CPF Special Account after 55 years old

maple96

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I think you got the wrong understanding. Leaving aside standard plan, about 10% of RA is used to pay annuity premium for basic plan at the time of PEA. That premium money, not to say interest, is as good as gone into a pool unless one lives beyond a certain age to recover what's in the poo.. The balance in RA earns interest at prevailing rates and payout is from RA till it runs dry and henceforth payout will be from the pool.

Deferring payout only makes sense as money in RA will roll over at prevailing interest rate and the subsequent payout will be (7%) higher. But then one is betting more on CPF Life as 10% of RA will be taken off as annuity premium.

My estimate, one needs to live well pass 90s to get back every cent that's in RA (without annuity deduction) at prevailing interest rates. Below that you lose in the bet.

Your comment shows your incorrect understanding/interpretation of CPF rules, and obviously a wrong understanding/interpretation of what I wrote!

Pls comment in the context of this thread. My comment is based on JL's uncle's CPF Life plan which is a standard plan, 50k already in CPF Life pool as premium. So it does not make sense to defer his payout as his 50k is earning interest for the CPF Life pool! Should he die before his CPF Life premium is fully withdrawn as payout, his bene gets it, only the unused premium, no interest!

I will not discuss on CPF Life Basic plan as this is not the topic of discussion here. My choice is of course Basic Plan with payout at 65.
 

dork32

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the error is in your comment.

Read what I wrote carefully, I am referring to where the monies sit, ie CPF life premium interest is not yours!

With CPF Life basic, about 10% goes to CPF Life pool as CPF Life premium, interest on that is not yours!

His uncle has 50k sitting in CPF Life pool as premium!

10% goes to the pool, but you still get 90%. that is also not bad
 

dork32

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Your comment shows your incorrect understanding/interpretation of CPF rules, and obviously a wrong understanding/interpretation of what I wrote!

Pls comment in the context of this thread. My comment is based on JL's uncle's CPF Life plan which is a standard plan, 50k already in CPF Life pool as premium. So it does not make sense to defer his payout as his 50k is earning interest for the CPF Life pool! Should he die before his CPF Life premium is fully withdrawn as payout, his bene gets it, only the unused premium, no interest!

I will not discuss on CPF Life Basic plan as this is not the topic of discussion here. My choice is of course Basic Plan with payout at 65.

you only partially correct. yes, lion's uncle is on the standard plan, so his cpf is not earning extra interest.

but if he defers his payout by one year, he is going to get 7% more. so there is a strike off. both scheme has its benefits and disadvantage. i respect lion's decision. there is really no right or wrong answer here.
 

Papermate

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Based on your repeated points, could I say that if there's an option to defer CPF pay-out to 150 years old (and with 7% increase per year), then your personal opinion is that this is always the best choice to do so?

Assuming the person already has emergency funds of 24 months.
150 years? I would not do that, not even up to 70 years old as is allowed now.

Let's say, the payout is $1,100 per month, which works out to (12 x 1,100) = S$ 13,200 per annum.

In 5 years, that would be (5 x 13,200) = $66,000 total

How much more "additional" interest must I receive from age 70 onwards in order to breakeven, having foregone receiving $66,000?

What the actuarial is doing is to take your $66,000 and return it back to you bit by bit and say "You get 7% more".
 

JuniorLion

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150 years? I would not do that, not even up to 70 years old as is allowed now.

Let's say, the payout is $1,100 per month, which works out to (12 x 1,100) = S$ 13,200 per annum.

In 5 years, that would be (5 x 13,200) = $66,000 total

How much more "additional" interest must I receive from age 70 onwards in order to breakeven, having foregone receiving $66,000?

What the actuarial is doing is to take your $66,000 and return it back to you bit by bit and say "You get 7% more".

My sentiments, exactly.
 

dork32

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150 years? I would not do that, not even up to 70 years old as is allowed now.

Let's say, the payout is $1,100 per month, which works out to (12 x 1,100) = S$ 13,200 per annum.

In 5 years, that would be (5 x 13,200) = $66,000 total

How much more "additional" interest must I receive from age 70 onwards in order to breakeven, having foregone receiving $66,000?

What the actuarial is doing is to take your $66,000 and return it back to you bit by bit and say "You get 7% more".

it really depends on the scheme you are on.

if you are on basic, this 66k will be from your own account. it will be like going to atm and withdraw 1000 from it and feel very good because you are 1000 richer.

i have done some calculations, it will be 80+++ that you will get back your 66k.

it is important that we do some analysis of the system. if 7% is not enough, what will be a good number for you to defer the payout? if they give 20%, i would definitely grab it.
 

stiffs

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How much will I get monthly if my Special Account has $100,000, after 65 years old, after setting aside the FRS inside retirement. I am expecting an amount from my Special Account balance + an amount from my CPF Life pay-out. Is the amount from Special Account base on life expectancy till 82 years old.
 
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dork32

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How much will I get monthly if my Special Account has $100,000, after 65 years old, after setting aside the FRS inside retirement. I am expecting an amount from my Special Account balance + an amount from my CPF Life pay-out. Is the amount from Special Account base on life expectancy till 82 years old.

you can take out as much as you like from your sa every month, till your sa runs out of cash
 

BBCWatcher

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you can take out as much as you like from your sa every month, till your sa runs out of cash
Yes, once you've got your CPF LIFE annuity nailed down (Retirement Account set aside) then your Special Account is like an "on demand" savings account from age 55. It'll continue to earn attractive interest (Singapore tax free), and it's on deposit with an extremely high credit rating government. It's also well protected against creditors and court judgments while it's on deposit. You can also nominate one or more heirs to receive your residual CPF funds. If you don't need that money, just let it keep growing. It's a lovely cushion.
 

JuniorLion

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Just went to my uncle's place. I realised that I made a mistake on the first post.

My uncle is actually on the CPF Life PLUS Plan. Unfortunately, there is no avenue to alter the plan now, as the deadline for changing is 2013. So my uncle is stuck with the plan.

According to what I could find, for CPF Life PLUS Plan, all of the RA savings will be used to purchase the annuity premium. The annuity will be paid from the CPF member's DDA until he passes away.

From what I have read, this is a pretty terrible plan.
 

crimsontactics

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Just went to my uncle's place. I realised that I made a mistake on the first post.

My uncle is actually on the CPF Life PLUS Plan. Unfortunately, there is no avenue to alter the plan now, as the deadline for changing is 2013. So my uncle is stuck with the plan.

According to what I could find, for CPF Life PLUS Plan, all of the RA savings will be used to purchase the annuity premium. The annuity will be paid from the CPF member's DDA until he passes away.

From what I have read, this is a pretty terrible plan.
What is this plus plan?

Sent from . using GAGT
 

LiteHouse

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Just went to my uncle's place. I realised that I made a mistake on the first post.

My uncle is actually on the CPF Life PLUS Plan. Unfortunately, there is no avenue to alter the plan now, as the deadline for changing is 2013. So my uncle is stuck with the plan.

According to what I could find, for CPF Life PLUS Plan, all of the RA savings will be used to purchase the annuity premium. The annuity will be paid from the CPF member's DDA until he passes away.

From what I have read, this is a pretty terrible plan.

I thought Plus plan is a very good plan that has since retired i.e. not available for new cohorts.
 

maple96

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Just went to my uncle's place. I realised that I made a mistake on the first post.

My uncle is actually on the CPF Life PLUS Plan. Unfortunately, there is no avenue to alter the plan now, as the deadline for changing is 2013. So my uncle is stuck with the plan.

According to what I could find, for CPF Life PLUS Plan, all of the RA savings will be used to purchase the annuity premium. The annuity will be paid from the CPF member's DDA until he passes away.

From what I have read, this is a pretty terrible plan.
After CPf simplified the CPF life Plans, Plus plan is very similar to Standard Plan. Under CPF Plus, 100% RA went into CPF Life pool after 55.

Changing the plan in 2013 or now is not worth the effort as he would have lost many years of interest and his mthly payout will drop alot if he switch to Basic. Dun bother switching to escalating plan, he will lose even more interest!

U mentioned he had been topping up his RA. So RA topups are likely to go to CPF Life Pool at 65. Suggest u check with CPF Board on this and whether he can withdraw 20% of RA at 65 (that would be about 10k he can "salvage"), start payout at 65 to recycle his funds. If he had not topup for 2018, then those monies will not end up in CPF Life pool as well.

(note: 20% only applies to those born after 1958, so u check with CPF board how much he can withdraw at 65)
 
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crimsontactics

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Anyways, with regards to whether to delay your payout or not, you should take consider your financial situation at 65 to 70 rather than trying to "maximise" your returns from CPF Life.

For instance, if you're in need of money at 65, then it's no brainer to not delay.

But if you're financially secure and comfortable at 65, why bother starting the payout when it doesn't increase your well-being by much and decreases your financial security for the future?

Especially when you can be extremely flexible in your delay, to the best of my knowledge, meaning that you can start at any year between 65 to 70 in the event your financial situation change.
 

BBCWatcher

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I believe he can switch to the CPF LIFE Escalating Plan this year (2018) if he wishes.
 

JuniorLion

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After CPf simplified the CPF life Plans, Plus plan is very similar to Standard Plan. Under CPF Plus, 100% RA went into CPF Life pool after 55.

Changing the plan in 2013 or now is not worth the effort as he would have lost many years of interest and his mthly payout will drop alot if he switch to Basic. Dun bother switching to escalating plan, he will lose even more interest!

U mentioned he had been topping up his RA. So RA topups are likely to go to CPF Life Pool at 65. Suggest u check with CPF Board on this and whether he can withdraw 20% of RA at 65 (that would be about 10k he can "salvage"), start payout at 65 to recycle his funds. If he had not topup for 2018, then those monies will not end up in CPF Life pool as well.

Thanks maple96. I appreciate your assistance.

Question: Would ALL monies in RA be sent to CPF Pool? Even if he has more than the Minimum Sum?
 
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