With new initiatives and multiple changes being introduced to the personal finance space in Singapore, 2015 has been an important year for everyone to take note of.
Despite the fact that most of the new changes announced are still in the infant stage of implementation, it is likely that they will all play an important role in shaping the personal finance space in years to come.
Let’s take a look at some of these changes and how they will impact the average person in Singapore.
1. CompareFIRST – For personal Insurance
CompareFIRST is an online portal that provides comparison for different types of plans offered by insurance companies. Launched in April 2015, CompareFIRST was jointly developed by Consumers Association of Singapore (CASE), the Monetary Authority of Singapore (MAS), the Life Insurance Association Singapore (LIA) and MoneySENSE to enable consumers to get easy access to information across products from different companies.
The main thing we can use CompareFIRST for is to compare premiums for insurance policies. We can think of it as being quite similar to how we now compare prices of hotel rooms or motels on Agoda.
Of course, picking a life insurance plan is far more complex than choosing where we want to stay for 3 days and 2 nights on a holiday trip. This is where the role of an insurance agent comes into play. An agent who is simply being a distributor of insurance policies or helping people compare prices of different plans will very quickly find his or her role made redundant by the CompareFIRST platform. To stay relevant, an agent now needs to further value-add by providing quality advice.
Read Also: A Simple Guide To MAS CompareFIRST Platform
2. Flexibility Of CPF LIFE – For Retirement
Instead of a one-size-fit-all approach for CPF LIFE, the CPF Board has introduced a variety of options that Singaporeans can choose from to suit their preference for retirement.
Singaporeans can now choose from 3 options to set aside in their Retirement Account.
In addition to choosing how much you would like to set aside in your Retirement Account, you can also choose to delay the monthly payout, which starts at age 65. This allows people who do not need their income to delay the onset of payment till the age of 70. Naturally, starting the payout later would mean getting a higher payout each month for the rest of your life.
The Enhanced Retirement Sum is what really stood out for us. Previously, people couldn’t opt for a higher payout from CPF even if they wanted to put in more money. Moving forward, this is an additional option available for those who opt for the CPF Life Enhanced Retirement Sum.
Read Also: 5 Retirement Tips To Know
3. Smaller Lots For Counters on the Singapore Exchange (SGX) – For Investors
In the past, any stock counters being transacted on SGX would need to be in denomination of 1,000 shares. This makes it expensive to purchase some blue chip stocks like DBS or UOB, which costs over $20 per share, or over $20,000 per lot (1 lot = 1,000 shares)
In 2015, SGX revised the lot size such that investors can now purchase stocks in denomination of 100 shares instead. This allows retail investors who have less cash to gain access to stocks that would otherwise cost five figures to purchase previously.
Read Also: Reasons To Start Investing In 2015
4. MediShield Life – For Healthcare
By the end of this year, MediShield Life will be replacing the old MediShield. MediShield is the basic national health insurance scheme in Singapore. In case you do not know, monies from your Medisave Account are usually used to pay the premium for this.
The wonderful thing about the new MediShield Life is that it would provide protection for all Singapore citizens and Permanent Residents, inclusive of those who have pre-existing illness. The fact that it is non-discriminatory is fantastic because it covers, at the very least, basic healthcare needs for everyone.
Naturally, this coverage comes at a price, which is most likely in the form of higher healthcare premiums. At the same time, there are some Medisave top-ups given by the government for the elderly that would help them defray the increase in cost.
All in all, we believe that providing adequate coverage for the elderly, the sick and those with special needs is something well worth spending on, even if it comes at a higher price for everyone.
Read Also: Why Is Medisave So Important In Singapore?
5. Singapore Saving Bonds – For Savings
The Singapore Saving Bonds (SSB) is an impossible to beat investment if you are looking for something risk-free. The fact that it is also accessible to almost every individual and has a $500 entry barrier just makes it even better.
In case you still do not know, MAS is introducing the SSB that (only) individuals can purchase. You purchase a SSB and it provides you with an annual interest payout, which is dependent on how long you have already held the bonds for. The best part about the SSB is that buyers would only need to give 1-month notice if they wish to redeem their bonds. Essentially, there is no lock in period.
To apply for the SSB, the minimum denomination required is only $500. The returns you would earn on these bonds would follow closely the interest rate being paid for the Singapore Government Securities (SGS).
Previously, access to bonds in Singapore was not easy for the average person, with denomination for corporate bonds being $100,000 and $250,000. Even bonds that were targeted at retail investors would usually require a minimum of about $5,000 and $10,000 per subscription.
What the SSB does is that it sets a hurdle rate that other assets would need to beat. Unless your fixed deposits or endowment plan can beat the returns on the SSB, there is no logical reason to invest in them. More so, the SSB is risk-free as well. Perhaps the only catch for the SSB is that each individual can only subscribe to a maximum of $100,000 each.
6. Progressive Wages – For Workers
2015 saw the expansion of Progressive Wages to include one more sector, that being the landscaping industry. This means that Progressive Wages are now present in 3 sectors, the cleaning sector, the security sector and the landscaping sector.
While some people may nit-pick on the details of the wages being paid, deeming it insufficient for workers, there can be no denying that it has improved the lives of people at the bottom income bracket. Of course, more can still be done going forward. But at the very least, small but tangible steps are being taken.
Conceptually, we see nothing much wrong with Progressive Wages and it’s even arguable that Progressive Wages provides a better alternative for the country compared to Minimum Wages. We will leave that argument for another day.
Interestingly, the sectors that have been introduced to Progressive Wages are also the sectors that tend to hire the most number of Singaporeans. Is this a coincidence? We will let you decide.
How will all these new changes affect the way our lives and the planning on our personal finance matters? Share with us your thoughts on Facebook.
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