A well-deserved retirement is a Golden time for many people. After a long career everyone wants to pay more attention to themselves and their families. Of course, for a decent pension in retirement you need to think about it in advance.
In the media and social networks continues a vigorous discussion about alternative use of pension savings, many are encouraged to study the international experience. Most often referred to the Singapore model as a model of savings and their use. There are proposals to unify all social contributions into a single Kazakhstani Fund for example, this country located in Southeast Asia. However, let’s try to understand how this is possible in our country.
In the world there are two models of pension systems: PAYG – when the maintenance of the pensioners at the expense of the taxes of the working population, which forms the budget, thus, a large burden falls on the state itself. The second option is the funded system, the main principle of which – independent formation of pension savings of working citizens. They pay contributions accumulate, are invested with and received from the investment income can then be used to provide a pension to those who carried out the accumulation. In Kazakhstan at the present stage there is a gradual transition from a PAYG to a funded. Something we have left over from the Soviet Union (the solidarity pension is given to those who have experience before 1998), and that we adopted from advanced countries, adapting to their realities. In Singapore, the joint part is missing and therefore we see a completely different path of development of the pension system, which is much older than Kazakhstan.
A leading role in social security of the city-state of Singapore plays a Central savings Fund (Central Provident Fund). It was created in 1955 as administrator of the national pension system the British colonial government. Currently, the Fund is one of the leading operators of retirement services in Asia. The purpose of the Fund is closing with the retirement savings and investment programs of the population’s needs in retirement, housing and medical services.
Employees and employers deduct the required monthly contributions to the Fund, which are accumulated in three accounts. The first is a normal account (amount can be used for the purchase of housing, insurance, investment, educational loan), the second is a special account (for the pensions and investments), the third is a medical expense (for costs of medical care and purchase medical insurance policy). Note that the total monthly contribution of employee and employer is on average 37% of the employee’s salary. 20% contribution from the employee’s income, 17% of employer contributions. The rate of contribution depends on age, salary and status (citizen/permanent resident of Singapore) employee. In particular, this rate applies to persons under the age of 55 years and with a monthly wage of not less than 750 Singapore dollars ($550). That is getting, for example, 750 Singapore dollars, the Singapore worker will be transferred to your pension account $ 150, even 127,5 dollars credited to his account by the employer. However, it should be clarified that a contribution of 37 % at a certain age decreases. For example, in the 55 years it will be 26 %, in 60 years of 16.5, %, further in 65 years and older is 12.5%. It is clear that accumulation as well as in Kazakhstan accumulative pension system, personified. The only difference is in numbers – there are 37% of the income of the employee and the employer, we only have 10%.
In the future, all these funds are invested in special government bonds risk-free Singapore. The money received from the issue of these special risk-free bonds, the Monetary authority of the country uses to be converted to foreign assets. By the way, on the pension savings of depositors in the Central savings Fund accrued guaranteed real rate of return of 5% per annum.
The Fund has special investment program CPF (CPFIS), it allows investors themselves to invest their savings with the ordinary and special accounts to multiply their savings. At the same time, if you do not use this right, the investor can simply leave the money in the accounts of the Fund, and earn its guaranteed return. To self invest their pension savings, the investor must be over 18, not be bankrupt and have savings of more than 20 thousand Singapore dollars (5.6 million tenge) on ordinary account or more than 40 thousand (11.2 million tenge) on special. He can invest the money that exceeds those amounts of savings.
One of the advantages of the Singapore model is called program home purchase. This is a public housing program (Public housing scheme) and the program of private real estate (Private Properties Scheme). Each of them has many nuances.
In particular, the program of a Public housing scheme, you can use the savings from the CPF (that is, the accumulation, over a sufficient minimum) for full or partial payment of the cost of housing; repayment of monthly payments on mortgage debt for the purchase of housing under the Ministry of National Development (Housing & Development Board, HDB); payment of state duty, payment of legal and other related expenses, such as housing repairs.
The CPF investor is not entitled to withdraw the savings from the ordinary account for housing purposes in the case of a home purchase with the remaining duration of payment of the mortgage debt of not less than 30 years, while there are age restrictions. Thus, it should be noted that this program is calculated for the long term.
Thus encouraged careful use of money for housing purposes and a reasonable withdrawal limits of. However, there’s a catch in that, in the case of a subsequent sale of housing, the owner must refund the money taken from the account of CPF for the purchase or construction of housing. Another feature is that housing is very expensive in Singapore, prices start from 500 thousand U.S. dollars. The average salary is equal to 4700 Singapore dollars, which equals $ 3,500, but American. Therefore, the state strongly encourages the purchase of housing through various programs.
Everything else, often in the media mentioned and the program of study financing at the expense of savings. The CPF investor can get a loan to pay for education for yourself, children, spouse, brother/sisters or other relatives at authorized educational institutions using their savings in the Ordinary account. However, during the year or earlier of the completion of study the student is obliged to return the amount of the principal debt and accrued interest in CPF. To calculate interest on a loan for training is used the rate of return on savings in the Ordinary account, accrued debts.
To our country to apply such experience is quite difficult, as Kazakhstani and Singaporean systems are totally different. The main difference is that we have only retirement savings accumulated on individual pension accounts. Other social contributions, including the recently introduced social contributions to the social health insurance Fund, impersonal. They come in the General insurance boiler and just in case you need medical or other assistance, the money will be taken from him. In Singapore, by contrast, there is no mandatory health social insurance and guaranteed medical care. There this aspect is the responsibility of the citizen, in contrast to Kazakhstan, and insurance policies in Singapore individual.
Another difference Singapore and Kazakhstan systems lies in the fact that the pension system of Singapore is working more 60 years. Accordingly, savings of inhabitants of the island state is much higher than domestic. So learn from the experience of the “Asian tiger” at the moment difficult. Because in addition to the pension system must be changed and insurance and mortgage and banking system, so in the near future is unlikely.