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Straits Times
05-07-2025
- Business
- Straits Times
CPF's central philosophy of self-reliance remains as pertinent as ever: SM Lee
Sign up now: Get ST's newsletters delivered to your inbox Senior Minister Lee Hsien Loong delivering a speech at the launch of the CPF 70th Anniversary Commemorative Book on July 5. SINGAPORE - The Central Provident Fund's (CPF) central philosophy of self-reliance remains as pertinent as ever, with an emphasis on each generation funding its own retirement needs based on individual savings. With this approach, Singapore avoids burdening younger generations with older generations' retirement needs, said Senior Minister Lee Hsien Loong on July 5 at the launch of the CPF 70th anniversary commemorative book. 'The ethos of fairness and personal responsibility fosters the right attitudes towards work, retirement and active ageing. 'This is in sharp contrast to the countries which have adopted tax-based 'Pay-As-You-Go' (PAYG) pension systems,' said SM Lee at the event held Our Tampines Hub, which Minister for Manpower, Dr Tan See Leng attended. In the PAYG systems, people have no incentive to retire later. SM Lee said it is politically very difficult even to broach the topic of pension reform. 'Because in these systems, retirement benefits are entitlements, paid for not by themselves, but by the next generation of taxpayers,' he added. SM Lee said while self-reliance works well for the majority of the population, Singapore recognises its limits for lower-income workers and those who have not been in the workforce, such as housewives. He said the Government complements members' own savings with targeted state support to those who need it more. 'We have built this into structural components of our social safety nets, such as the Workfare Income Supplement scheme, the Silver Support Scheme, and tax incentives to encourage voluntary CPF contributions from family members,' he said. SM Lee added that the Government also provides additional support through packages for the Pioneer, Merdeka and Majulah generations, as well as periodic CPF top-ups in the annual Budgets whenever the economy does well. 'This ensures a certain degree of intergenerational equity, so that the older generations too share the fruits of the nation's progress, which was only possible because of their earlier hard work and sacrifices. 'But the basic principle remains: you must try your best to provide for your own future needs. If that is still not enough, the Government will be there to help you,' he added. In his speech, SM Lee recounted how he had once met the late Lord Paul Myners, a British financial expert and the UK City Minister, who said with people living longer, there were only three ways for them to still have enough for retirement: save more while working, spend less every month, or work longer and retire later. SM Lee said: 'There is no other painless way out... All countries are confronted with this trilemma, and neither can Singapore escape these choices.' While it is possible to make balanced, practical and politically workable arrangements to ensure Singapore's retirement adequacy, SM Lee said each decision and change to the CPF system must be carefully thought through as it affects the lives and plans of millions of people. He said the schemes must be patiently and clearly explained to win support. 'In the end, for the whole CPF system to function and to endure, Singaporeans must have faith that the system is sound, and that the rules ultimately serve their best interests,' added SM Lee. Noting that public trust in the CPF is very high, SM Lee said many members voluntarily top up their own and their family members' CPF accounts with cash. 'Last year, (CPF) members made 875,000 such tops-ups, totalling nearly $5 billion. Even when members reach 65, a significant minority do not make any withdrawals. 'They just leave the money in the CPF's good hands,' he said. 'They are confident that their money is safe, and they know that they are getting more than a fair deal,' he said, adding that this trust took a long time to build and must never be taken for granted. He said while the CPF is in a generally good state now, the savings scheme will have to be adapted and updated to keep it fit-for-purpose for new generations of Singaporeans. This calls for some very tough choices, said Mr Lee. SM Lee, who was first elected as MP in 1984, said the CPF contribution rate had risen from 10 per cent, when the scheme was introduced in 1955 - five per cent each from the employee and employer - to 50 per cent by 1985. When Singapore was hit by the global recession in 1985, the first since independence, the Government decided to cut employer's contribution rates by 15 percentage points, which meant a pay cut for workers. Despite it being a painful decision, SM Lee said it was the only quick way to revive the economy. This process was repeated twice: in the Asian Financial Crisis in 1997 to 1998, and again in the early 2000s after the September 11 terrorist attacks. Currently, the CPF contribution rate stands at 37 per cent, which SM Lee said is about the right level for the long term. Changes were also made to the withdrawal age, he noted. At first, CPF members could withdraw all their savings once they reached 55. SM Lee said this was not unreasonable for an era when life expectancy was only around 60. But as life expectancies lengthened into 70s and 80s, those who did not carefully steward their retirement sum could easily exhaust their savings early. The Government proposed a Minimum Sum to be kept in members' CPF, which would spread out monthly payments over a period of years. Members could withdraw only the balance beyond this sum. The Minimum Sum is now known as the Retirement Sum. It has been raised regularly to keep pace with rising incomes and cost of living, noted SM Lee. Another major improvement to the CPF scheme is the Lifelong Income for the Elderly (CPF LIFE), which converted members' CPF savings into annuities. Turning to the retirement age, SM Lee said the Government encountered pushback over delayed CPF payouts when they moved for people to work longer. Currently, the bulk of CPF payouts start from 65, to align with the re-employment age. As retirement and re-employment ages continued to rise, the Government decided not to correspondingly delay the payouts further. The Basic, Full and Enhanced Retirement Sums, as well as the CPF LIFE scheme ensured a baseline of retirement adequacy for everyone, said SM Lee. 'It is a great triumph of our CPF system, and the way we have designed the schemes and the incentives – that as Singaporeans live longer, they want to work longer, and to accumulate more CPF savings for themselves, for as long as they can,' he added. SM Lee said the CPF story is, at its heart, a Singapore story - one of self-reliance, ingenuity, and constant adaptation. He added: 'Singapore is internationally recognised as having one of the best national retirement systems in the world. So we can be justly proud of the CPF scheme.'
Yahoo
05-06-2025
- Business
- Yahoo
Millions of Aussies missing out on $830 tax deduction: 'Nothing'
Soon everyone in Australia will be on the lookout for the same thing: deductions. The more you can deduct, the less you pay in tax and the larger the refund the ATO will send you. But you do not want to go overboard. Only some things are allowed to be deducted. And the taxman uses algorithms these days — if your deductions are out of line for someone in your job, the algorithm raises a red flag. So it is important to know what is and is not normal for someone in your position. This article uses the ATO 2 per cent sample file for 2021-22, a unique dataset to give real insight into what Aussies are deducting. This anonymised dataset of 2 per cent of Australia's taxpayers in that financial year reveals some astonishing things. Like there was one Australian who made $500,000 in tax deductions in that year. I do NOT recommend you do the same! On the other hand, as the next chart shows, 25 per cent of Aussie taxpayers made no tax deductions. Nothing? You can't find even one work-related receipt? The median is a deduction of a bit over $830. A tax deduction doesn't directly reduce your tax. What it does is reduce your taxable income. If your total income is $110,000 and you have $5,000 in tax deductions, your taxable income falls to $105,000. That's five grand you don't pay tax on, saving you 30 cents on every dollar, which adds up to $1,500. That's money you will get back from the ATO (if you paid PAYG throughout the year). Tax deductions are mostly for money spent on the costs of earning money. Example: you need a uniform for your work. That's not money you spent for fun, so you get to spend that money from untaxed income. RELATED ATO warning as Aussies follow growing trend to boost tax returns: 'Big difference' $4,400 ATO car tax deduction that most Aussies miss: 'Easy win' Centrelink $1,011 cash boost for Aussie farmers doing it tough: 'Get back on track' Here's a graph of all the spending on uniforms and safety gear for work. We see office workers are less likely to have deductions in this category, but trades workers often do. Likewise costs of driving to certain worksites. You spend that as part of your work so you don't have to use after-tax income. Instead you can claim it as a tax deduction. Note that I said worksites. If you have a regular workplace or two, there's no deduction for driving there! But if you do sales or inspections and you're constantly moving around, the deduction is allowed. Why? Not for any great reason but probably because it could encourage people to do gigantic super commutes and would be wide open for rorting. Here's a chart of all the spending on work related car expenses. Another way of getting a tax deduction is donating to charity. Most Aussies don't do that, as the next chart shows. Tax deductions, you'll notice, always involve you spending more money than you save in tax. If you spend $100 on work travel, and you subtract that from your income, the ATO gives you back only the tax saving. Even at the highest tax rate of 45 per cent that's only $45. Tax deductions are not a magic money machine! Where people do try to save extra money is by claiming money they would have spent anyway. For example, there's always someone trying to claim the fuel for their weekend away as work travel, and someone trying to claim their scuba diving gear as vital work safety equipment. That's against the rules. The ATO might not spot you doing it this year. But one day they might flag you, and then go through all your past tax returns in detail and make your life very unpleasant. Of course, moves like the petrol and scuba gear are relatively subtle. There's also stupid moves that will definitely get you caught. 'One of the most bizarre claims involved a taxpayer attempting to deduct the cost of their pet dog's Botox treatments,' said H&R Blocks director of Tax Communication, Mark Chapman. 'He argued it was necessary for the dog's appearance in a client-facing role!' Chapman noted that while expenses for working dogs — such as those used in farming or security — can be deductible, this particular claim was rejected by the ATO. My hot tip is to not worry too much about deductions — there's no point spending $100 just to save $45. And make sure you keep your receipts.
BBC News
10-02-2025
- BBC News
Metro passenger's warning over 'devious' scammers
A victim of a social media scam claiming to offer free public transport has said fraudsters tried to take money out of her account for three months. Patricia Daglish, from Gateshead, made a purchase from the fraudulent page, which promised six months of unlimited free travel in the Newcastle area with a £2 Pop Pay As You Go (PAYG) card. She said she thought it was "too good to be true", but initially believed the advert came from an official Tyne and Wear Metro Facebook page. Metro operator Nexus said it had reported the scam page - which gets taken down but then appears again with a new name - dozens of times. Facebook has been approached for a comment. "We have reported this to Meta numerous times. We're aware that other transport operators across in the UK have been targeted by what looks like the same scammers," Nexus said."Our customers are advised that this is a scam website and they should not engage with it. This is not connected in any way with Tyne and Wear Metro, or Nexus, and we do not endorse its content." Since September, there have been a number of warnings from Nexus about the fraudulent page, which features photos of Tyne and Wear Metro, buses and the Shields Daglish, 64, said there were also comments on it from people claiming they received the card and saying it was a great deal - but these were also fake. "Stupidly, I thought I'm going to try it," she said. 'Total, absolute scam' Days after the initial payment of £2.35, fraudsters tried to take out about £ Daglish said she used a Zing card for the initial payment and had put only £3 on scam payments failed because there was not enough money, and Ms Daglish cancelled the card - which was used in the euro currency for trips abroad - straight she said, despite the cancellation there were about nine attempts to take money out of the invalid card between the end of September and Christmas Day, for random sums ranging from about €9.99 to €49.99."I was very mad. I thought 'I cannot believe that I fell for something so stupid'," Ms Daglish said."I haven't seen the page for about two months now, but I can guarantee they are still doing it."It's a total, absolute scam and I don't know how the Metro can stop it, I don't know whose problem is it, but people must be getting money taken out of their bank accounts."Ms Daglish only lost the initial £2.35 but said she was worried of more scams in the future."I don't know who they are and how they get away with it. It's disgraceful," she said."They're very clever, they're very devious."Nexus advised customers to be vigilant "with any rogue social media page or website pretending to sell travel passes" and to report it to Nexus and Facebook.
