and west along the northern coast of Hong Kong island. With a total of 120 stops, the trams provide transportation services on 6 routes over 30 km of tramways, operating from 6 am till midnight everyday. The tramways stretch from Kennedy Town in the west to Shau Kei Wan in the east, with a branch circulating the Happy Valley racecourse. There are route maps at every station.


Each tram will display their final destination on the front of the tram, so you do not have to worry about taking the wrong one. The trams will stop at every stations and run at least twice every hour. Stations are located at an average of 250 m and it is easy for anyone to locate the trams without getting lost.

Riding on a Ding Ding Tram is one of the best way to explore Hong Kong. We boarded at Western Market terminus at Sheung Wan heading towards Shau Kei Wan terminus. The journey from Western Market terminus to Shau Kei Wan terminus took about 90 minutes, traveling over 100+ stops, from one end of the line to another end.

The Ding Ding tram is boarded on the left side through the back door and the fares are paid only when you exit via the front door. Climbing the steps onto the tram, we had to struggled to pass through a very narrow turnstile that prevent passengers from exiting the tram without paying.

Inside the tram, we walked through a very narrow corridor with rows of two wooden seats on either sides. We climbed up the narrow spiral staircase to the upper level, heading towards the window seats on the right side. The seats on the upper deck offer the best view and photo opportunities. I would highly recommend anyone to get a seat upstairs to enjoy the best experience.

Since we boarded from the terminus, we had the best chance of getting a seat at the upper deck. The tram was quite empty when it arrived at the Western Market Terminus station.


The non-air conditioned trams are surprisingly well-preserved and very clean. However, it can get very crowded during rush hours as locals use the tram to commute to and from work every day. During peak hours, both tourists and locals will be packed inside the trams like sardines, which is definitely not going to be an enjoyable experience.

Although standing is allowed in the trams, it is likely that you would not have chance to take photos and enjoy the sights along the track. I would advise anyone to avoid the peak hours during weekdays for the best experience.


Ding Ding Trams are cheapest mode of transportation on the island. The fare is HKD 2.30 for adult, HKD 1.20 for children under 12, and HKD 1.10 for senior citizens aged 65 and above. Tram fare are the same flat rate regardless of the distance traveled and can be paid either in cash or by the Octopus card.

For those who are paying in cash, there is a coin box located by the exit next to the driver. Please note that exact amount of coins have to be given when you exit from the tram. For budget traveler, the Ding Ding tram is certainly the most cheapest way to get around the island. The trams are very affordable, reliable and convenient. You do not have to walk a long way to MTR station to take the trains if you are not in a hurry.


All the trams are colorfully painted and decorated with advertisements. Since the opening of MTR West Island line, the tramway has been suffering a steady decline in ridership to an average of 200,000 passengers daily. Today, the advertisements are an important source of revenues for the trams.


Trams travel at relatively low speed and are very environmentally friendly as they emit zero emissions. Riding on a tram provides us plenty amount of time to enjoy the views along the tram track.

Along the way, we passed by several MTR stations. The tram track is built parallel to the MTR with the central MTR line going through an identical route as the tram. Do not take the tram if you are in a hurry. You might want to take the MTR instead if you are short of time. You are able to reach your destination in just a few minutes with the MTR.



Riding on a Ding Ding tram is an unique experience.The tram is not only a form of transportation in the city, but also an iconic symbol of Hong Kong.For over a century, Ding Ding trams have been part of Hong Kong culture and locals' daily life. A ride on the tram will give you a glimpse of Hong Kong everyday street life - a sight which you would not able to see if you are riding on the MTR.

The tram ride was however, a little bumpy and noisy due to traffic congestion. I believe it might be worst during the peak hours.


We spend our time looking out of the open windows, observing the the life of the locals. As the tram move, I could feel the gentle wind brushing across my face. Although the windows are wide open, the wind was actually not cooling enough. This is probably not going to be a pleasurable ride during hot weather days.


We pass through bustling residential area and main city center where you will find the financial core of Hong Kong.


The main road are full of organized traffic, and are lined with skyscrapers, shopping malls, trendy restaurants and traditional eateries.

The narrow side streets are crammed with makeshift markets selling all sorts of wares. You probably would not know the existence of these markets if you are taking the MTR.


Occasionally, we get to see trams going the other way as well. The trams are so close to each other till you could reach out your hand and touch the passengers in the passing tram.


While sitting on the tram, I noticed that Hong Kong is very similar to Singapore in many ways. The towering skylines, congested roads and crowded shopping districts.


People always seems to be in a hurry, even on a Sunday.  With a population of 7 millions, Hong Kong is one of the most densely populated cities in the world. Both countries are highly competitive society where people work day and night to keep up with the fast pace of life.

Having lived in Singapore for most of my life, I am sorry to say that Hong Kong certainly does not amaze me, except for the nice food.



The two cities are so similar, yet different in its unique ways. Unlike Hong Kong, the streets in Singapore are actually more pristine and sterile clean. You probably would not find congested shopping districts on narrow streets or makeshift markets anywhere, especially around the center city area in Singapore. Air pollution level is high in Hong Kong and the streets are always crowded with vehicles and people.


The buildings in Hong Kong are so old and dilapidated that seems to be on the verge of collapsing. However, the high density of the population makes rebuilding nearly impossible. Some people think that this is the true beauty of Hong Kong and what makes the city entirely different from Singapore.


Passing through the Hong Kong's central area, we are surprised to see thousands of maids gathering in trains stations, parks and outside of public buildings. It was a Sunday, which was also their fixed once-a-week working day off. Every Sunday, you will see the maids meet and gather in the public spaces where they will socalize, eat and sing, blocking the facade of luxury stores and metro exits. It is quite sight!


A trip to Hong Kong is never complete without a ride on the Ding Ding Tram.Passengers are free to hop on at any tram station and jump off anywhere along the route as you like.

However, the tram ride can get pretty boring after a while. It actually took longer than we expected. Halfway through the journey, my eyelids were slowly drooping. I was falling asleep. To prevent myself from sleep, I took out my camera and started to snap lots of photos of the same old buildings, streets, shops and people along the way. I tried to enjoy the ride but it was difficult. Everywhere I look, it was the same old buildings, streets and shops.

Even so, it is still a great way to see Hong Kong. You will notice things you will never notice when you are on the ground. I would recommend anyone to take a ride on the Ding Ding Trams if you have spare time in Hong Kong.

Be sure to follow me on my Facebook or Twitter to get the latest updates on my Hong Kong trip! Also, do not forget to share my blog posts with your family and friends if you find them helpful. In the meantime, you might also want to check My Wanderlust page for some of my other travel adventures.

Wednesday, May 18, 2016

Singapore CPF VS Malaysia EPF


References: Central Provident Fund |  Employer Provident Fund

Central Provident Fund (CPF) and  Employee Provident Fund (EPF) are both are mandatory social security saving scheme funded by contributions from employers and employees. Both are compulsory comprehensive plan for citizens and permanent residents working in the country. The purpose of CPF and EPF is to fund the people retirement, healthcare, education and housing needs.

CPF and EPF are very similar but at the same time, also very different in many ways. I actually did a quick comparison between the Singapore CPF and Malaysia EPF previously in my "Why did I left Singapore For Malaysia" post. But I think that was not detailed enough for Singaporeans and Malaysians to understand the differences between the two systems, which is also why I decided to write this post. I would recommend anyone to spend some time and read through this if you would like to know about the differences.

Understand EPF and CPF

CPF and EPF are both employment based saving scheme with both employers and employees contribute an amount to the fund. The contributions are not compulsory for foreigners working in the country. Foreigners are not allowed to contribute to CPF in Singapore, whereas in Malaysia, foreigners can opt to contribute to the fund.

EPF

EPF account is divided into two accounts - Account 1 and Account 2. Account 1 is where 70% of member's monthly deduction is allocated and withdrawal is restricted until members reach the retirement age of 55, is incapacitated, leave the country or passed away. Account 2 is where the rest of the 30% of member's monthly deduction goes to and withdrawal is allowed if certain specific urgent cash requirement is met.

CPF 

CPF account, on the other hand, are divided into four different accounts - Ordinary Account (OA), Special Account (SA), Medisave Account (MA) and Retirement Account (RA). The allocation rates for private sector and public sector non-pensionable employees is shown as below:

Employee’s Age
(Years)
Allocation Rate From 1st Jan 2016
(for monthly wages  ≥ $750)
Ordinary Account (OA)
(% of wage)
Special Account (SA)
(% of wage)
Medisave Account (MA)
(% of wage)
35 & Below
23
6
8
Above 35-45
21
7
9
Above 45-50
19
8
10
Above 50-55
15
11.5
10.5
Above 55-60
12
3.5
10.5
Above 60-65
3.5
2.5
10.5
Above 65
1
1
10.5

CPF contribution are allocated first to Medisave Account, followed by the Special Account. The remaining is then allocated to the Ordinary Account. Below is the function of each account:

Ordinary Account
Primarily for retirement, investments, education and housing needs.
Special Account
Primarily for retirement needs.
Medisave Account
Primarily for healthcare needs.

Funds in Ordinary Account can be used for a wide variety of purposes, but earn a lower interest rate. The savings in Ordinary Account can be used for investments, insurance, education, property and of course, retirement. Special Account can only be used for retirement and some other low-risk investment such as retirement-related financial products. The Medisave Account is primarily used for healthcare and can be used to pay medical care, hospitalization expenses and approved medical insurance.

A fourth account, the Retirement Account will be created upon reaching the age of 55 where savings from both the Ordinary and Special Accounts will automatically be transferred to form the Retirement Sum. Retirement sum is the amount of retirement saving primarily for retirement that will provide member a monthly payout to support a basic standard of living for the next 20 years.

Contribution Rates 

Below is a comparison between the CPF and EPF contribution rate.











In Singapore, all employed Singapore citizens and permanent residents up to the age of 55, earning $750 above, are obligated to contribute 20% of their monthly wage to their respective CPF account every month. The employer, on the other hand, are required to contribute 17% of employees' monthly wage to their CPF account. Those in high age groups (55 and above) contribute at lower rates. This is to encourage employers to retain older workers.

Whereas, in Malaysia, all employed Singapore citizens and permanent residents up to the age of 60, are obligated to contribute 11% of their monthly wage to their respective EPF account every month. Corresponding, the employers are required to contribute an additional amount equivalent to 13% of the employees' monthly wage.

However, for employees who earns a monthly income exceeding RM 5,000 and above, the employers are only required to contribute an additional amount equivalent to 12% of the employees' monthly wage. For employees aged 60 and above, they may opt to continue to contribute to EPF at reduced 50% rate.

Recently, EPF announced that the statutory rate for employees age 60 and below will be reduced from 11% to 8%. For employees age 60 and above, the contribution rate will be reduced from 5.5% to 4%. For employers, the contribution rate will however, remain the same. The changes above will start from March 2016 to December 2017. However, employees are given the option to maintain their EPF contribution rate at 11%.

Contribution Interest Rate

Next, let us take a look at the interest and dividend rate declared by CPF and EPF.

CPF Interest Rates
EPF Dividend Rates
Year
Ordinary Account (%)
Special, Medisave & Retirement Accounts (%)
Account 1 & 2 (%)
2011
2.5 - 3.5
4 - 5
6
2012
6.15
2013
6.35
2014
6.75
2015
6.40

Funds in Ordinary Account earn a guaranteed interest rate of 2.5% per annum while funds in Special, Medisave and Retirement Account earn guaranteed interest rates of 4%. Despite inflation and rising cost of living, the interest rate has remained unchanged over the years.

Members are given a choice to transfer their balance in Ordinary Account to Special Account to enjoy the higher guaranteed interest rate, provided that the balance in the Special Account have not reach the minimum Retirement Sum of $161,000. However, I would not recommend doing so because the Special Account offers lesser flexibility for members to use the funds. Once the saving in the Ordinary Account is transferred to the Special Account, it cannot be transfer back.

Starting from 2016, CPF announced that an additional 1% interest will be paid on the first $60,000 of a member's combined balance (with up to $20,000 from the Ordinary Account). On top of that, members aged 55 and above will also earn an extra 1% interest on the first $30,000 on their combined balance. In total, CPF members aged 55 and above will earn up to 6% interest per year on their retirement balances.

EPF, on the other hand, also guaranteed a minimum 2.5% dividend rate every year, but usually, it is much higher. Despite the poor market performance last year, EPF has declared a 6.40% dividend rate for 2015. Over the past 5 years, the EPF Board has continuously declared above 6% dividend rates to its contributors.

CPF Withdrawals vs EPF Withdrawal

Both CPF and EPF provides various withdrawal options (pre-retirement and retirement) for members to use their savings in their accounts. Please note that the options below only applies to Singaporean / Malaysian citizen or permanent citizen of Singapore / Malaysia.

1. Retirement

EPF

For EPF, pre-retirement withdrawal is allowed. EPF members are allowed to withdraw all their saving in Account 2 upon reaching the age of 50 in order for them to start planning for their retirement. This is 30% of the total savings in the EPF Account. Upon reaching the age of 50, members can either choose to withdraw all the saving or a partial amount in Account 2.

Upon reaching the age of 55, members are allowed to withdraw all their EPF savings from both Account 1 and 2 to fund their retirement. Members can choose to withdraw their savings according the following options.

1. A single lump sum

2. A partial amount and/or transfer a partial amount for monthly payment and/or retain the balance in their account to enjoy the higher interest rates

3. Transfer the entire savings for monthly payments

CPF

Upon reaching the age of 55, CPF members are allowed to withdraw their CPF savings ONLY after setting aside a Full Retirement Sum or Basic Retirement Sum with sufficient property pledge in their newly created Retirement Account.

All the saving from both Ordinary and Special Accounts are automatically transferred to the Retirement Account to meet the Minimum Retirement Sum required. There are two types of Retirement Sum for members to choose from - Full Retirement Sum or Basic Retirement Sum.

Full Retirement Sum

The following Full Retirement Sum applies to members who turned 55 from 1 July 2013 to 2015:

55th birthday on or after
Full Retirement Sum
1 July 2003
$80,000
1 July 2004
$84,500
1 July 2005
$90,000
1 July 2006
$94,600
1 July 2007
$99,600
1 July 2008
$106,000
1 July 2009
$117,000
1 July 2010
$123,000
1 July 2011
$131,​000
1 July 2012
$139,000
1 July 2013
$148,000
1 July 2014
$155,000
1 July 2015
$161,000

The Full Retirement Sum has been increasing over the years as to combat inflation or rising cost of living. As of 1 July 2015, the Full Retirement Sum is $161,000.

Basic Retirement Sum

If you own a property, you will qualify for the Basic Retirement Sum with sufficient property charge or after you pledged your property to the CPF. A CPF charge is automatically created when member use their CPF savings to purchase the property. The value of the charge is the total amount of CPF savings plus the accrued interest that can be earned from those savings.

The CPF charge is considered sufficient only if it can restore the Full Retirement Sum after the property is sold, transferred or disposed. Members are required to pledge their properties if the CPF charge is not sufficient.

Member can pledge their properties for up to 50% of Full Retirement Sum required, which is $80,500 ($161,000/2). Pledging a property means that when the property is sold, the amount of the pledge have to be refunded to the CPF.

The following Basic Retirement Sum applies to members who turned 55 from year 2016 to 2020.

55th birthday in year
Basic Retirement Sum
2016
$80,500
2017
$83,000
2018
$85,500
2019
$88,000
2020
$90,500

Just like the Full Retirement Sum, the Basic Retirement Sum will also increase every year to combat with inflation and rising costs of living. 

Please note that property to be pledged must have more than 30 years of remaining lease to qualify and studio apartments are not allowed to be pledged. So, if you do not own a property, you will not have much of a choice because you do not qualify for the Basic Retirement Sum.

After setting aside the Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge, members will then be allowed to withdraw any remaining balance in their CPF account. Members who have reached the age of 55 in 2016 are allowed to withdraw based on the following criteria:

Cash balances in Ordinary Account (OA) and Special Account (SA) at 55
Amount which you can withdraw at age 55
$5,000 or less
All their savings in Ordinary and Special Accounts
Between $5,000 and $161,000
(i) $5,000
and
(ii) Any Retirement Account (RA) savings above the Basic Retirement Sum with sufficient property charge/pledge
More than $161,000
(i) $5,000 or any Ordinary and Special Account savings above $161,000, whichever is higher
and
(ii) Any Retirement Account (RA) savings above the Basic Retirement Sum with sufficient property charge/pledge

Members are allowed to withdraw up to 5,000 even if the Full or Basic Retirement Sum cannot be met. Withdrawal of savings from the RA will be based on monthly payment under the CPF Life Scheme upon reaching the payout eligibility age, which is currently at age 65. Apparently, the more savings you have in your CPF Accounts, the higher the monthly payout will be.

Enhanced Retirement Sum

Starting from year 2016, there is an additional option for members to choose from - Enhanced Retirement Sum. For members who have some spare cash in hand, they can choose to put in more of their money into their CPF Account to meet the Enhanced Retirement Sum, which is currently at $241,000. The good thing about this that you will receive a higher payout upon reaching the eligibility payout age at 65. But the bad thing is members will not be able to withdraw the amount of money they have put in after they have joined. So, I would advise anyone to think carefully before choosing to go for the Enhanced Retirement Sum.

CPF Life Scheme

CPF Life Scheme is a mandatory annuity bought using the savings in the Retirement Account. The Scheme provides members with a monthly payout for as long as they live. All CPF members will be automatically placed on the CPF Life Scheme if they have at least:

1. $40,000 in their Retirement Account upon reaching the age of 55
2. $60,000 in their Retirement Account upon reaching the age of 65

There are two types of CPF Life plans for members to choose from - LIFE Standard Plan and LIFE Basic Plan. So, how much is the monthly payout? The amount of payout vary for individuals, depending on the type of LIFE Plan they choose.


Monthly payout for life from 65
Retirement Sum at 55
Own a property and pledged the property
$660 - $720
Basic Retirement Sum
$80,500
Do not own a property or do not want to pledge your property
$1,220 - $1,320
Full Retirement Sum
$161,000
Put more savings in CPF LIFE
$1,770 - $1,920
Enhanced Retirement Sum
$241,500

For members who own properties and choose to pledge their properties to CPF, they will receive a monthly payout of $660 to $720. For members who do not own properties or do not want to pledge their properties to CPF, they will receive a payout of $1,220 - $1,320 per month. For members who decided to put in more money in their CPF Accounts to meet the Enhanced Retirement Sum, they will receive a monthly payout of $1,770 - $1,920.

My Thoughts

EPF offers their members more flexibility to choose and manage their own finance. Unlike CPF, the EPF system is pretty much straightforward and relatively easy to understand.  However, the bad thing is there is a possibility that people might mismanage their finance and squander their savings within a few years time. But at least, people get to take responsibility for their own savings.

On the other hand, Singaporeans are 'forced' to set aside 20% of their income every month to contribute to the fund and most people would only get at most $5,000 back before you turned 65. The monthly payment that you will receive upon receiving the age of 65 is probably not enough for you to live a comfortable life, especially in a country where cost of living is forever rising.

How can a monthly payout of $650 to $700 even enough for one to sustain a basic standard of living in Singapore? A monthly payout of $1,220 to $1,320 might be good enough, but the Full Retirement Sum might be a little difficult to meet. Most Singaporeans probably would not have that much savings in their Accounts since most of it would be used on housing.

The government should consider increasing the CPF interest rates rather than keep increasing the Retirement Sum. Obviously, the government guaranteed CPF interest rates are unable to keep up with inflation rate in Singapore.

2. Home Ownership

EPF

EPF members are allowed to withdraw their savings from their Account 2 to buy or build a residential house or a shop lot with residential unit. Members are allowed to withdraw 10% of the property price for down payment or all the savings in Account 2, whichever is lower but not less than RM 500. Withdrawal to purchase second residential house is allowed, but only after the first residential house is sold or disposed.

Please note this option is not available to members who purchase a land or house lot only. Withdrawal is also not allowed when the loan is taken to:

1. Renovate, repair or carry out additional works to the existing house.
2. Purchase third property
3. Purchase non-residential property
4. Overseas property
5. Taken an overdraft loan

In addition to that. members are also allowed to use their savings to:

1. Reduce or fully settle the housing loan balance
2. Make monthly housing loan installment payments
3. Or both

However, for withdrawal to reduce or fully settle the housing loan balance, application can only be made once a year.

CPF

CPF members are allowed to use their savings in the Ordinary Account to buy or build new or resale Housing and Development Board (HDB) flats and private residential properties in Singapore. The funds in the Ordinary Account can be used to pay the purchase price of the property and/or service the monthly loan installment taken to buy the property. It can also be used to pay the stamp duty, legal fees and other related costs.

Members who have used their CPF savings to finance their properties are required to refund the principal CPF amount that was withdrawn from their account and the accrued interest which they would earned to their CPF Account. For those who have pledged their property to withdraw their savings in the Retirement Account, they are also required to refund the pledged amount to their Account once the property is sold.

3. Healthcare

EPF


EPF members are allowed to withdraw savings from Account 2 to pay for medical expenses incurred for the treatment of critical illnesses and/or to buy medical aid equipment approved by EPF Board for yourself, spouse, children (including step children and legally adopted children), parents (including step parents), parents-in-laws and siblings. Members can withdraw all the savings in Account 2 or the actual medical cost, whichever is lower.

In the case where members become physically or mentally unfit to work, they are allowed to withdraw all the savings in both Account 1 and 2.In addition to that, they are also eligible to receive an one-time incapacitation benefit from EPF amounting RM 5,000.

CPF

Part of the monthly CPF contribution is allocated in the Medisave Account, which is basically a national medical savings scheme that help members to save for future medical and hospitalization expenses. Medisave can be used at all public healthcare institution and approved private hospitals and medical institutions, up to the respective Medisave withdrawal limits.

Medishield Life is a compulsory all-inclusive health insurance scheme that provides lifetime coverage for all Singaporeans and permanent residents. All Singaporeans and permanent residents will be automatically covered under Medishield Life and premium will be paid from member's Medisave Account.

Besides Medisave and Medishield Life, CPF members are allowed to withdraw their CPF savings on medical grounds.Withdrawal is allowed if the member is physically or mentally unfit to work, suffering from an terminal illnesses or have a reduced lifespan. Members can withdraw up to $5,000 or savings after setting aside a reduced Retirement Sum and will receive a monthly payout (minimum $450) from the Retirement Account until the account is exhausted.

4. Education

EPF

EPF members are allowed to withdraw the savings in Account 2 to pay for their own, children (including step-children or legally adopted children) tuition fee at an approved Institute of Higher Learning either locally or abroad. Your children must undertake a course at Diploma, Advanced Diploma, Bachelor Degree, Master Degree, Doctor of Philosophy or equivalent.

CPF 

CPF members are allowed to withdraw the savings from the Ordinary Account to pay for their own, children, spouse or relatives' subsidized tuition. However, only approved full time subsidized diploma/degree courses conducted locally at the approved institutions are covered under the Education scheme. Diploma/degree courses conducted locally but awarded by foreign institutions will not qualify for the CPF Education scheme.

The CPF Education scheme is actually a loan scheme where member can take up a loan with their own CPF Account. The student supposed to repay the principal amount withdrawn plus any accrued interest in cash to the CPF Account, one year after graduation or termination of studies whichever is earlier.

Interest for education loan will start to accrue once the saving from the Ordinary Account is withdrawn, until the loan is fully repaid. It is pegged to Ordinary Account interest rate, which is 2.5% and is calculated on monthly basis, compounded on yearly basis

My Thoughts

So, instead taking up an education loan with commercial banks, you will getting the loan with CPF. All you just need to have sufficient savings in the Ordinary Account and Available Withdrawal Limits. But the funny thing is that you will have to repay your own or your parents' CPF Account when you are using your own money and with interest charged. I believe most parents would not charge their children any interest if they would like to borrow some money from them. So, why is CPF charging their members interest when they are using their OWN money?

Well, CPF might argue that the withdrawal will cause the member to 'lose out' since they are not able to earn the 2.5% fixed interest for the money taken out. This will result the member to have lesser savings in their accounts for retirement. Thus, it is logical to ask the student pay the loan amount plus all the accrued interest back. This is just to ensure that the CPF member has sufficient funds for retirement.

Well, the good thing about the CPF Education Scheme is that you do not need a guarantor in order to secure a loan from CPF. The interest rate charged by CPF is also lower than the rate charged by the banks.

5. Leaving The Country

EPF

Malaysian citizens or permanent residents who have renounced their citizenship and and planning to migrate to another country are allowed to withdraw all their savings in their EPF Accounts. Foreigners who have ceased employment and wish to return to their country of origin are also allowed to withdraw all their savings in the EPF accounts under this option.

CPF

Whereas, in Singapore, Singaporean citizens or permanent residents who have renounced their citizenship are ONLY allowed to withdraw their savings in full if they are about to leave or have left Singapore and West Malaysia permanently with no intention to return to either country for employment or residence.

Those who intend to reside in West Malaysia after they have renounced their citizenship are only allowed to withdraw if they are 55 years old and above, below 55 but above 50 years old and have not worked in Singapore for the last two years or physically or mentally incapacitated. The restriction does not apply if you are residing in the East Malaysia.

Conclusion

Below is a quick summary of the differences between the CPF and EPF systems.

EPF
CPF
Retirement
Upon reaching age 50
Can withdraw all or partial savings in Account 2

Upon reaching age 55
Can withdraw all savings in Account 1 and 2 or withdraw partial and transfer the balance to monthly payments


Upon reaching age 55
  • Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge to be met
  • Any excess above the Retirement Sum can be withdraw
  • Can withdraw up to $5,000 if cannot meet Full Retirement Sum or Basic Retirement Sum
  • Savings in Retirement Account will be transferred to CPF LIFE to provide monthly pay out to members upon reaching the eligibility pay out age at 65.
Upon reaching age 65
  • Receive monthly payout from CPF for as long as you live.
  • Amount of monthly payout is not fixed and depends on individual’s CPF Life Plan.
Housing
Can withdraw:
  • 10% of the property price for down payment
  • To reduce / fully settle outstanding housing loan
  • To pay for monthly housing loan instalments
Cannot withdraw for:
  • Renovation or repairs works for existing property
  • Purchase of third property
  • Purchase for non-residential purposes
  • Overseas property
  • An overdraft loan
When property is sold or disposed:
  • Not required to refund the savings to the EPF Account
  • Gets 100% of the sale proceeds minus any taxes and fees
Can withdraw:
  • Buy or build new or resale Housing and Development Board (HDB) flats and private residential properties in Singapore
  • To pay for purchase price of the property
  • To pay for monthly housing loan instalments
  • To pay legal and stamping fees
When property is sold or disposed:
  • To refund the principal CPF amount that was withdrawn and the accrued interest which the funds would earned to their CPF Account.
  • The pledged amount if the property is pledged to meet the Basic Retirement Sum

Healthcare
Can withdraw:
  • Medical expenses incurred for the treatment of critical illnesses
  • Buy medical aid equipment approved by EPF Board for yourself, spouse, children (including step children and legally adopted children), parents (including step parents), parents-in-laws and siblings.
If member becomes physically or mentally unfit to work:
  • Can withdraw all the savings
  • Receive one-time incapacitation benefit from EPF, amounting RM 5,000
Medisave:
  • To pay for medical care and hospitalisation expenses at public healthcare institutions, and approved private hospitals and medical institutions.
  • All CPF members will be covered by Medishield Life, a compulsory all-inclusive health insurance scheme that provides lifetime coverage.
Can withdraw if member is :
  • Physically or mentally unfit to work
  • Suffering from an terminal illnesses
  • Have a reduced lifespan
Members will receive:
  • Up to $5,000 or
  • Savings after setting aside a reduced Retirement Sum.
  • Monthly payout (minimum $450) from the Retirement Account
Education
Can withdraw:
  • To pay tuition fee (including one way airfare & lodging) at an approved Institute of  Higher Learning either locally or abroad
Can withdraw:
  • Only approved full time subsidized diploma/degree courses conducted locally at the approved institutions
  • Do not include foreign Diploma/degree courses conducted locally but awarded by foreign institutions
  • Have to repay the principal amount withdrawn plus any accrued interest in cash to the CPF Account, either by a lump sum or monthly payment, one year after graduation or termination of studies
Leaving The Country
Can withdraw all savings if:
  • Renounced citizenship
  • Ceased employment and plan to migrate or return to country of origin


Can withdraw all savings if:
  • Renounced citizenship
  • Plan to migrate with no intention to return for employment and residence
  • Cannot reside in West Malaysia (Only allowed if you are age 55 and above)

I would not say which is the better systems as there are flaws in both. However, it is apparent that both the CPF and EPF will not be enough for most people to live a comfortable life after retirement. Most people would have used a large part of their savings for housing. Thus, I would like to emphasize the importance of personal savings. It is never good enough to rely on your CPF or EPF savings for retirement.

EPF

Comparing to CPF, the EPF actually offers its members more flexibility to use their savings. The high dividend rate declared by EPF Board has helped members to enhance their retirement savings. It is good that the savings in the EPF Accounts can be fully withdrawn upon the reaching the retirement age of 55 since members are given the freedom to choose what they would like to do with their money. But sometimes, too much freedom may not a good thing because there are always possibilities that people might mismanage their finances and squander their savings in just a few years. The flexibility to withdraw will also mean that there will be lesser savings for retirement.

Unlike CPF, the EPF does not offer a medical saving or all-inclusive healthcare insurance scheme to its members. Although public healthcare in Malaysia is heavily subsidized and are made affordable to the Malaysian citizens and permanent residents, it is still important to have health insurance coverage. However, the thing is there are still a high percentage of people who do not have a medical insurance or enough insurance coverage. The inadequate healthcare insurance coverage is worrying because healthcare costs are usually the largest expenses after retirement.

CPF

The CPF system is good in the way that it provides lifelong monthly income to its members upon reaching the age of 65. Most CPF members would not have to worry about their life about retirement.

However, it seems like the government is treating Singaporeans like children who cannot manage their own finances well. The Singapore government should let Singaporeans have more freedom to choose what they would like rather than 'forcing' them to follow their rules.

CPF should allow greater flexibility for its members to use their savings and they should not be asked to pay back the accrued interest for using their own savings. Whatever amount the members withdraw from their accounts, they have to put them back eventually, plus any accrued interest that could be earned over the years. I understand the purpose of this is to make sure that the members does not lose out but it just does not make sense to me. Furthermore, even if the people pay this accrued interest back, most Singaporeans still do not have enough to retire.

The ever-increasing Retirement Sum is also very frustrating and I believe this is not going to stop. Instead, the government should consider increasing the CPF interest rate to help enhance the retirement savings of its members and perhaps, decreasing the interest rate charged for the savings withdrawn will help too.

Overall, it seems that the CPF system might have been 'intentionally' complicated to confuse its members. It will be good if the government can make it simpler and less complicated for its members to understand.

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