TAP, SCP and You

As a gainfully-employed citizen or permanent resident of Brunei, part of your pay is deducted automatically for both TAP and SCP.

What are those?

Say I earn $1000 per month. On every payday, 5% of that, or $50 in this example, is whisked away, and put into an account managed by an entity. Another $50, this time from my employer, is also saved into that account. This $100 totalled per month is used by the entity to generate more money for me, and when I manage to reach the retirement age of 55, the whole sum of money my employer and I have put into said account through the years will be handed back to me with dividends, possibly in a duffel bag I don’t know. That’s TAP.

But $35, another 3.5% of your money,  is also deducted and put into another account. Employer also matches, and the same entity as above works this money, but instead of getting a lump sum at 55 years old, I’ll have to wait 5 more years, trying not to spend that sweet TAP money all at once, and from 60 receive a legally-mandated minimum of $150 per month* for the next 20 years. This is SCP.

The entity? YOU The Employees’ Trust Fund, or better known as Tabung Amanah Pekerja.

Of course, life is not that simple, and neither are things that are to do with money. I’ll try to break down how both of them work, and how to make them work for you.

Before I do that though, imagine a hypothetical me from above who started working from when he was 25 years old, and for some reason, never thought to ask for a raise or move to a different workplace with higher pay all throughout his working life, and calculate how much he will get from his TAP and SCP when he retires at 55.

Let’s tackle the easy answer first: he’ll be getting $150 per month* from SCP, because that’s the minimum he is required to receive. Terms and conditions apply though, and boy there are a few of them, which I’ll try to cover when I get to it.

TAP is more straightforward. Toiling for 30 straight years in the same job, not even getting a raise– either hypothetical me really liked doing what he did, or he just couldn’t dig himself out of the hole. Let’s hope it’s the former.

Anyway, after 30 years of work, he would’ve been handed a whooping (100 p.m. x 12 months x 30 years) $36,000. That’s the same amount he had earned for 3 years. That’s not too bad, but considering he retired at 55, and that the average life expectancy for Bruneians is just over 78 years, and assuming he lived paycheck-to-paycheck (i.e. using that $915 [$1000 less TAP and SCP] up every month), that still leaves around 20 years worth of his life to cover.

“But!” you argue, “even if hypothetical you never managed to earn more than $1000 per month, surely the annual dividends from TAP puts it a little more than the $36,000!”

You’re right that I haven’t accounted for that, so I fired up the TAP website’s own calculator, and put some figures in. From what I’ve managed to find out, the highest ever dividends paid was during 2004-2008, when rates were up at 4.25%. In the calculator, I put down a generous 5% rate through his whole working life, because I’m an optimist like that.

$79,726.62, or 87 months, or just over 7 years with his current (I assume hedonistic) lifestyle. Keep in mind that the dividend rates for fiscal years of 2013-2015 were just 1%, and that for the 2008-2009 period TAP paid no dividends due to the global financial crisis.

Yeah, you should feel sorry for hypothetical me. You should also be worried for yourself. Just over 55% of Bruneians live under $1000 per month, and 80% live under $2500 per month, according to 2004 statistics.

I’ll end this article here with that sobering thought. Next time hopefully, I actually explain TAP and SCP in depth.

* why asterisks? According to verbal accounts from people who have started receiving their SCP, this hasn’t actually been the case, but I’m trying to learn more about them before I say for sure one way or another

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