What are the advantages/disadvantages applying for PR?

[Blue Sapphire]

We are considering whether we should apply for PR or not.

My husband meets the criteria. We are here indefinitely because my husband owns a small company here. My 3 yrs old son was born here and will probably only know Singapore as his home. We really don't mind sending him to NS someday.

We already own a condo. So we don't need any housing benefits as such.

Can anyone advice me whether its worth applying for PR or just remaining as a long term expat? Thanks!

[sundaymorningstaple]

Let's put it this way. And an EP holder, his employment pass can be revoked or not renewed at any time, business owner or no.

As a PR, he will only run into that problem if he found wanting morally or legally. Even if they don't renew his REP, he can still stay in Singapore without it, he just cannot leave the country. Owning property here will not guarantee you the right to PR, and neither will owning a business, but of course the odds are greatly in your favour. Whereas, if the government needs to trim the foreign population, then can cancel EP and WP with the stroke of a pen or a few keys on a keyboard.

[revhappy]

Instead of putting it as Advantages/Disadvantages, would put it as Priviledges/Liabilities.

Priviledges of PR:
1) You will be able to buy a HDB house
2) You and your husband will have more flexibility to switch jobs/business
3) I guess there is some quote in local school for Citizens/PRs. Fees are less. When your son would like to join university again there are huge subsidies.
4) Medical costs are lower.

Off late the benefits for PRs have been reduced quite a bit so that Citizens feel they are special. So you need to really do some research on the quantum of benefits for PRs.

Liabilities of PR:
1)Compulsory CPF. It may be good or may not be good depending on how you look at it.
2)NS for 2nd gen male PRs
3)No free entry into the casinos

So It really depends on how long you want to stay in SG. Normally people dont have very long term visibility. So its difficult to decide. Still there isnt much to lose if you do get a PR. But if you do have a visibility of 10 yrs or more then I would say you are likely to regret it if you dont apply for PR. Coz you never know 5-10 yrs from now how the world is going to be. The Singapore $ is strengthening all the time. The USD and EUR are going down. Asia is the place to be and within that SG is the most livable city.

[x9200]

It is good to be a PR mostly for the mentioned social/job security but it also simplifies certain things with the company when it comes to the interactions with ACRA.

[sundaymorningstaple]

Show me any other financial vehicle that will give the same rate of long term return "risk on risk" that CPF does. Current from 2.6 to 4% with an extra 1% on the first 60K.

[x9200]

CPF is clearly beneficial for the salaried employees but If the main source of income for the OP is from their own small company (self employment) then this could be pretty negligible unless they decide to voluntarily pay something above the Medisave.

[teck21]

Show me any other financial vehicle that will give the same rate of long term return "risk on risk" that CPF does. Current from 2.6 to 4% with an extra 1% on the first 60K.

How long is long?

[sundaymorningstaple]

Can you show me ANY equal "risk on risk" financial vehicle regardless of length of time that will current or even prospectus wise will equal what is currently on offer from CPF?

[revhappy]

Can you show me ANY equal "risk on risk" financial vehicle regardless of length of time that will current or even prospectus wise will equal what is currently on offer from CPF?

I do agree that CPF returns are attractive on a risk to return basis. Also you have the option of investing a part of it in Unit Trusts and pay off home loans so thats gr8.

But, being a HR, you would know this practise followed by many companies in SG: Say a person joins a company on an EP and his salary is 5k. He is not given any CPF obviously. At a later point if this person takes up PR. The company is liable to contribute for CPF so is the employee. But what happens in reality is the company tells you that their contribution of CPF was already included in the 5k they were giving. So both the employees contribution and the employers contribution comes straight out of the original 5k so now the employee takes home just 3.6k.

It affects the cash flow of the employee and basically if the employee is savvy enough(like me ) to make his own investment decisions, this CPF stunt is not really necessary.

[x9200]

But what happens in reality is the company tells you that their contribution of CPF was already included in the 5k they were giving.

But...this is illegal.

[sundaymorningstaple]

If your company does this, you should leave the company. You are being had only because of your own fears. And yes, it's illegal. Additionally, the CPF rates are reduced the first two years so the cashflow impact, is minimized to give you time to adjust to the difference in cashflow. However, if you have been smart you would have already been socking away about that amount into savings anyway so it's not really affecting cash flow, just diverting it to a different savings vehicle.

Seriously though, It's time to look for a new company if your company is trying to pull that one on you. Unless it's written into your contract, which, if so, should come as no surprise then.

[revhappy]

SMS, This practice is very rampant. Its not limited to a just a handful of companies. Most of the contract staff companies for large banks do this, if not all. And I think its in the contract, so its not illegal.

But I think it is fair because these contract companies have narrow margins for having staff on their payroll and working for their clients. Most of the people employed by these contract staff companies are foreigners. So when a foreigner converts to a PR, these companies cannot be expected to take a hit on their margins. Imagine this the company originally pays you only 4.3k instead of 5k and keeps the 700 bucks because you are a foreigner and tells you if you become a PR you get the 700 bucks. In that case its unfair on the part of the employer to keep the 700 bucks just because its a foreigner.

So I have no problems with the way it works currently.

[x9200]

It is very simple to make it both legal and fair right from the start. It is enough to put in the contract a clause that until the employee remains on EP he/she receives an equivalent to the CPF contribution paid as a gratitude/bonus. At the moment of becoming PR this disappears in favour of the real CPF contribution. Handling this the way you described is illegal what you can easily confirm on the CPF webpages.

[sundaymorningstaple]

SMS, This practice is very rampant. Its not limited to a just a handful of companies. Most of the contract staff companies for large banks do this, if not all. And I think its in the contract, so its not illegal.

But I think it is fair because these contract companies have narrow margins for having staff on their payroll and working for their clients. Most of the people employed by these contract staff companies are foreigners. So when a foreigner converts to a PR, these companies cannot be expected to take a hit on their margins. Imagine this the company originally pays you only 4.3k instead of 5k and keeps the 700 bucks because you are a foreigner and tells you if you become a PR you get the 700 bucks. In that case its unfair on the part of the employer to keep the 700 bucks just because its a foreigner.

So I have no problems with the way it works currently.

As I said, in my initial post, it's illegal unless it has been written into your contract. And, no, it's not rampant. I should know. I contracted many, many programmers to the various banks here for 14 years. We never had it in any of our contracts. Instead, we had a clause that if you took up PR, your contract would be renegotiated. Fair & simple. Oh, one other thing. Contract staffing of IT personnel has huge profit margins, not slim. I used to give my contract staff a raise and or bonus if they rolled over their contracts with us, without renegotiating with the client bank. Our philosophy was by giving you a raise, even if the client wouldn't compensate, our staff would probably renew their contract. If we took less in margin, no big deal as had the employee been unhappy and left, we had nothing. Been there & done that for too long.

[revhappy]

The point is not whether its legal or illegal. You have yourself agreed that you would renegotiate the contract if an EP holder takes up PR. Thats what I meant when I said the practice is rampant.Legal or Illegal, at the end of the day CPF is not something like an extra that an employee gets when he gets his PR. So if anything, its a hassle rather than a benefit.