• About Us
    • Fact Checking Policy
    • Ownership & funding information
    • Volunteer
  • Subscribe
  • Letter submission
    • Submissions Policy
  • Contact Us
The Online Citizen Asia
  • Opinion
    • Editorial
    • Commentaries
    • Letters
    • Comments
  • Current Affairs
    • Singapore
    • Malaysia
    • Indonesia
    • China
    • ASEAN
    • Asia
    • International
  • Finance
    • Economics
    • Labour
    • Property
    • Business
  • Community
    • Arts & Culture
    • Consumer Watch
    • NGO
    • Lifestyle
    • Travel
  • Politics
    • Civil Society
    • Parliament
    • Transport
    • Education
    • Environment
    • Health
    • Housing
  • Law & Order
    • Legislation
    • Court Cases
No Result
View All Result
  • Opinion
    • Editorial
    • Commentaries
    • Letters
    • Comments
  • Current Affairs
    • Singapore
    • Malaysia
    • Indonesia
    • China
    • ASEAN
    • Asia
    • International
  • Finance
    • Economics
    • Labour
    • Property
    • Business
  • Community
    • Arts & Culture
    • Consumer Watch
    • NGO
    • Lifestyle
    • Travel
  • Politics
    • Civil Society
    • Parliament
    • Transport
    • Education
    • Environment
    • Health
    • Housing
  • Law & Order
    • Legislation
    • Court Cases
No Result
View All Result
The Online Citizen Asia
No Result
View All Result

Budget 2012: An Analysis (Part 1)

by onlinecitizen
18/02/2012
in Current Affairs, Letters, Opinion
Reading Time: 4 mins read
0

~by: Leong Sze Hian~

 

23 times more surplus?

From the originally estimated Overall Budget Balance of $0.1 billion, we now expect a larger Overall Budget Surplus for FY2011 of about $2.3 billion. This is about 23 times more than what was originally projected. With this huge budget surplus what are we doing for ordinary Singaporeans, particularly the lower-income and elderly?

Less disposable income for older workers and self-employed?

Well, for starters, CPF contribution rates for those aged between 50 and 55, will be raised by 6 percentage points – 4 percentage points from the employer and 2 percentage points from the employee.

What this may mean is that some lower-income older workers may be even more cash-strapped, as their disposable cash income gets reduced by 2%.

“We will allocate more of the increased contribution rates to the Special Account (SA), with a smaller portion going to the Ordinary (OA) and Medisave (MA) accounts."

Which means that most of the increase in contributions may only be used if you fall ill, or reach the age 65 and beyond.

The Medisave contribution rates of self-employed persons aged 50 and above will also be raised from 9 to 9.5%. This will mean that a self-employed person will now have 0.5 per cent less disposable income.

Encourage lock-up more CPF?

A Silver Housing Bonus of $20,000 will be introduced whereby, the"Government will provide $15,000 in cash and $5,000 to the CPF accounts. To benefit from the scheme, the homeowners will use the proceeds from the sale of their previous home to top up their CPF savings up to the prevailing Minimum Sum. All amounts above the Minimum Sum can be withdrawn in cash", and the Government expects many to be able to do so.

The Finance Minister in unveiling Budget 2012, goes on to say, "Suppose we have a retiree couple who each had $10,000 set aside in their Retirement Accounts when they turned 55. They decide to move from a 3-room flat to a Studio Apartment. That gives them net proceeds of $250,000. The proceeds will go into their CPF LIFE. But because they will now exceed the Minimum Sum, they take out $8,000 in cash. Together with the $15,000 cash from the Silver Housing Bonus, they get $23,000 in total. Most important, they also get a much bigger income for life from CPF LIFE – an additional $1,200 per month."

What may have been overlooked  is that if you have to downgrade, it probably means that you may be quite cash-strapped. So, to get the $20,000 Silver Housing Bonus, you may in a sense be asked to sacrifice most if not all of your HDB flat sale cash proceeds and delay your CPF payout until age 65 as a monthly life annuity.

But, what if you need money before you reach 65? What if you need a lump sum for an emergency?

Since the CPF Life monthly annuity is fixed without indexing for inflation, what happens when the monthly annuity is not enough for you to survive because of inflation in the future?

And, how many couples will have the prevailing CPF Minimum Sum of $131,000 ($262,000 for a couple in the example), which increases every year?

We may also need to note the uncertainty of CPF Life annuity payouts, which is subject to the average yield of 10-year government bonds and the life expectancy assumptions.

MediShield premium increase

MediShield cover will be enhanced and extended from age 85 to 90. Since this will require an increase in premiums across the board, there will be a one-off Medisave top-up to all Singaporeans currently on MediShield.

But how long will this one-off Medisave top-up last to pay for the increased premiums? Will the increased premiums mean that there will be lesser disposable income for some Singaporeans?

Since it is a Medisave top-up, it may be consumed by rising medical costs, and not just for the purpose of paying the increased premiums.

GST increase – pay cash but get Medisave and U-Save back?

A new GST voucher will be given to help particularly lower-income and elderly Singaporeans, comprising three components – cash, Medisave top-up and U-Save.

So, you pay for your GST increase in cash, but you get the bulk of it back not in cash, but as Medisave top-ups which you can only use for medical purposes, and U-Save which helps you to pay for what has historically been generally increasing utility bills.


Key Budget 2012 initiatives HERE.

Budget 2012 in brief HERE.

 

 

For just US$7.50 a month, sign up as a subscriber on The Online Citizen Asia (and enjoy ads-free experience on our site) to support our mission to transform TOC into an alternative mainstream press.

Related Posts

US tells vaccinated people in high COVID risk areas to mask again
AFP

White House says US COVID emergency status to end 11 May

31/01/2023
Editorial

Excessively charging for an essential need, and calling it affordable because people still can pay for it?

31/01/2023
258 BTO flats and 168 resale flats returned to HDB due to non-fulfillment of Minimum Occupation Period
Politics

Desmond Lee files Ministerial Motion to affirm commitment on affordable public housing in Singapore

31/01/2023
Keppel O&M’s involvement in Brazil’s massive corruption scandal
Business

Keppel Offshore & Marine paid fines and damages of US$65 million to Brazilian authorities over corruption case

30/01/2023
Malaysian PM Anwar Ibrahim arrives in Singapore for one-day official visit
Malaysia

Malaysian PM Anwar Ibrahim arrives in Singapore for one-day official visit

30/01/2023
TikToker alleges being “thrown in airport jail” for going on a 10 hours day trip to Changi Airport
Comments

TikToker alleges being “thrown in airport jail” for going on a 10 hours day trip to Changi Airport

30/01/2023
Subscribe
Connect withD
Login
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of
Connect withD
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
0 Comments
Inline Feedbacks
View all comments

Latest posts

US tells vaccinated people in high COVID risk areas to mask again

White House says US COVID emergency status to end 11 May

31/01/2023

Excessively charging for an essential need, and calling it affordable because people still can pay for it?

31/01/2023
258 BTO flats and 168 resale flats returned to HDB due to non-fulfillment of Minimum Occupation Period

Desmond Lee files Ministerial Motion to affirm commitment on affordable public housing in Singapore

31/01/2023
Keppel O&M’s involvement in Brazil’s massive corruption scandal

Keppel Offshore & Marine paid fines and damages of US$65 million to Brazilian authorities over corruption case

30/01/2023
Malaysian PM Anwar Ibrahim arrives in Singapore for one-day official visit

Malaysian PM Anwar Ibrahim arrives in Singapore for one-day official visit

30/01/2023
TikToker alleges being “thrown in airport jail” for going on a 10 hours day trip to Changi Airport

TikToker alleges being “thrown in airport jail” for going on a 10 hours day trip to Changi Airport

30/01/2023
Workers’ Party Sengkang MPs receives a “mountain of rice pack” from public after donation call for needy families in CNY

Workers’ Party Sengkang MPs receives a “mountain of rice pack” from public after donation call for needy families in CNY

30/01/2023
Former Singaporean shares change of life in Australia with annual pay of S$80,000 as a plumber

Former Singaporean shares change of life in Australia with annual pay of S$80,000 as a plumber

30/01/2023

Trending posts

Former Singaporean shares change of life in Australia with annual pay of S$80,000 as a plumber

Former Singaporean shares change of life in Australia with annual pay of S$80,000 as a plumber

by Yee Loon
30/01/2023
15

...

Two Indian nationals paid about S$330 and S$730 respectively for forged certificates submitted in their S-Pass application

MOM found issuing EPs meant for foreign PMETs to PRC waitress and general worker

by Correspondent
26/01/2023
41

...

Earning only S$400 a month, delivery-rider turned hawker threw in the towel after two years of running a rojak stall

Earning only S$400 a month, delivery-rider turned hawker threw in the towel after two years of running a rojak stall

by Yee Loon
26/01/2023
24

...

Ho Ching breaks silence over Temasek’s write down of its US$275 million investment in FTX, says it “can afford to be contrarian”

US regulator questions VCs’ due diligence work prior to investing in FTX; Ho Ching says Temasek can afford to be contrarian

by The Online Citizen
24/01/2023
28

...

Indian rupee falls 60% since signing of CECA while Singapore becomes top investor in India

by Correspondent
25/01/2023
59

...

Temasek and GIC reportedly in talks with Adani Group accused of “brazen” market manipulation and accounting fraud

Temasek and GIC reportedly in talks with Adani Group accused of “brazen” market manipulation and accounting fraud

by The Online Citizen
26/01/2023
49

...

February 2012
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
272829  
« Jan   Mar »

The Online Citizen is a regional online publication based in Taiwan and formerly Singapore’s longest-running independent online media platform.

Navigation

  • Editorial
  • Commentaries
  • Opinion
  • Politics
  • Community

Support

  • Contact Us
  • Letter submission
  • Membership subscription

Follow Us

  • Facebook
  • Twitter
  • YouTube
  • Instagram
  • Fact Checking Policy
  • Privacy Policy

© 2022 - 2023 The Online Citizen Asia

No Result
View All Result
  • Opinion
    • Editorial
    • Commentaries
    • Comments
  • Current Affairs
    • Malaysia
    • Indonesia
    • China
    • ASEAN
    • Asia
    • International
  • Finance
    • Economics
    • Labour
    • Property
    • Business
  • Community
    • Civil Society
    • Arts & Culture
    • Consumer Watch
    • NGO
  • Politics
    • Parliament
    • Transport
    • Education
    • Environment
    • Health
    • Housing
  • Law & Order
    • Legislation
    • Court Cases
  • Lifestyle
    • Travel
  • Subscribers login

© 2022 - 2023 The Online Citizen Asia

wpDiscuz