My CPF – Who decide? You or me?

Yesterday evening, I was at Joo Koon MRT station taking my meal break. I met my colleague Dr Dos. He was relating his problem about servicing his monthly HDB flat instalments. He is called Dr Dos cuz he is an expert on the old DOS operating system. He could even assemble and service PCs. We always look for him if we have any problem with our PCs. He will gladly do it for a small fee. I’ve used his services on few oaccasions.

Dr Dos bought a 4-room A model resale flat at $260,000 in the year 1995. He took up a non-subsidised HDB loan of $180,000 over a period of 25 years. The interest rate is 2.6%. Every month, he is paying about $645 for his flat instalment.

Initially, he had no problem paying for the flat. He need not pay any cash for his flat. His total CPF contributions were sufficient to cover his monthly instalments for this flat. The problem only started when he hit 55 years old. He is now 56 years old. When he hit 55 years old, his total CPF contributions were reduced from 32.5% to 23.5%. That is where the headache started coming in.

CPF contribution rates for employers and employees.

Since his current combined CPF (Boss: 10.5% and Worker: 13% = 23.5%) is reduced by 9%, he now has problem servicing his monthly housing instalments. He has another 8 years to go before his flat is fully paid up. Now, he has to come out of his own pocket with cash of between $300 to $350 every month. His take-home pay is less than $2,000. His pay has been stagnant since year 2000. Meaning his pay still remains more or less the same for more than 10 years. On top of that, he has a son who is diagnosed with “congenital non-progression” case. It means that his son is an invalid totally dependent on a care-giver. His wife is the care-giver. He has three children.

Dr Dos is quite depressed. He is worried about his daily expenses. He told me that he had to pay for the utility bills, conservancy charges, his two other children’s education, household expenses etc. He barely could survive on his less than $2,000 take-home pay; not forgetting that his invalid son still needs constant medical attention. If he had to set aside $300 to $350 monthly to service his housing loans, he could hardly survive given the current high costs of living. Dr Dos is the sole bread winner in the family of five.

Dr Dos thought deeply over his problem. He thought that he had a solution to his current financial problem. He proposed to the relevant authority that he would like to use his retirement funds in his special account to offset the housing loan balance which is about $56,000. He has about $61,000 in his special account. CPF board refused to entertain his request. CPF board says that his special account is meant for his retirement and cannot be touched. Only ordinary account could be used to pay for housing loan.

Dr Dos says that if he were to use his $61,000 special account to pay off his remaining housing loan of $56,000, his current financial burden would be much lessen. After all, he still has his 4-room A model HDB flat fully paid up. It is still an asset where he could sell, downgrade or rent out two rooms if he really can’t work any more. He plans to leave this flat to his invalid son. CPF board just refused to listen to him. CPF board says that rules are rules, cannot be changed. HDB also says the same thing. But rules are made by humans and rules surely can be changed right? Dr Dos says that maybe if he votes for the opposition, the rules will change since this government won’t want to change the rules. It is his money. He is free to use his money in whatever way he deems appropriate! Who are you to tell me how am I going to use or spend my CPF money? I am not asking for free handouts, so says Dr Dos.

The immediate serious problem is that he could hardly survive on his meagre take-home pay of below $2,000 after paying more than $300 cash to service his housing loan. If he cannot survive the present circumstances, what future retirement fund the government is talking about? They are just forcing me up the wall, says Dr Dos. Sometimes, these people just don’t understand the pain and the suffering we are going through according to Dr Dos. What about those who worked but never had CPF in their life at all? Those self-employed or never declare CPF at all? Dr Dos says those people also got no CPF for their retirement in their special account.

In other words, Dr Dos is asset rich on paper but cash poor. The government keeps his hard-earned money. He has got more than $61,000 inside his CPF special account but cannot use it to pay off his flat at all! Really langgar! He has to struggle to top up every month with more than $300 to pay for his flat when he can easily pay off the balance of his flat with his locked CPF. What a joke? Dr Dos says that this government will try all ways and means to lock away your CPF money till the day you die!

When I heard about this, I felt quite sad. There are many Singaporeans including both my parents who didn’t have CPF when they were working in their prime yet they could live till past 70 years old. My mother was a housewife all her life. My father was a lorry driver with so little CPF. Both still manage to survive and still working without any retirement funds in their special accounts. Why can’t CPF board look into special cases such as Dr Dos to alleviate his current pain and suffering? Does Dr Dos need to change the government (so that rules can be changed) in order for him to use his own CPF money in the most appropriate manner he deems fit? It is citizens like Dr Dos who is in dire straits due to the inflexibility of this government that the latter is losing support from the heartlanders. Will Dr Dos support this government? The answer is quite obvious. Need I say more?

PS: Dr Dos passed away suddenly on 22nd Sep 2015. May he rest in peace.