It is important to understand that financial planning in every country is different. This is due to the rules and government policies which will affect the way we plan, and they have to be integrated into our financial plan in order to work collectively. In Singapore, there are many policies and regulations which impact the way we plan. Just to name a few – CPF prevailing interest rates, CPF Life, Total Debt Servicing Ratio, CPF and Insurance Nominations Act, Laws of Intestacy in Singapore etc.
Why are these policies important? They complement our financial plan. For example, CPF Life ensures that every Singaporean has a lifetime annuity income upon age 65. By planning well with one’s CPF, it allows a person to retire at age 65 with a basic income stream which is ever lasting. This constitutes a portion of the retirement plan, in which the Singaporean can further add on with their investments, endowments or private annuities, to form a complete retirement program which ultimately meets their planned age to retire, matching their risk profile and aligning their overall financial plan.
On healthcare perspective, Singapore operates a unique 3M structure which comprises of Medisave, Medishield and Medifund. It is important for every Singaporean to understand this structure so they will know how to best plan for their medical expense and surgical costs.
These rules and regulations may change as time goes by. For example, the government enhanced its Medishield to Medishield Life on 1st Nov 2015. It is therefore important to keep ourselves updated about these changes because it will affect our overall financial plan.