CPF SA Shielding hack - RIP (Obsolete)

[HWZ1973]

Say a person has 100K in OA and 100K in SA. FRS is $176,000.

Normal scenario. 100k from SA and 76K from OA is taken to form RA. Therefore, balance becomes this after age 55:

OA: 24K (2.5%), SA: 0 (4%), RA: 176K (4%)

SA Shielding scenario. 40K from SA
and 100K from OA is taken to form RA. Therefore, balance becomes this after age 55:

OA: 0 (2.5%), SA: 60K (4%), RA: 140K (4%)

Of course, scenario 2 is better since the full 200k earns 4%

Thanks for the explanation, but we can opt to transfer OA to RA first right?
So why take the trouble to do shielding?
Using SA to do investment may not even yield 4%.

 

[lyndonmaxewell]

Thanks for the explanation, but we can opt to transfer OA to RA first right?
So why take the trouble to do shielding?
Using SA to do investment may not even yield 4%.

Your RA interest goes to the CPF life common pool, which you never going to smell or touch

You SA interest on the other hand you can withdraw and enjoy

 

[Guojing88]

CPFB should amend the policy to transfer from OA then SA to benefit all CPFB MEMBERS! The current policy is bias, how can PAP and Opposition party agree to such a policy which only benefits the rich!

Everyone will be happy, even those who still need to pay housing loan, as thy can withdraw from SA n put back to OA to service their loan, or just withdraw from SA standing instruction, after 55 no more restrictipns

It’s not true that everyone will benefit. There are still many Singaporeans who cannot form the frs from the sa + oa.

So if you allow them to form the ra first from oa, their remaining sa cannot be taken out to service the housing loan anyway, so for these people, it makes sense to use the sa first to form the frs, if they are cash tight.

 

[lyndonmaxewell]

It’s not true that everyone will benefit. There are still many Singaporeans who cannot form the frs from the sa + oa.

So if you allow them to form the ra first from oa, their remaining sa cannot be taken out to service the housing loan anyway, so for these people, it makes sense to use the sa first to form the frs, if they are cash tight.

Correct, it may not be very useful for citizens who cannot meet FRS or BRS in their RA first, to withdraw the excess cash (froma 4% account) any time after age 55.

 

[OngHuatHuat]

My entire balance are in SA and MA, don’t think I have any benefit.

 

[assiak71]

https://toc.net/2019/10/20/cpf-sa-shielding-before-ra-is-formed-at-age-55/


Elaborating on the SA shielding trick, to use more of OA monies instead of SA monies to form RA before turning 55, by using SA to purchase of low-risk investment instrument.

Is this an error in the article? The article didnt make sense to me due to this sentence:

Upon reaching Age 55, your Retirement Account (RA) is created with monies from your OA account, then SA account in that order of priority.

 

[havetheveryfun]

Thanks for the explanation, but we can opt to transfer OA to RA first right?
So why take the trouble to do shielding?
Using SA to do investment may not even yield 4%.

Say a person has 100K in OA and 100K in SA. FRS is $176,000.

Normal scenario. 100k from SA and 76K from OA is taken to form RA. Therefore, balance becomes this after age 55:

OA: 24K (2.5%), SA: 0 (4%), RA: 176K (4%)

SA Shielding scenario. 40K from SA
and 100K from OA is taken to form RA. Therefore, balance becomes this after age 55:

OA: 0 (2.5%), SA: 60K (4%), RA: 140K (4%)

Of course, scenario 2 is better since the full 200k earns 4%

then why not like transfer 100k OA to SA before 55 instead of buying some investment tools?

because only can transfer up to 176k (min sum?)

 

[ocs_woodlands]

One positive way to view this official revelation is that, over the next few years, cpf act may be amended such that a choice is now given to those turning 55.
.

I am not sure.

BUT can anyone quote an instance in the history of Singapore when the interest of citizens is at odds with the interest of govt and the Govt has legislated in favour of the interest fo the citizens??

 

[lyndonmaxewell]

My entire balance are in SA and MA, don’t think I have any benefit.

If you have no OA, then of course there is nothing to shield

 

[lyndonmaxewell]

Is this an error in the article? The article didnt make sense to me due to this sentence:

Upon reaching Age 55, your Retirement Account (RA) is created with monies from your OA account, then SA account in that order of priority.

Yes error! already amended to "from you SA account, then OA account in that order of priority".

 

[lyndonmaxewell]

then why not like transfer 100k OA to SA before 55 instead of buying some investment tools?

because only can transfer up to 176k (min sum?)

In the first example I gave, yes the person can transfer from OA to SA 76K first. Now FRS is met (total 176K).

Balance
OA: 24K, SA: 176K

However if he does SA shielding, he can make it as such,

Balance
OA: 0, SA: 136K (first 40K cannot shield), RA: 64K

 

[lyndonmaxewell]

I am not sure.

BUT can anyone quote an instance in the history of Singapore when the interest of citizens is at odds with the interest of govt and the Govt has legislated in favour of the interest fo the citizens??

higher CPF contribution rates for older workers? Just wondering

 

[polyglob]

My entire balance are in SA and MA, don’t think I have any benefit.

How is that possible? Got another hack?

 

[ocs_woodlands]

higher CPF contribution rates for older workers? Just wondering

Not against the interest of the Govt cos the higher contribution does not come from GIC or the govt budget.

the higher contribution comes from employers and self.

My assertion is simple.
This government can do the good and right things but NEVER at the expense of itself.

 

[lyndonmaxewell]

How is that possible? Got another hack?

OA to SA transfer. I have personally done it (see below). Now zero dollars in OA.

https://toc.net/2019/09/25/maximising-my-cpf-returns-while-i-am-young/

 

[lyndonmaxewell]

Not against the interest of the Govt cos the higher contribution does not come from GIC or the govt budget.

the higher contribution comes from employers and self.

My assertion is simple.
This government can do the good and right things but NEVER at the expense of itself.

I can agree with you on this then. My example wasn't good at all.

 

[pillow89]

is there a requirement an individual needs to meet when doing this SA shielding? does the individual has to have enough for BRS or FRS?

 

[lyndonmaxewell]

is there a requirement an individual needs to meet when doing this SA shielding? does the individual has to have enough for BRS or FRS?

SA shielding is just essentially buying financial instruments to the max, any excess about 40K for SA. The first 40K cannot be used to invest.

This is about the only rule.

 

[assiak71]

SA shielding is just essentially buying financial instruments to the max, any excess about 40K for SA. The first 40K cannot be used to invest.

This is about the only rule.

Meaning after shielding dont need to care whether remaining balance in OA and SA meet BRS/FRS? Then wouldnt RA end up with less than BRS/FRS?

 

[maple96]

Meaning after shielding dont need to care whether remaining balance in OA and SA meet BRS/FRS? Then wouldnt RA end up with less than BRS/FRS?

TS talks alot of rubbish here!