2016 changes to the CPF and SRS for a better retirement.

I was reading the papers on changes to the CPF and SRS which took effect on 1 Jan 2016 and thought to myself that working Singaporeans are a lucky bunch.

If you are a middle income worker, rejoice because mandatory CPF contributions by both employer and employee per month are now based on a higher salary ceiling of $6,000 a month instead of $5,000 a month. Your CPF savings will grow at a faster clip.

If you are a worker between 50 to 65 in age, your employer will now contribute an additional 0.5% to 1% based on your monthly wage into your Special Account (SA). 

If you are 55 years old or older, you will also receive an additional 1% interest on your first $30,000 in CPF savings which means you get 6% interest per annum, risk free!

It would be a good idea for younger readers to communicate this change to their parents. If at all possible, consider topping up your parents' CPF SA or MA if they do not have that first $30,000 in their accounts. 

We really should not pass on a 6% annual return from a AAA rated sovereign bond!

A comfortable retirement need not be a dream.

As for the SRS, the ceiling is raised to $15,300 for Singaporeans and PRs. It is $35,700 for foreigners. So, if you pay plenty of taxes each year, this is another tool to help pay less in income tax.

I think it is important to count our blessings and not keep complaining. Probably, there is more than a handful of people who think that the changes are not good enough. Fion Lau, 41, said that the changes do not go far to provide retirement adequacy.

Well, I would like to remind Fion that the CPF is, like I always say, a cornerstone in our retirement adequacy strategy. It is not the entire foundation.

Related posts:
1. SRS: A brief analysis.
2. Retiring before 60 is not a dream.
3. Retirement: Buy a AAA rated bond.

Filial son working hard towards financial security in 2016.

Young people often feel invincible. I am not saying that it is a bad thing but it is important to realise that we are not really invincible and that life will throw problems our way.

So, what to do?

Have measures in place so that the feeling of invincibility has some genuine substance beneath it. Then, the only thing that could destroy us would be Kryptonite...

Sorry, couldn't resist that.

Here is a recent conversation with a very sensible young person:

Hi AK, 

I'm 26 this year. been working 2 years plus all due to due to NS. 

I have been reading your blog for one whole week and i realise you share alot of impt details.

I start to feel very stress when i login to both my parents singpass to check their cpf. both of them are self employed. my dad 58yo, oa and sa is less than 1 k. his ma is have 40k. my mum 56yo, oa,sa,ma all less than 500. they always claim that they have insurance. but after checking from moh site, they doesnt have any H&S insurance at all.

As i earn only 2300 each month. for myself i already brought dps and h&s already. this week i have been meeting AIA, Prud and going to meet NTUC agent next week. i read alot of advise from your blog.

I have transfer all my oa to sa and using excel to calculate how much i gain from SA in the next 25 years. For now, i doesnt have much savings, but i plan to pay insurance for my parents using my MA and giro as well as i plan to apply UOB one card or OCBC frank card to gain more interest. (tips in your blog) however their age is expensive to buy insurance now. but i will check out the enhance income shield for them and buy the maximum age so at least the price is maintain rather than increase if they need to renew.

I just paid 20k for my part time degree. my saving only have 2k now. i did my planning on expense and saving. once i settle my parents H&S and term plan. I aim to save up 5k and start doing s-reits first, then follow by stock to get 4-6% yield each year. but i will also ensure i do my Emergency fund to least me at least 6 mth first.

I am going to finish my studies in jun 16 and i plan to change job, hope to pinch a better pay. I also learn from you, i do freelance designer to earn extra money, recontact iphone and sell yearly to gain extra cash to pay my mobile bills and expense,

I hope you can continue to share more knowledge in stocks and reits. i will spend time to read TA and FA first, and save up money first. Meanwhile waiting for MR market to give us the opportunity to enter a good price when he is depress.

Lastly, i just wish you good health and thank you so much once again. i hope to have the chance to meet the session with you next time. And also i start to share with my frens about oa transfer to sa. but like you said. most of them doesnt bother and feel lazy. so I just ignore them and let them regret in the future. Last of all. wishing you and your family stay healthy and happiness.

Thanks AK. you change my life.

AK's reply:

Hi S,

Welcome to my blog.

I can appreciate your anxiety but you are taking steps to rectify the issues you have discovered. That is a good thing. Of course, it will take time.
Rome was not built in a day.

For your parents' H&S needs, I would like to make a small suggestion that could help you save some money.

If your parents do not mind staying in Class C or B2 wards in government hospitals, there is no need for you to buy H&S policies from any of the private insurers as they only need Medishield Life. It will be less of a burden on your pocket.

I shall look forward to more updates on your journey towards greater financial security. In the meantime, gambatte!


Time is a dwindling resource for all of us. All young people have one big advantage and that is time is on their side.

With the new year upon us, I hope this blog will nudge younger readers to consider their own situations and what action they might want to take to achieve financial security.

Wishing one and all a financially more secure and happier year in 2016!

Related posts:
1. Graduating soon? Think financial security.
2. How much to have in emergency fund?
3. Beef up and achieve financial freedom.
4. Do the right things and transform our lives.
5. Medishield Life and hospitalisation.
(Read related posts too.)

2015 full year income from non-REITs.

Before I reveal the numbers, let me talk to myself about what I did in 4Q 2015, investments wise.

I re-initiated a long position in ARA as I felt that its stock price declined to a reasonably attractive level. 

ARA's rights issue which followed not long after was unexpected but I took up my entitlement and applied for excess rights as I looked at it as an opportunity to buy more on the cheap. I will probably buy more if the stock declines further in price.

Of course, those who follow my blog will also remember another rights issue and that was by Croesus Retail Trust. I too participated fully in that rights issue.

A back of the envelope calculation shows that Croesus Retail Trust is now trading at a 10% distribution yield. 

Croesus Retail Trust has rather high gearing level but if we were to take that away, Croesus Retail Trust is actually still generating more than a 5% distribution yield (i.e. non-leveraged yield) which I think is very attractive for a portfolio of mostly freehold retail properties in Japan. 

As the Trust's unit price declined, I added to my position again in the middle of December at 78c a unit.

I also increased my investment in Accordia Golf Trust as its stock price declined. The last time I did this was in mid-December at 51c a unit.

Investing in Accordia Golf Trust, we must realise that weather plays an important part in its performance. So, we have to expect its revenue to fluctuate quite a bit seasonally, much like investing in hospitality REITs.

With sentiments pretty negative, if Mr. Market were to offer me meaningfully lower prices, I would probably be buying more.

I also did a bit of trading in 4Q 2015. I reduced my long positions in Wilmar and ST Engineering as their stock prices recovered. That gave me some trading gains for the quarter.

I don't trade very much anymore as it requires a bit more work. Now, I might not even look at the stock market for several days in a row.

I added to my long position again in ST Engineering as its stock price declined by more than 10% from my recent selling price. 


ST Engineering is still one investment for income and growth. I definitely want to buy more if Mr. Market goes into a depression.

For those who do not follow my comments section, I initiated a smallish long position in DBS. Some know that I have been thinking of buying into the three local banks for a while and have been waiting for their stock prices to become cheaper.

I chose DBS first because it was trading at the smallest premium to NAV compared to OCBC and UOB. There is also consensus that DBS would be the biggest beneficiary of rising interest rates.

I also added to my investment in SingTel as its stock price declined. We invest in SingTel, Starhub and M1 because they are defensive income generators but with SingTel, there is also a nice element of growth.

Finally, I added to my long position in APTT this month after having left it alone since its inception. The rapid plunge in APTT's unit price up till middle of December seemed excessive to me even though I have mentioned before that a DPU of 8c a year is unsustainable in the longer run.


A much lower DPU of between 4c to 5c would probably be more sustainable for APTT. So, adding to my long position at 63c a unit, I am expecting a more realistic distribution yield of 6.3% to 7.9%.


A more recent development was an expression of interest by a party to acquire Ascendas Hospitality Trust which I included in my income portfolio in 3Q 2014. I have added to my investment on a few occasions since then, as and when its unit price declined.

The last time I increased exposure to Ascendas Hospitality Trust was on 24 August 2015 at 58.5c a unit. With an estimated annual DPU of 5.5c, I was looking at a distribution yield of almost 10%.

Although I hope that the offer is going to be at a fairly attractive premium to valuation, I am aware that if the Trust should be taken private, my income from non-REITs next year would take a hit.

Very safe to show hand like this.

Including my first income distribution from Religare Health Trust (RHT), dividends from my investments in non-REITs in Q4 brings my income in 2015 from them to a grand total of S$76,804.69.

This works out to be about S$6,400.00 a month.

Including the distributions from S-REITs this year, I am pretty satisfied with the total income generated by my investment portfolio.


Related post:
1. ARA: Re-initiating long position.
2. Croesus Retail Trust: Rights.
3. Trading ST Engineering.
4. Religare Health Trust: Entered at 88c.
5. 9M 2015 income from non-REITs.