CPF Part 1

CPF (Central Provident Fund) is the basic theory of economic. It is about saving a part of your earning. It is also about compulsive saving. A lifestyle habit, to be thrifty and frugality cultivated from young and introduced from working life.

CPF is a traditional colonial rule inherited from the British. It is a social safety net for old age and retirement. Over time, the Singapore government improvised it and changed the rules to allow CPF savings as part of long term investment giving bigger and more secure return. This was the reason CPF savings can be used to buy public housing (HDB flat) and private properties. In recent years, it also allowed to use CPF savings to invest in government approved (blue chips) bonds, stocks and shares to earn higher return.

Lately, the CPF Board allowed elderly or retired Singaporeans to deposit part of their total CPF savings to CPF Life to earn higher interest and to be withdrawn on monthly payment for a life time just like the annuity scheme. In other words, one receives a sum of money to support their daily expenses and livelihood.

I have benefitted from this policy of CPF scheme. It allows me to buy my first HDB flat from my CPF savings. Although my basic salary was low when I started working and monthly contribution to the CPF was not much, I do not have to pay cash and incur financial burden in repaying the monthly instalment. With low purchased price for a 5-room point block flat at the time, I was able to repay the mortgage loan in a short few years. The employer's CPF share of contributions played a crucial part in both savings and instalment repayment scheme. I later sold the HDB 5 room flat and invested the total sales proceeds in a private property.

The CPF scheme has provided me with a permanent home but also gives me a good return on my assets. Both the HDB flat and private property bought appreciated in value and gave me a good return on my investment. All these were possible with my savings in the CPF when I started working.

When I started my own business, I continue to contribute to the CPF under self- employment. It allowed me to accumulate my CPF savings and I was able to buy and re-invest in other properties. It also allows my savings to grow and earn good return in term of interest and appreciated values in assets.