Over the parliament opening, 10 items have been mentioned on Prime Minister Lee Hsien Loong’s to do list. 3 items related to personal finance caught my eye. They are the Medishield Life, Improving CPF savings and CPF annuity schemes as well as keeping housing affordable for all and allowing more home monetization options.
These are all very important subjects which are close to the hearts of the Singaporeans. To add further to these items, here are some comments.
1. Ensure quality and affordable health care through new Medishield Life
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This is extremely important as there are many Singaporeans who are uneducated about the Integrated Medishield plans. As such, they are unprotected in the event of large hopsitalization bills. Even for those who do, many are unable to subscribe due to pre-existing conditions or old age. However, it is not really their fault as the Integrated Shield Plans were not available to them at a younger age!
So yes, we would like to see the changes as proposed, to allow coverage for all even those with pre-existing conditions and coverage for the very old. Insurance companies should not get to pick and choose since this is a government scheme.
2. Improve CPF savings and CPF Life annuity schemes for retirement
Much has been discussed about the CPF Minimum Sum. Despite all the unhappiness over rising CPF Minimum Sums, it remains a fact that the CPF Minimum Sum does not provide sufficient income for retirement. Another even worrisome issue is that some people may not even have enough CPF saved up to meet the Minimum Sum by retirement. This issue requires a delicate balancing act and whatever the outcome, they should communicate more effectively to the public.
3. Keep housing affordable for all and develop more options for Singaporeans to monetize their homes
Affordability of housing is another rather touchy subject. Again it is hard to satisfy everybody, young people who do not have homes generally want HDB to be more affordable. However, more established households with homes would like to see appreciation in their housing prices. Housing prices have definitely sky rocketed in the last few years due to the poor planning policies of the Ministry of National Development. Minister Khaw Boon Wan jumped to rectify this problem by jacking up supply and the effects have been apparent in the last 2 quarters.
Other than supply issues, HDB policies should also be re-examined as well. Should home owners be allowed to keep their HDB if they are upgrading to private? Since that is a clear case that they are already able to afford non-subsidized homes, why should they continue to be entitled to one? Rules surrounding the rental of whole HDB units should also be looked at. Since rental yields are so attractive for HDB prices, the market force will continue to push the price upwards.
Lastly, we covered the monetization of homes in Unlocking Value From HDB Flats For The Senior Citizens. They will probably look at reverse mortgage scheme in more detail. More innovative methods should also be studied to help out the typical “asset rich but cash poor” Singaporean household.
About the Author
Calvin Yeo, CFA, CFP is the Managing Director of Doctor Wealth Pte Ltd (www.drwealth.com), which is is revolutionizing the financial advisory industry by building an online platform to provide high quality and comprehensive financial advice.
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