Please be more transparent and tell Dan about the possibility of the fixed-price funds converting into variable-priced funds, and of the taxation matters pertaining to the funds that you have mentioned.

Secondly, I don't think the EPF can keep-up the above 6% dividend consistently year-after-year.

Whether something will happen or not is of an individual's interpretation. Transparency comes from letting another person know of all things and leaving it up to the individual to decide on what to do. That is transparency. And transparency has nothing to do with what will happen in future.

I say it is fortunate that the EPF is given the mandate to invest overseas. Sure, investing overseas comes with its risks, but do not forget about diversification. I was told personally by the CS at EPF that they profitted from forex this year. Isn't this good news ?

I am sure whoever is reading this, including Danmooncake, would realize and appreciate the idea of transparency and of my writings here.

I guessed at the same when you were constructing the above post, I was writing-up my reply for Ramjade. Great,... you confirmed my points in my reply to Ramjade.

I am in agreement with you on your points. What that is making me nervous is that they did not specify clearly what the treatment is for 'leftovers' in our EPF account when there is no further contribution after 55.

The SGD is strong, making imported goods coming in cheaper. Hence, inflation is controlled. The Monetary Authority of Sgp controls inflation and GDP by adjusting their exchange rate. Their exchange rate is denominated by an index called the S$NEER.

When economic activity slows down, the MAS has to slow down the currency appreciation pace of their SGD, hopefully this will stimulate the economy to run faster.

The days of low interest rate in Sgp is numbered. If you look at the reading of the Sgp Swap Offer Rate (SOR) and the Sgp Interbank Overnight Rate (SIBOR), they have been incaresing for the last few months.

I reckoned if the confidence builds up again, I, for one, would not hesitate to add into the EPF. Perhaps we can keep adding-up slowly as the years go by in order to reap more dividends. After the years have gone by, we cannot add anymore,.......unless we don't mind for the entire amount to be locked-up till 60.

Anyway, all is just for discussion sake, we still have many years to go before 55. The EPF may change the EPF Acts again in one or two years from now.

I think I'd stay on the sidelines a little bit more before ploughing in more of my bullets into the EPF,.... yeah,.. think I'll focus into my overseas investment bit more first,... the EPF is not going to run away, at least not that soon.

Tks Dan,... I understand fully what you have just said,... which is why I am considering the EPF very closely. Even if I am no longer staying in Msia, I can always leave my funds inside the EPF if it is safe enough, and if the yield stays close to 6%.

I have not counted all of them, but I monitor my SG REITs and counters closely,... For my current holdings, the annual yield is running at 7.9922%.

Tks Will,...Yeah,...I know,... put wherever to maximise gain... But I too practise country allocation, or geography diversification. So,... I must not miss out on Msia, must always put a small portion into this place.

Tks Nexona,...I know and I am putting more focus and time into the overseas stuff now. However, I still am forcing myself to look back here every now and then for diversification purposes.

Assumptions on assumptions :-

1) And assuming too that the EPF is still able to give back the full amount when Dan intends to pull-out.

2) And assuming too that the EPF is still able to give out 6% or higher throughout the years when Dan's funds are still inside.

Thank you, Cherroy,... your writing strengthens the conviction that my thinking and my actions are on the right track.

That's fine,... more opinions, more deliberations, more check-and-balance, better decisions made...

Not really, profits can be reported in the form of :-

1) gain from higher revaluation of assets compared to the previous year.
2) accrued profits which have not been collected yet.

For the above two types of reported profits, there is NO actual cashflow that benefits us, the investors. Fir fixed income investors like us, for me, I am more keen to study the Cashflow Statement.

The Cashflow Statement will tell me how much cash that the fund has to pay me my portion of the dividends.

Replies in red above.

Changes to Sgp's CPF system. Compare with Msia's EPF system :-

...as announced at the Singapore Budget both last year and this year, there will be several changes to the way the CPF works. Most of these changes affect those who are at least 50 years old in 2016. Here’s a quick summary of all of the changes and what this means for your CPF account and your take home pay.

1. CPF Contribution Rate increases for those aged between 50 to 65 years old

Currently, for those of us 50 years old and below, CPF contribution rate is 37% of our salary (20% of your own salary + 17% employer contribution). This amount gets lower as we get older. From 1 Jan 2016, this contribution rate is extended to those aged 55 and below. Here are the new contribution rates and what they changed from:

Employee’s Age (Years) Contribution Rate by Employer (% of wage) Contribution Rate by Employee (% of wage) Total (% of wage)
50 and below 17 (no change) 20 (no change) 37 (no change)
Above 50 to 55 17 (from 16) 20 (from 19) 37 (from 35)
Above 55 to 60 13 (from 12) 13 (no change) 26 (from 25)
Above 60 to 65 9 (from 8.5) 7.5 (no change) 16.5 (from 16)
Above 65 7.5 (no change) 5 (no change) 12.5 (no change)

Let’s look at the example of Mr Teo, who turns 52 in 2016. He earns $5,000 a month. In 2015, his total CPF contribution rate (employee and employer) would have been 35% of his wages, or $1,750 each month. In 2016, assuming he still earns the same salary, his CPF contribution rate is now 37% of his wages, or $1,850 each month. That’s an extra $100 going in to Mr Teo’s CPF account each month. At the same time, from 2016, Mr Teo’s take home pay is also $50 less each month.

2. Ordinary Wage Ceiling will be increased to $6,000

Currently, the CPF wage ceiling is $5,000. That means that both you and your employer will only need to make CPF contributions for the first $5,000 in salary. From 1 Jan 2016, that has been raised to $6,000. We’ve already talked about what raising the CPF salary ceiling will mean for you, but in summary, that means from 1 Jan 2016, if you’re 55 years old or younger and earning $6,000 or more each month, your take home pay will now be $200 less than before. In addition, your employer now has to contribute up to $170 more each month.

Let’s look at the example of Ms Hazirah, who turns 54 in 2016. She earns $6,000 a month. In 2015, her total CPF contribution rate (employee and employer) would have been 35% of $5,000 (the 2015 wage ceiling), or $1,750 each month. In 2016, assuming she still earns the same salary, her CPF contribution rate is now 37% of $6,000 (the 2016 wage ceiling), or $2,100 each month.

That’s an extra $350 going in to Ms Hazirah’s CPF account each month. Of course, from 2016, Ms Hazirah’s take home pay is also $250 less each month, due to the changes in contribution rate and wage ceiling.

3. Higher CPF interest rates for those aged 55 and above

If you’re 55 years and above in 2016, you can expect to earn up to 6% interest on your CPF balances. But note that it’s only for the first $30,000 of your CPF. The next $30,000 will earn the same 5% interest rate that everyone else is enjoying on their first $60,000. Finally, any CPF amount above $60,000 will only earn the base 4% interest rate, the standard interest rate.

The good news is that you’ll now have more flexibility to top up your loved one’s CPF accounts in order to enjoy the higher interest rate. That means, if you have excess CPF above the Basic Retirement Sum, and your immediate family doesn’t, you can top up their CPF accounts so that they can earn up to 6% interest.

That way you don’t need to tell them you love them. They’ll know.

Wow… these changes seem really complicated…

Put simply, the government is trying to help you save for your retirement, especially for those of you aged 50 and above. I find their lack of faith disturbing.

To do this, they’re increasing the contribution rates, which means your employer needs to pay more, and your take home pay may decrease if you’re between 50 and 55 years old. They’re also raising the wage ceiling, which means your employer needs to pay more, and your take home pay WILL decrease, if you’re earning more than $5,000. Finally, they’re helping to grow your CPF by increasing the interest rates for the first $60,000 in your account, with an additional 1% if you’re above 55. ...

That's right,... conditions are attached to retirement, hence can still withdraw at the required age if fulfilled said conditions.

Whose scheme is better, huh ? Our EPF's or my CPF's ? Or each has its own merits ?

Thank you, Ramjade and WongMK,....

Well, if you are not of withdrawal age yet, it is good if the yield is high, because you will get to accumulate more Ringgit as you grow older. The lower the yield, the less will drop into uor retirement funds.

Secondly, those who are within withdrawal age now can always withdraw the dividend only when it is given out, and spend that amount. The pattern is something like the ASX fixed-priced funds, where at year-end, many people withdraw only the divdiends for usage, but left the principal untouched to earn dividends again for next year.

Contributors will only be worried about the yield if they still have funds inside the EPF, not for those who have withdrawn all, or for those who intend to withdraw all.

It's not easy because we think it's not easy. But when the EPF yield drops, and our RM drops in purchasing power, then we can see that the SGX is ready for buy-ups again. It's all in the mind,... we have had it easy for many years, when the Ringgit had its purchasing power and normal inflation in the urban areas were manageable.

The new normal is now no more the above with the Ringgit.

Even if the Ringgit manages to regain some strength against the USD, the prices of goods and services in the country will not drop back after such prices have gone up.