Are you ready for the 'CPF Reform'?

A SHORT EXTRACT OF THE TRANSCRIPT OF PRIME MINISTER LEE HSIEN LOONG’S
NATIONAL DAY RALLY ENGLISH SPEECH ON 19 AUGUST 2007
AT NUS UNIVERSITY CULTURAL CENTRE

So, that’s the first major change to the CPF, higher interest rate, subject to a cap and rules. The second question is how to make CPF savings last for your life expectancy, which means up to 80-years-old. Today, we already have some rules. At 55, you set aside the Minimum Sum, then you can take out the rest. Minimum Sum is going up. The rules for setting aside are getting tighter, but basically, you must aside the Minimum Sum. We settled this in the last round of CPF changes. So, my first message is – no change to the rules at 55 to what has already been settled. That remains. It was settled in 2003 and will continue. But right now, after you have put aside your Minimum Sum and put it into your Retirement Account, you start to draw down your Minimum Sum when you are 62-years-old. Monthly payments are supposed to last 20 years, but actually if you don’t have enough CPF, it may not last 20 years. So, 62 plus 20 is 82. So, 62-years-old is when you start to draw your Minimum Sum and that is called the Draw-Down Age for the minimum sum.

But is 62 the right age to start drawing down? I told you what Madam Ng said to me just now and her problem. She says, “What happens when my CPF runs out?” Even with a higher interest rate which we are paying, if we start drawing down the CPF too early, the money is going to run out too soon. If we start later, the Minimum Sum will last longer. You may think that 62 to 82 is long enough, but many people are going to live beyond 82. So, if we can push off the draw-down by one year at the front end, then that one year’s money which is saved and which stays in your CPF and accumulates interest, including plus one per cent for 20 years, by the time you reach the tail end of your 20 years, that will have multiplied and doubled. So, you’ll have two more years’ worth at the tail in order to last you longer. So, we have to make some adjustment to the draw down age because 82, on average, you may live that, but many will live beyond and I think especially many women will live beyond because the women’s life expectancy will be longer than the men’s life expectancy.

We are legislating for re-employment until 65. We are pushing hard for people to work into their 60s until 65. Therefore, Draw-Down Age should also go to 65 because you are working, you work till 65, when you stop working, probably at 65, then you start drawing down. If you can continue working beyond 65, well, then you get both. So, we will raise this Draw-Down Age from 62 to 65, but not in one shot – progressively over a number of years. In 2012, the Re-Employment Act will kick in and we will start to raise the Draw-Down Age in 2012 from 62 to 63 and then, every two years, we will push it up another one so it will reach 65 by 2018. So, that means if the Draw-Down Age is 65 and you draw it down over 20 years, 65 plus 20 means it lasts till you are 85-years-old, which I think is better.

How will these impact different age groups? First of all, those who are nearly 62-years-old and going to draw either tomorrow or next year, you are okay, we are not disturbing you. You will have made your plans, you may want to go on holiday, go ahead. But those who are slightly younger, that means 57-years-old and below, we will disrupt your plans just a little bit by one year. Those who are not approaching 62-years-old yet, that means 53 and below, I think you can take the full adjustment, we will push your Draw-Down Age up to 65. You have got nearly ten years to continue re-skilling and for us to change the laws, and make sure that when you get to that age it will be easier for you to find a job and work till 65. The press will carry the table tomorrow. I will not show you the table, but that is the gist of it.

I have explained this at length because I know that this is not so popular. As Straits Times did a survey last week abut CPF, they asked people, “Do you want higher CPF returns?” “Yes, CPF returns are too low”. “Do you want to work longer?” “Yes, we want to work longer”. “Are you worried about savings for retirement?” “Yes, I am very worried I may not have enough”. “So, how about delaying the Draw-Down Age?” Huge numbers said, “No!” They know the problem, but they want to draw down now. But we have no choice. People are living longer, we have to work longer and we have got to start drawing on our reserves later. Therefore, we have to start moving now; not move all the way now, but start moving now and we will get there in good time.

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In my opinion, people who are financially prepared for old age will say NO to the idea of working longer. Can you imagine the condition of your body at age 60, 62 or 65? Is it going to be more energetic or slow in response? I'm sure you know the answer. Unfortunately, people who didn't plan well ahead, have to reluctantly say, "YES, we want to work longer". Why? The truth is they didn't maximise their full financial potential. Perhaps they have bought too many liabilities. As a result, they didn't have enough money to last them through old age.

Singapore Government is very efficient and always plan ahead for the people. This is a blessing. So the question now is, are you going to leave all the planning to the government? Should you also make an effort to plan for yourself? Remember, it's YOUR LIFE! If you don't take good care of yourself, don't expect others will.

Ask quality questions to get quality answers. So ask yourself these questions:

Are you prepared to work with much lower pay, when you hit 50s or 60s?

Can you guarantee that you will be healthy enough to work when you are in 50s or 60s?

Do you consider yourself successful now? Is that the best you can do or earn?

Remember, success is what you become.

If that is the best you can do or earn, you are successful. Well done!

If you have not realise your true financial potential, you must not be comfortable... you must not have the attitude of 'wait-and-see'.

Prepare to work harder for your financial success so that you will be more comfortable in later life.

The Decline of Middle-Income Earner

Below is a report published on Tuesday, May 2, 2006 by the Rocky Mountain News (Colorado)

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Since the election of Ronald Reagan the wealth of the nation has more than doubled. Per capita, Americans are now 70 percent richer than they were in 1979. Where have these several trillion dollars of new affluence gone?

For poor people, the answer is clear: Essentially none of this wealth has come their way. Adjusted for inflation, the tenth percentile of after-tax family income is almost exactly the same today as it was in 1979 - about $13,500 (note this means that 30 million Americans live on even less). For the middle class, the situation is only slightly different. In 1979, the average middle-class family had an after-tax income of $38,000; today that figure is about $43,700, meaning that over the past quarter-century the average American family has seen its income rise by about $200 per year.

For our wealthiest citizens, by contrast, 25 years of Republican rule have made these very much the best of times. During this period, the average after-tax income of the top 1 percent of Americans has risen an astonishing 111.3 percent, from $298,900 to $631,700 per year (again, all these figures are adjusted for inflation).

In other words, in absolute terms the poor are just as poor as they were a generation ago, while a middle-class family's annual share of the last quarter-century's worth of economic growth allows it to buy one extra tank of gas every three months. Meanwhile, in relative terms, both groups are far poorer: indeed, compared to the rich, most Americans are now only half as well-off as they were during the Carter presidency.

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As you know, US is the world's largest economy and many Asian economies rely heavily on US. What's the message that this report is telling us? If you ignore the message, you or your future generations will regret heavily.

So to say, the rich gets richer and the poor gets poorer. The spending power of the rich will affect the middle class and the poor. The average American middle class family has income rise of $200 per year! That's pathetic. We all know that living expenses keep on increasing. When you start a family, you have more expenses. When you age, your medical bill goes up. The cost of daily neccessities increase with time. So does transportation cost!

What's going to happen to the middle-class earners? We call this phenomenon, the thining of middle-income earner. In the future, there will be only two classes: Rich & Poor

This is happening and I cajole you not to remain ignorant. Take responsibility to improve your financial potential. The best way to help the poor is not to be one of them.

Pay It Forward, Help the Sick and Needy Children

When someone has done something good to you, most of us want to return them a favour. However, most people don’t need the favour in return. So instead of returning a favour, those who have benefitted are asked to do something good to someone else instead.

The term originates from the movie, “Pay It Forward”. If you get an opportunity to watch the movie you will be touched by the heart-warming story it presents.

As one SkyQuestCom family around the world, we would like to join together to "Pay It Forward" by helping those who cannot help themselves. We have chosen a home for kids with HIV/AIDS in Chennai, India. The name of the home is "Shelter: Hope for Every One".

About Shelter
Shelter's aim is to provide love, laughter, and life to HIV-positive children.
Love - because most of these children have lost their parents and are longing for love.
Laughter - to take them through the difficulties of their situation.
Life - to give them a quality life for as long as they live with proper care, food, clothing and other needs.

There are HIV-positive kids and 4 HIV-positive women as staff in the home. 90% of the children have lost both parents. A couple more have a single parent who is not in a position to take care of them because they themselves are in the back end of life.

Help the Children
Here are just a couple of examples of the different kinds of children with various degrees of problems and issues the shelter helps:

Suraj, 10 years old, has lost both of his parents and four of his siblings - he lost one elder sister, his two small brothers and one younger sister. Imagine the emotional trauma and difficulty this child has to face in seeing six of his family members dying in front of him. He came into the home on his last days, but with antiviral drugs, he is now stable.

Sita, a 7 year old girl, has multiple sicknesses in her brain. These cause convulsions or ticks. When she has an attack, froth will come from her mouth and she faints and needs to be attended to within 1 hour of the attack.

Senthil, an 8 year old boy, has skin infections from his head to his toes with open wounds all over his body. His mother wished he would die because she could not handle his suffering. She literally said "I am dropping you here and would be happy if you died." He is now doing well. He is smiling, he is going to school, and is one of the bubbly children they have in the home.

No financial support to help any more children
The shelter has had to turn down kids who need help because they do not have the financial support to take on any more children.

They do not currently have any support from the corporate sector, or government sector or international funding. The shelter is being run on an individual basis, but is a registered trust in India. Currently the shelter is only supported by friends, relatives and a few local individuals.

Finances are an added stress to the already present stress of taking care of these very sick and needy children.

They have difficulty finding proper schools for these children. If the kids have a fall or get sick, the shelter gets desperate calls from the school for them to come and take them. Emergency help from hospitals is difficult. Even simple issues like getting a haircut are difficult because they have boils all over their heads and it can stink quite badly. Barbers are not willing to come in and do a simple haircut.

There are also food issues; as some children have different dietary requirements and cannot eat the same things. Feeding them in front of others can be difficult because they may want certain foods that they cannot eat.

These kids go through a lot of emotional trauma in their lives and often don't know how to express themselves.

With Heart and Love

Taking pills of MOTIVATION to stay SELF-MOTIVATED

Dear Reader, do you have challenges with a lack of motivation? The very meaning of the word motivation means “to move”. Defined as the internal factor that induces behavior and gives a new direction, motivation is integral to everyone’s life. Motivation theory described the various processes that talk about the reasons (why, how, what etc) that affect an induce behavior patterns in all of us to feel motivated to do something.

One factor which plays a major role in determining the success of any individual is motivation. Motivation is a positive emotion which drives human beings for achieving their goals and provides them with the necessary drive to achieve what they desire. Now the question arises about how to maintain our motivation level at all time? Read on to discover how.

What are you striving for? Do you have goals in life? - There can be several things you might be striving for in terms of material aspect. But the question in hand is, are you striving for perfection? If this is the case then you would most probably end up demoralizing yourself as there is no such thing as perfection. Each new day in your life is a new discovery therefore you should strive for excellence and not perfection to stay motivated.

Have a deadline - This is the biggest form of inspiration and motivation for any human being. Goals are dreams with deadlines. Having a specified deadline keeps you charged up as closer the dead line comes the harder you need to work therefore it keeps you on your toes. It also keeps your motivation level at high.

Take massive actions - The main secret to motivation is doing what you truly want to do from within not what someone else wants or expects you to do. Therefore do not live according to the society of the people around you and be your own master. Therefore you do not need an external push to get your engine going, you have all the energy within you good enough to help you achieve your goal with ease. That is what self-motivation is all about.

Let your fears drive you - It's good to have fears at times as they drive you towards success. Usually, pain factors are more useful in helping you to stay focus on your goals and maintain your motivation state. Let your fear be a driving force along with a specified deadline. Make it like a real battle where it's a do or die situation. Think about how awful your life would be if you do not achieve what you truly desire.

Learn from famous failures - There are several famous people right now who used to be big failures at first. Learn from such great people and model their mindsets. Get into their minds and learn how they managed to bypass the turbulent times to become what they are right now. Why do they have such great motivation? Overcoming adverse situations and make an opportunity out of diversity is the best motivating factor for any human being.

Equip Yourself To Succeed

If you have paid attention to a a goldfish in a bowl, you may have noticed that it just swims round and round the bowl and never gets anywhere. Many people are like goldfish. Busy as they might seem to be, they drift and wander through life without plan or purpose.

Life is never intended to be a game of chance. You must decide what you want out of life. The choice is yours. Think of a successful person that you want to emulate. Make it your life goal, in line with your natural aptitude and talent.

Besides academic qualifications, there are some other qualities essential to attaining success in whatever you do:

Aptitude
The selection of the right profession in life has become quite complicated. Your aptitude is your natural tendency or acquired inclination; both capacity and propensity for a certain course. This is one of the secrets in selecting your life goal. Make sure you choose a career that you are naturally suited for, or in a field that interests you.

Personality
Every person has a personality that is all his own, with physical, mental, social and emotional characteristics that are unique to him. A positive personality plays a vital part in building a successful career, as people like dealing with somebody who is optimistic, cheerful and confident. Analysing your personality profile helps you to understand yourself and how you relate to your work environment. Are you an early bird or a night owl? Are you outgoing or an introvert? Choose a career in which your personality can shine through. If you are an introvert, for instance, a career in sales may not be suited to your personality. You would be better off doing something that does not require dealing with many people.

Intelligence
There are multiple, inter-disciplinary forms of intelligence, such as linquistic intelligence (displayed by poets), quantitative-logical intelligence (scientists), musical intelligence (composers), spatial intelligence (architects and sculptors), bodily-kinesthetic intelligence (dancers and athletics), interpersonal intelligence (entrepreneurs and trainers), naturalist intelligence (botanists) and existential intelligence (leaders). All individuals have these intelligences, but differ from one another in their strengths and profiles. Psychologists say that the average person uses only 2 to 5 per cent of his mind's potential. Even the best use only up to 10 per cent. Our brain is like a muscle, use if often to develop it. Make sure that what you do challenges your abilities, and forces you to work to, or even exceed, your potential.

Integrity
Integrity is soundness of moral principles and character. With integrity, you foster closer relationship and trust among those who work with you, especially those you manage. Colleagues will look upon you with respect as well.

Besides the above qualities, you should also possess qualities such as humility, self-motivation, conscientiousness, postitive attitude, self-confidence, resilience, perseverance, patience, foresight, vision, kindness and creativity. Lifelong learning should form part of your daily routine so as to be knowledgeable and to stay ahead of others. Life is full of trials and tribulations. It is not what happens to you, rather it is what you do about your life that matters. Learn life lessons the wise and cost-effective way rather than the hard way.

Every person is good at something. Be a master of your own destiny. Pursue your passion, uncover and develop your natural hidden talent to your fullest potential and bring out the best that is within you.