Special Account After 55

[mummy1234]

No hope lah.

Quote for me an instance when the govt had to decide on the welfare between GIC VERSUS People of Singapore (CPF contributors) and the govt decides that the Poeple of Singapore's welfare is paramount.

This is a govt which has identified Mr Heng, the best person to take over the reins of govt as PM in future.

Who is Mr Heng? I dont know him personally but only through his public actions and words.

in May 2016, he had a stroke. Many people, including myself, said a prayer for him. I mean, at that point, I was ok with him.

What really DISSAPOINTED me was the 1st budget he presented in Feb 17, he announced the increase in PUB taxes and also future GST increases.

EQ wise, it is VERY VERY poor to "thank" the people by immediately announcing a gst increase and PUB taxes.

With this anecdote, what confidence can I have that the govt will "rule" in favour of people of SG against GIC's retained earnings (the difference between GIC ROI and interest paid to CPF holders).

Why am I so upset over loose cannon Lorna? because 2 x ERS = 650k (when me and wife reaches 55).

650k x 0.15% = 9.75k per year.

if we both live till 85, that is 30 years x 9.75k = 293k

I am now raging cos I will potentially lose 293k. if and when I actually lose 293k, can I claim from Lorna?

Maybe I still don't understand shielding fully but really so much? I thought ERS is fixed regardless of shielding and whatever excess u have, u still can have it in yr SA to earn 4%? If it is returned to u, just VC it back no?

 

[mummy1234]

Maybe I still don't understand shielding fully but really so much? I thought ERS is fixed regardless of shielding and whatever excess u have, u still can have it in yr SA to earn 4%? If it is returned to u, just VC it back no?

Oh I think I get it, u r referring to extra interests by using yr OA instead of SA to form yr FRS.

 

[mummy1234]

But the irritating thing about CPF is that the rules keep changing. Sigh, hope I did the right thing by transferring S$30k from OA to SA to meet FRS. In a way, trying to avoid being tempted to buy more Sg properties and making it difficult for my hubby to buy Sg landed. To him a dream, for me now a nightmare.

CPF rules r convoluted and confusing like the Sg roads thx to overpopulation.

 

[dork32]

No hope lah.

Quote for me an instance when the govt had to decide on the welfare between GIC VERSUS People of Singapore (CPF contributors) and the govt decides that the Poeple of Singapore's welfare is paramount.

This is a govt which has identified Mr Heng, the best person to take over the reins of govt as PM in future.

Who is Mr Heng? I dont know him personally but only through his public actions and words.

in May 2016, he had a stroke. Many people, including myself, said a prayer for him. I mean, at that point, I was ok with him.

What really DISSAPOINTED me was the 1st budget he presented in Feb 17, he announced the increase in PUB taxes and also future GST increases.

EQ wise, it is VERY VERY poor to "thank" the people by immediately announcing a gst increase and PUB taxes.

With this anecdote, what confidence can I have that the govt will "rule" in favour of people of SG against GIC's retained earnings (the difference between GIC ROI and interest paid to CPF holders).

Why am I so upset over loose cannon Lorna? because 2 x ERS = 650k (when me and wife reaches 55).

650k x 0.15% = 9.75k per year.

if we both live till 85, that is 30 years x 9.75k = 293k

I am now raging cos I will potentially lose 293k. if and when I actually lose 293k, can I claim from Lorna?

do you really lose the interest of ers?

i always tot the max you lose is frs-40k.

 

[dork32]

But the irritating thing about CPF is that the rules keep changing. Sigh, hope I did the right thing by transferring S$30k from OA to SA to meet FRS. In a way, trying to avoid being tempted to buy more Sg properties and making it difficult for my hubby to buy Sg landed. To him a dream, for me now a nightmare.

CPF rules r convoluted and confusing like the Sg roads thx to overpopulation.

but i tot you say property better than cash

 

[mummy1234]

but i tot you say property better than cash

Dunno leh but BBC keep saying too risky. Maybe should diversify like he said. Buy REITS better. No stamina to service mortgage at my age and rental income is not gauranteed.

I mean SA better for retirement better than let my hubby convince me to buy another landed. Unless really crash and supercheap FH landed. Too old to service mortgage. FH Sg landed is his dream but I don't want to work so hard just to fulfil his dream. What about my dream to semiretire?

I need to build up my cash reserves. With kids really cannot retire. My cousin smart, he and his wife don't want kids from the start. Sometimes my kids drive me crazy. Only wanna play, don't want to study. Want to be youtuber etc.

Can only rely on CPF life and MM2H perhaps to retire. The rental from Sg condo or perhaps leave it for my boys. Dunno yet.

Wondering if I should apply for MM2H now. Waiting for news of RTS first.

Hope Malaysian leaders help us who needs MM2H to retire or semiretire. Heard they suggested increasing Tebrau shuttle frequency which is a good alternative but someone disagreed.

Actually Iskandar is good for retirement and semiretirement. Hope it takes off and succeeds. Sg needs to work together with Malaysia for our future.

 

[BBCWatcher]

Dunno leh but BBC keep saying too risky. Maybe should diversify like he said. Buy REITS better.

Here's the advice again: stay reasonably diversified in terms of geography, asset classes, and other factors. For example, if 92% of your wealth is in the form of real estate in Singapore, investing in Singapore REITs would be the opposite of diversification, i.e. it would be concentration.

 

[LKY156]

Lorna the big mouth already splash all over the papers lah... how to still have?

Frankly, only a v small % of Singaporean would have such cash in CPF OA/SA.
Most of us spent on housing loan.

What SA hack? No capital to start with!

 

[SBC]

Frankly, only a v small % of Singaporean would have such cash in CPF OA/SA.
Most of us spent on housing loan.

What SA hack? No capital to start with!

Need to minus those with high mortgage commitment.
Only small group will be affected.

 

[dork32]

Frankly, only a v small % of Singaporean would have such cash in CPF OA/SA.
Most of us spent on housing loan.

What SA hack? No capital to start with!

for myself, i will withhold paying by housing loan as much as possible. I will also payback my cpf withdrawal for homeloan using cash.

 

[lifeafter41]

Dunno leh but BBC keep saying too risky. Maybe should diversify like he said. Buy REITS better. No stamina to service mortgage at my age and rental income is not gauranteed.

I mean SA better for retirement better than let my hubby convince me to buy another landed. Unless really crash and supercheap FH landed. Too old to service mortgage. FH Sg landed is his dream but I don't want to work so hard just to fulfil his dream. What about my dream to semiretire?

I need to build up my cash reserves. With kids really cannot retire. My cousin smart, he and his wife don't want kids from the start. Sometimes my kids drive me crazy. Only wanna play, don't want to study. Want to be youtuber etc.

Can only rely on CPF life and MM2H perhaps to retire. The rental from Sg condo or perhaps leave it for my boys. Dunno yet.

Wondering if I should apply for MM2H now. Waiting for news of RTS first.

Hope Malaysian leaders help us who needs MM2H to retire or semiretire. Heard they suggested increasing Tebrau shuttle frequency which is a good alternative but someone disagreed.

Actually Iskandar is good for retirement and semiretirement. Hope it takes off and succeeds. Sg needs to work together with Malaysia for our future.

Errrrr, I think Singaporeans work for their own future is better anytime.
With the flipping and flopping across the Causeway, don’t even think of it.

 

[SKenny]

He is trying to be smart, to use the withdrawal logic to explain why CPFB transfer from SA first then OA to RA.

But u are right, there is a difference between transfer from SA/OA to RA and CPF withdrawals after 55.

1. Current year interest up to mth prior to withdrawal for SA, then that similar interest for OA
2. All SA balance
3. OA balance

Your sequence is correct.

However before withdrawing the interest earned for SA/OA in that year, any contributions to SA/OA for that year will be withdrawn first.

 

[babyrobo]

Is it better to topup parents' RA account with cash ($7K tax relief) or transfer from OA (assuming no other planned use for giver's OA) ? If OK with either transaction? Which will be more worth the buck$?

 

[BBCWatcher]

Is it better to topup parents' RA account with cash ($7K tax relief) or transfer from OA (assuming no other planned use for giver's OA) ? If OK with either transaction? Which will be more worth the buck$?

Obviously tax relief is attractive.

You're certainly allowed to do both, in sequence (top up $7,000 of cash first for tax relief, then top up from other sources of funds). You're also allowed to coordinate tax reliefs within a family. For example, if you have a sibling who is in the 7% tax bracket, your sibling will save $490 on his/her income tax when he/she makes a $7,000 top up into a qualified elder's Retirement Account. Let's suppose your sibling has a cashflow problem (or lack of generosity problem, or both) and isn't willing to do that. OK, you could hand your sibling $6,600 with the agreement that your sibling will then add $400 and make a $7,000 top up. Your sibling then gets $490 back when his/her tax bill is reduced. However you reach such agreements within your family is up to you, but it's obviously nice to maximize available tax reliefs.

 

[maple96]

Is it better to topup parents' RA account with cash ($7K tax relief) or transfer from OA (assuming no other planned use for giver's OA) ? If OK with either transaction? Which will be more worth the buck$?

Uncle Henry is the best person to help u, tho I also know the answer. Uncle Henry has experience, I only know the law/rules

 

[maple96]

Your sequence is correct.

However before withdrawing the interest earned for SA/OA in that year, any contributions to SA/OA for that year will be withdrawn first.

I "summarise" the answer based on what is necessary to address the wrong answer.

You are sharp in spotting the missing component, but the correct answer should be:

"any contributions/refunds credited to SA then OA in the same month of withdrawal"

 

[maple96]

At 55, the combined balances in our OA and SA are transferred to a newly created CPF Retirement Account (RA).

- If we have sufficient funds in OA account to meet the FRS ($176k) to transfer to RA, will the SA account money remain untouched? Or the combined OA/SA will be transferred to RA?

- After deducting $176k from OA to RA, the remaining money in OA can be used for other purposes? Housing Loan? Withdrawal?

Frankly, only a v small % of Singaporean would have such cash in CPF OA/SA.
Most of us spent on housing loan.

What SA hack? No capital to start with!

So u should do the SA Hack to stop CPF from transferring monies in SA first then OA, read more here, which was shared by Ms Lorn Tan in Sunday Times on Oct 20, 2019.

Now people are worried that when their turn of hitting 55 comes, they cannot exploit this SA Hack. Would the govt/MOM/CPFB fixed this big loophole?

Maybe or may not so they themselves can continue to benefit from it if their boat has not anchored

Ok read this revised CPF FAQ, so I think what might happen is this: CPFB might change its policy to drop interest rate for SA to 2.5% after 55, if Govt do not want to be viewed as favoring the rich at the disadvantage of the "poor" and someone power can raise this issue to Parliament!


"The savings in members’ various CPF accounts attract different interest rates according to whether they are long term or short term funds. .......

When members turn age 55, their Special Account savings up to the Full Retirement Sum, is transferred and set aside in the Retirement Account, to provide them monthly payouts to supplement their living expenses when they reach their payout eligibility age. The remaining savings in the Special Account become withdrawable at any time. Strictly speaking, the withdrawable Special Account savings should attract a lower interest rate. This explains why when members make a withdrawal, the monies from the Special Account will be deducted first before the Ordinary Account."


My further comments:

"Strictly speaking" - so they are hinting CPFB is not strict to allow this big loophole for u to do the SA Hack!

 

[SKenny]

I "summarise" the answer based on what is necessary to address the wrong answer.

You are sharp in spotting the missing component, but the correct answer should be:

"any contributions/refunds credited to SA then OA in the same month of withdrawal"

Thanks. I stand corrected.

 

[romeo88]

If we take a step back and wind back to before LIFE was implemented, hasn't the SA been a special account with lots of restrictions and that's why the additional interest (aka liquidity premium) and there'd not be a thing called hack created. And don't forget people who have money in SA may not need LIFE anyways (except for the IB).

By the way, don't forget with LIFE eventually some of your CPF savings are being sucked into the pool where you kiss goodbye to the interest (even for Basic plan), unless of course you get to live beyond 95.

The CPF schemes are now like a spaghetti codes we'll see how many more tweaks it can sustain before imploding.

Ok read this revised CPF FAQ, so I think what might happen is this: CPFB might change its policy to drop interest rate for SA to 2.5% after 55, if Govt do not want to be viewed as favoring the rich at the disadvantage of the "poor" and someone power can raise this issue to Parliament!

 

[lifeafter41]

If we take a step back and wind back to before LIFE was implemented, hasn't the SA been a special account with lots of restrictions and that's why the additional interest (aka liquidity premium) and there'd not be a thing called hack created. And don't forget people who have money in SA may not need LIFE anyways (except for the IB).

By the way, don't forget with LIFE eventually some of your CPF savings are being sucked into the pool where you kiss goodbye to the interest (even for Basic plan), unless of course you get to live beyond 95.

The CPF schemes are now like a spaghetti codes we'll see how many more tweaks it can sustain before imploding.

It’s uncertain with a statement that they will deduct 10-20% of RA, If one chooses Basic plan that goes into the pool.

Assuming for male it’s 10% and female is 20% due to life expectancy, am very hesitant to top up from FRS to ERS when the time comes.

At least with basic, it’s either 80% or 90% of RA at age 65 onwards that the payout is clearly defined.

For the other 2 plans, it’s at the discretion of CPF on the payout, which is what I dislike.

Talk about shifting goalpost aka shifting payout.......