Advice needed on CPF ERS Scheme for my parents.

[crimsontactics]

Dear bros, need your advice on CPF ERS Scheme for my parents.

My parents are 56 this year and their FRS is $166,000.

Their ERS is $249,000.

They are interested in participating in the ERS, but when I'm studying the CPF FAQ for them, it states that the $249,000 amount is required in their RA at 55.

So if they join now or later, is the sum required still $249,000 or more?

Advance thank you for your assistance!

 

[crimsontactics]

Bumps for assistance.

Sent from . using GAGT

 

[BBCWatcher]

They are interested in participating in the ERS, but when I'm studying the CPF FAQ for them, it states that the $249,000 amount is required in their RA at 55.

Do you have a link?

The reality is they can both top up to the Enhanced Retirement Sum (ERS) now, preferably no later than September 24 (I would advise) in order to allow enough time for proper crediting this month and thus enjoy the interest accrual from October 1.

CPF LIFE payout estimates are only estimates, and the ERS level estimates are based on 55th birthday top ups to the ERS. A top up at age 56 means the monthly payout amount could be slightly lower (less interest accrues and compounds since the top up is later), that's all. But it'll still be much, much higher than FRS level.

It is also evidently possible to add some top up funds every time the ERS is raised on January 1, or at least that's something to check (if they're interested).

 

[crimsontactics]

Do you have a link?

The reality is they can both top up to the Enhanced Retirement Sum (ERS) now, preferably no later than September 24 (I would advise) in order to allow enough time for proper crediting this month and thus enjoy the interest accrual from October 1.

CPF LIFE payout estimates are only estimates, and the ERS level estimates are based on 55th birthday top ups to the ERS. A top up at age 56 means the monthly payout amount could be slightly lower (less interest accrues and compounds since the top up is later), that's all. But it'll still be much, much higher than FRS level.

It is also evidently possible to add some top up funds every time the ERS is raised on January 1, or at least that's something to check (if they're interested).

Thanks for your reply!

The link is here:

https://www.cpf.gov.sg/members/faq/schemes/retirement/cpf-life#

 

[tangent314]

To participate in the ERS, you simply use the Retirement Sum Topup Scheme (RSTS) to transfer money into your RA after age 55.

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme

 

[BBCWatcher]

I don't see exactly what you're referring to, but I assume you're asking about the payout estimates. Yes, the ERS level payout estimates are based on 55th birthday top-ups (within that 55th birthday month, immediately after the RA is created). A top-up at age 56 would result in slightly lower payout estimates since the interest accrual from age 55 to 56 is "missing." But at every age it's still Singapore's best life annuity deal, by far.

 

[crimsontactics]

To participate in the ERS, you simply use the Retirement Sum Topup Scheme (RSTS) to transfer money into your RA after age 55.

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme

But what is the sum of money for the ERS if my parents decided to join after 55?

Is it still the same as when they join up at 55?

Sent from . using GAGT

 

[crimsontactics]

I don't see exactly what you're referring to, but I assume you're asking about the payout estimates. Yes, the ERS level payout estimates are based on 55th birthday top-ups (within that 55th birthday month, immediately after the RA is created). A top-up at age 56 would result in slightly lower payout estimates since the interest accrual from age 55 to 56 is "missing." But at every age it's still Singapore's best life annuity deal, by far.

No, it's not about the payout estimate.

It's more about how much does my parent need to join the ERS scheme if they join after 55 instead of at 55 itself.

Will the ERS increase for them since FRS is fixed for everyone at the age of 55.

Sent from . using GAGT

 

[BBCWatcher]

Will the ERS increase for them since FRS is fixed for everyone at the age of 55.

The BRS, FRS, and ERS are not fixed. The Retirement Account is formed and filled up at the prevailing FRS on their 55th birthdays (or less if there aren't enough funds to fill it up), but the BRS/FRS/ERS limits continue marching forward, with annual increases on January 1, for everyone -- at least for top-up purposes, anyway.

So the answer is that they can top up their Retirement Accounts by $1, $10, or any amount up to the current (now 2018) Enhanced Retirement Sum (ERS).

In fact, if they top up now to the ERS, they might also be able to add a few more dollars to top up to the new ERS just after the ERS increases on January 1, and every January 1 thereafter up until at least age 65 and maybe even later. That's a bit speculative, though, but it's worth a try if they're interested.

You might be thinking of Medisave and the Basic Healthcare Sum, and how it behaves. The BHS is fixed when you reach age 65. It'd actually be nice if the BHS marched ahead past your 65th birthday, since that'd be a lovely little extra piggybank for stashing bequest funds (if that's your thing). But no, the BHS doesn't budge once you hit age 65.

 

[crimsontactics]

The BRS, FRS, and ERS are not fixed. The Retirement Account is formed and filled up at the prevailing FRS on their 55th birthdays (or less if there aren't enough funds to fill it up), but the BRS/FRS/ERS limits continue marching forward, with annual increases on January 1, for everyone -- at least for top-up purposes, anyway.

So the answer is that they can top up their Retirement Accounts by $1, $10, or any amount up to the current (now 2018) Enhanced Retirement Sum (ERS).

In fact, if they top up now to the ERS, they might also be able to add a few more dollars to top up to the new ERS just after the ERS increases on January 1, and every January 1 thereafter up until at least age 65 and maybe even later. That's a bit speculative, though, but it's worth a try if they're interested.

You might be thinking of Medisave and the Basic Healthcare Sum, and how it behaves. The BHS is fixed when you reach age 65. It'd actually be nice if the BHS marched ahead past your 65th birthday, since that'd be a lovely little extra piggybank for stashing bequest funds (if that's your thing). But no, the BHS doesn't budge once you hit age 65.

I see.

So if they want to participate in the ERS, they have to top up till this year's ERS limit instead of last year's ERS limit?

Sent from . using GAGT

 

[BBCWatcher]

So if they want to participate in the ERS, they have to top up till this year's ERS limit instead of last year's ERS limit?

The CPF LIFE ERS level payout estimates are based on topping up to the ERS in your 55th birthday month.

The ERS is higher now, yes, but there's also some interest that was "missed." The ERS increased about 3.01% between 2017 and 2018, while the Retirement Account interest rate is 4%. If they top up their Retirement Accounts now, to the current (2018) ERS, their CPF LIFE payouts should be very close to the estimates, but they won't be identical, to the penny, compared to top-ups on their 55th birthdays.

....But none of that matters, really. The decision they have, now, is whether they'd like to top up their Retirement Accounts for more lifetime retirement income, and by how much. They can add any number of dollars they wish, up to the current ERS. Heck, they can top up to the 2015 ERS if they wish -- that's arbitrary. Every dollar they add will boost their future CPF LIFE monthly payout to some degree. So if they want the maximum currently obtainable payout, then they ought to top up to the current ERS (and try again to add more on January 1 when the ERS increases and see if that works -- it might). That's it, really.

 

[crimsontactics]

The CPF LIFE ERS level payout estimates are based on topping up to the ERS in your 55th birthday month.

The ERS is higher now, yes, but there's also some interest that was "missed." The ERS increased about 3.01% between 2017 and 2018, while the Retirement Account interest rate is 4%. If they top up their Retirement Accounts now, to the current (2018) ERS, their CPF LIFE payouts should be very close to the estimates, but they won't be identical, to the penny, compared to top-ups on their 55th birthdays.

....But none of that matters, really. The decision they have, now, is whether they'd like to top up their Retirement Accounts for more lifetime retirement income, and by how much. They can add any number of dollars they wish, up to the current ERS. Heck, they can top up to the 2015 ERS if they wish -- that's arbitrary. Every dollar they add will boost their future CPF LIFE monthly payout to some degree. So if they want the maximum currently obtainable payout, then they ought to top up to the current ERS (and try again to add more on January 1 when the ERS increases and see if that works -- it might). That's it, really.

I see. Thank you very much for your help!

Sent from . using GAGT

 

[henrylbh]

Dear bros, need your advice on CPF ERS Scheme for my parents.

My parents are 56 this year and their FRS is $166,000.

Their ERS is $249,000.

They are interested in participating in the ERS, but when I'm studying the CPF FAQ for them, it states that the $249,000 amount is required in their RA at 55.

So if they join now or later, is the sum required still $249,000 or more?

Advance thank you for your assistance!

They can keep topping up their RA to meet the prevailing FRS and ERS (without accounting for interest earned).

So if in 2017 the RA showed 249k and in 2020 FRS is 181k, they can top up RA to 181k plus 90.5k to meet ERS in 2020.

Payout would depend on RA balance (and the plan chosen) at the age when one wants payout to start (between 65 and 70)..

 

[crimsontactics]

They can keep topping up their RA to meet the prevailing FRS and ERS (without accounting for interest earned).

So if in 2017 the RA showed 249k and in 2020 FRS is 181k, they can top up RA to 181k plus 90.5k to meet ERS in 2020.

Payout would depend on RA balance (and the plan chosen) at the age when one wants payout to start (between 65 and 70)..

Thank you for your advice!

Sent from . using GAGT

 

[henrylbh]

Thank you for your advice!

Sent from . using GAGT

actually I did not give any advice.

If ERS comes from SA savings or even OA savings, I will say leave SA/OA alone. Top up RA to ERS with cash, if really must go for ERS.

 

[tan1688]

actually I did not give any advice.

If ERS comes from SA savings or even OA savings, I will say leave SA/OA alone. Top up RA to ERS with cash, if really must go for ERS.

Kindly explain rationale for this: "If ERS comes from SA savings or even OA savings, I will say leave SA/OA alone. Top up RA to ERS with cash, if really must go for ERS."

 

[BBCWatcher]

SA earns 4%, and OA earns 2.5%. Using CPF funds to top up a RA draws first from SA then from OA. That’s an expensive source of funds, because you’d lose a lot of interest on what are “on demand” funds for those age 55+.

So it’s better to use cash for your RA top up, if you can afford it, which is probably not enjoying such terrific interest rates, especially not that 4% rate.

 

[Battery Operator]

Dear bros, need your advice on CPF ERS Scheme for my parents.

My parents are 56 this year and their FRS is $166,000.

Their ERS is $249,000.

They are interested in participating in the ERS, but when I'm studying the CPF FAQ for them, it states that the $249,000 amount is required in their RA at 55.

So if they join now or later, is the sum required still $249,000 or more?

Advance thank you for your assistance!

https://forums.hardwarezone.com.sg/...ax-gains-cpf-srs-boost-revenue-5757203-4.html

I can't help but recall your previous thread to tax CPF LifePayout; if your idea comes to fruition, i am sure you get a big pat from your parents

 

[crimsontactics]

https://forums.hardwarezone.com.sg/...ax-gains-cpf-srs-boost-revenue-5757203-4.html

I can't help but recall your previous thread to tax CPF LifePayout; if your idea comes to fruition, i am sure you get a big pat from your parents

Don't think my parents will mind tho.

They are able to accumulate so much money risk free in their CPF, around 800k for both, they wouldn't mind paying less than $100 in tax a year from their monthly payout.

If they complain about being taxed, then I will say that they are too selfish and ungrateful.

Sent from . using GAGT

 

[Battery Operator]

Don't think my parents will mind tho.

They are able to accumulate so much money risk free in their CPF, around 800k for both, they wouldn't mind paying less than $100 in tax a year from their monthly payout.

If they complain about being taxed, then I will say that they are too selfish and ungrateful.

Sent from . using GAGT

Truly a role model for all to strive for. Congrats