Opinion

Should PRs Leaving Singapore be Allowed to Keep All of Their CPF and HDB Sales Proceeds?

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Jeff Cuellar

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What enrages you more? The fact that you can’t cash out your Central Provident Fund (CPF) account unless you renounce your citizenship, or that Singapore Permanent Residents (PRs) can withdraw all of their CPF funds AND Housing and Development Board (HDB) sales proceeds with them when they leave Singapore?

Understandably, you’re pissed off because it’s not fair that someone from another country can take part in your social security program (CPF), use it as a glorified saving account, and withdraw all of it when he/she moves back home.

Let’s not forget the property issue as well. A PR flipping his/her property before leaving Singapore can easily make several hundred thousand dollars – more than enough to buy a huge landed property in 75% of the world.

These are issues that beg the question, “Should PRs be allowed to cash out whenever it’s convenient, or should they pay their fair share?”

 

The CPF “Cash Out” Issue

The issue of CPF withdrawal has become an increasingly hot topic among Singaporeans. That’s because Singaporeans feel frustrated that they have little control over when and how much money they can withdraw.

In fact, an ex-CPF employee confirmed that in our article about the 3 Biggest Complaints Singaporeans Have About Their CPF Accounts. CPF is a well-intentioned social security system, but it’s not very flexible – you can’t use it if you get retrenched or have a major financial emergency, even if you have $100,000+ in your CPF account.

PRs also contribute to CPF and benefit from many of the social programs offered to Singapore citizens. However, unlike Singaporeans, they can withdraw all of their CPF account after renouncing their PR status.

Well, you can too – if you renounce your citizenship.

In a way, CPF is also like a piggy bank that gives PRs access to a “savings account” that gives them 2.5% interest, which is exponentially better than the “normal” savings account interest rate in Singapore, which is 0.01%-0.05%!

Recently, CNA reported that according to Manpower Minister Tan Chuan-Jin, over the last decade more than $4 billion dollars (avg. $426 million each year) was withdrawn from CPF members leaving Singapore.

Currently, CPF doesn’t track how much is withdrawn by PRs and former Singapore citizens. But does that really matter? After all, if there are more PRs cashing out, it shows that they’re just using CPF as a piggy that they can crack open before heading home.

And if a higher percentage of ex-Singaporeans are the ones cashing out, what does that say about the system, especially if these former citizens are leaving Singapore because of the inflexibility of CPF?

 

The HDB Flat “Flipping” Issue

“Flipping” property boils down to this simple definition – purchasing real estate below market value and selling the property when the market rises, usually within a short period of time. For people who flip property, their intention isn’t to live there “permanently,” but to sell it for a profit.

In terms of citizens and PRs, who do you think is more likely to buy a property and live in it on a “permanent” basis?

The answer is a no-brainer, and that’s what angers Singaporeans – the fact that PRs jumping ship to go home can just “flip” their property and leave Singapore like a bandit walking out of a bank.

Of course, Singapore does have the Seller Stamp Duty (SSD), which is meant to prevent short-term “flipping” by imposing a tax of:

  • 16% of the price or market value (whichever is higher) if you sell within 1 year
  • 12% of the price or market value (whichever is higher) if you sell within 2 years
  • 8% of the price or market value (whichever is higher) if you sell within 3 years
  • 4% of the price or market value (whichever is higher) if you sell within 4 years

However, four years isn’t a very long time. While the SSD inflicts enough financial pain to discourage short-term flipping, it won’t do much to dissuade a PR from selling his property, especially since most PRs are in Singapore for a longer period of time.

 

What Can Be Done to Ensure PRs Pay Their Fair Share?

“Permanent Resident,” isn’t that term ironic? Think about it, many don’t even stay and contribute to Singapore “permanently.” But this isn’t what infuriates most Singaporeans.

What really pisses Singaporeans off is how incredibly easy it is for PRs to “escape” Singapore and go back home after they’ve made their fortune. Singaporeans don’t have that option – there’s no place to escape to.

There’s no way you can ever “cash out” of the system – unless you renounce your citizenship. Where’s the fairness in giving PRs the ability to cash out without any sort of penalty?

Change has to come from the top. There’s no way around that. So what can be done to ensure there’s more “fairness” in the way the government handles PRs who choose to renounce their status?

Here are a few humble suggestions to ensure PRs pay their fair share and aren’t given “preference” over Singaporeans when it comes to their CPF accounts and property sales:

  • Impose a Tax on PRs Withdrawing All Their CPF (ex. 20% Withdrawal Tax)
  • Impose a 10% Lifetime Seller Stamp Duty (SSD) on PRs Selling Their Homes Unless They Become Citizens
  • Give PRs a Lower CPF OA Interest Rate Unless They Become Citizens (ex. 1% lower than Citizens)
  • PRs Renouncing their Status Must Sell Any Property They Own
  • PRs Renouncing their Status Cannot Regain It a Second Time

These are just a few suggestions that can help alleviate some of the anger Singaporeans feel about PRs who leave the country after making their fortunes.

What are your suggestions?

 

What are some other fair suggestions you have regarding PRs who give up their status and leave with their CPF funds and proceeds from home sales? Share your thoughts with us on Facebook

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.

  • TK

    Not true if you are West Malaysian, compared to East Msian and other foreign

  • flyingsquirrel

    There are also PRs who have been around a long time and are as committed to Singapore as those born here, and have Singaporean family members of many generations. Be careful with sweeping statements and name-calling.

  • Tri Noviardi Thamrin

    Why are you not mentioning:

    1. PRs pay non-subsidized fees for lift upgrading
    2. PRs don’t get housing grants
    3. PRs don’t get subsidies in child care centres
    4. PRs pay at least 4 times the school fees of normal Singaporeans
    5. Despite paying same taxes etc, PRs don’t get GST credits or handouts from government
    6. PRs pay more for subsidized health checkup in government hospitals (you can check SGH website for specialist treatment rates)

    In short: PRs are already paying more than citizens do.
    The blue IC is no different from a glorified work permit for PRs.

    Your opinion does not present the whole picture and the fact that it gets published in Yahoo only serves to stoke current negative sentiments against PRs.
    I think its very despicable and immature.

    • kookoo

      Interesting list you got.
      Can you provide more informtion on the differences please.
      Where would you say you are originally from?

      • Karthik

        Why the fuck you wanna know where is the poster from? you bloody fucking racist.

    • PQUE

      A Higher Nitec PR student pays $4K for one term, whereas a local pays 536$ per term. Isn’t it amazing? Isn’t it surprising? Isn’t it?

  • Human

    It’s sad to know that we have people like this author in Singapore. Very narrow minded and influence people to create problems.

  • kcchiew

    $4 billion dollars (avg. $426 million each year) was withdrawn from CPF members leaving Singapore……Total CPF memebers’ balance in CPF on 2013 was 2529.6 billion dollars.

  • adx

    I am going to be blunt. Your suggestions are simply narrow minded. Spore gov will have to take a holistic view in this cpf topic. Citizens or PR should not subject to second class treatment. After all, there are already fundamental understanding and policies that defines the two different groups. Your suggestions point towards a close system.

    The issue with the general singaporeans is when unhappy or discontented we go round ranting and comparing. Big picture is important. Like any first world country , Singapore needs foreign talent and external investment. You gain some, you lose some. Nothing is perfect as we are not living in an ideal world. Trying to bring others down does not add anything to one’s loss. At some point in time, we may find ourselves in the opposite side of situation.

  • Kannan

    This is pure poison..What the hell is wrong with you???

  • Eujinia

    Are you yourself a PR working in Singapore or planning to apply for one? Why are you even writing such article. So called foreign talent dumping trash here in Singapore

  • Francis

    Trying to gain attention? You are pulling the same stunt like TRS, TRE and other rubbish websites just to get advertisement money.

  • Shang Star

    At the moment, PR or non-PR is all or nothing. Need more calibrated PR e.g. PR1, PR2, PR3. Different people should have different benefits from PR e.g. some allowed any jobs, some allowed jobs in only certain sectors, some only certain jobs with minimum salary, some can only buy HDB of certain type, others to buy private condo only, some can withdraw CPF only after certain fixed years, some cannot withdraw till retirement. Which features the PR has should depend on their factual background e.g. nationality, length of time in Singapore, income, skills, charity work, age. PR is too blunt an instrument at moment, hence we get people abusing the system, to the detriment of those who actually want to stay here long term.

  • balance_your_thoughts

    PR has a chance to return “home”
    Do Singaporean has another alternative?

    • Francis

      Singapore is home for Singaporean. What other “home” are you talking about? If you do not think this is your home, please go somewhere else. We won’t miss you.

      • Nacky Nacar

        Boooo!!!

  • ray

    Not to forget PRs pay monthly rental fees to singaporean families. We help them pay off their mortgage. My landlord for instance has 3 condos.

    Most of us who are skilled workers..we have international experience that we share to younger locals and help them grow too.

    Just like what tri said, this author is incompetent and should be sued for writing such an immature and malicious article like this!

    I agree to whatever tri said.

  • Karthik

    Fuckin nonsense suggestions

  • nukestrom

    Your suggestions will dry up CPF as foreigners who plan to apply PR and pay CPF will not do so, and if a rule implemented more will denounce their PR and leave, affecting everyone benefiting from CPF. Also, this will discourage talented foreigners coming in at the first place.

    I think this is similar to 401K in US, where you get to take whatever left in your 401K.

  • gb

    PRs contribute equally to the country’s economy as any citizen during the length of their stay in the country and yet you are suggesting even further infringements on the PRs rights to social security and properties. The fact that they are PRs mean they have familial ties to other countries but work or circumstances could have brought them to live in Singapore. You have such a protectionist and narrow minded way of thinking when truly the only way to attract the best brains to spore is to make conditions more palatable to foreigners and not regulate them further!

  • PQUE

    Some PRs are forced to renounce their rights because Singapore (ICA) has denied their renewal application. So, what would you do then? Of course, renounce, claim your hard-earned money and leave Singapore. Common-sense though.

  • William Owenson

    As for the pros and cons of being Singapore PR:

    The main advantage is the entitlement to stay in Singapore without visa restrictions. Once you obtain your Blue Card (which is the identity document given to you once you receive your permanent residence status), you have the right to live in Singapore and you can leave and enter the country as you wish.

    As a Singapore PR, your spouse and unmarried children under 21 are also eligible for similar status while your foreign parents are able to receive long-stay visas. If your children are school-aged, they are high on the priority list, behind citizens, to enter public schools of your own choosing. Non PRs are at the bottom of the list and are often left with no choice when it comes to schools.

    Permanent residence in Singapore also enables you to change jobs freely without having to worry about re-applying for a work permit. Employment pass holders must cancel their working visas if they want to change jobs, which involves inherent risks such as having your new EP application rejected or delayed, forcing you to leave Singapore. Permanent residence removes those risks and hassles.

    Singapore PRs who have jobs are also obliged to join the Central Provident Fund (CPF) scheme, in which you and your employer contribute a monthly minimum amount to your pension fund. The CPF scheme helps you out financially when it comes to health care, home-ownership, family protection and growing your assets. By deducting your contribution from your salary, you are able to enjoy a form of tax relief.

    Another financial benefit of being a Singapore PR is that it is easier to borrow various loans such as a housing loan if you want to buy property.

    Permanent residence also opens the door to Singapore citizenship, should you wish to acquire Singapore nationality at some time in the future. It may take a few years before you can apply for citizenship, but it is the only path to obtaining a Singapore passport (apart from being born to a citizen).

    One aspect of Singapore permanent residence that concerns many foreigners who have young sons is the national service. Under the Enlistment Act, all male Singapore citizens and permanent residents are liable to register for national service upon reaching 16½ years old. They must serve two years when they turn 18. This is followed by 40 days of Operationally Ready National Service every year until they turn 50, for officers, and 40 for other ranks.

    When buying property, permanent residents are only allowed to buy second-hand units of government HDB flats while only citizens can purchase new ones.

    And at last PR is not so easy to obtain http://www.one-visa.com/singapore-permanent-residency-visa-service

  • rose cao

    What penalty you are talking about here?
    I’m PR and living in Singapore for 12 years, My spouse lives here for 5 years. Now the long term visit pass got rejected. We are expecting our first child. If he needs to go back to his country. Do you think i should remain PR status here?

    I have been contributing CPF and now they don’t want us to start a home here. What is the fair share?