cpf Special account shielding

[rrr2015]

as what i understand, u suppose to have at least FRS in OA before u try shielding

what would happen if after shielding, the RA amount is less than FRS ...

Would there be a 2nd SA sweep into RA to meet FRS after shield is removed ?

 

[rrr2015]

wow … 600k in SA really?

Hi I read somewhere that recommends buying Tbill 6 months for shielding. So let's say next month my 55 birthday then this month I use 600K in SA to buy T Bill left 40K remain in SA. After 6 months, the 600K automatic go back to my SA? Is that how it works?

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[BBCWatcher]

as what i understand, u suppose to have at least FRS in OA before u try shielding

No, that's not a requirement. For example, you could swoop in with a cash top up to your Retirement Account as soon as it's formed.

 

[decibel.]

That's one way, but ~7 months of SA interest loss is an enormously steep price to pay. The unit trust-based method is much lower cost.

So e.g 55 on Nov then buying G3B on Sep and sell all on Jan?

Sent from HUAWEI VOG-L29 using GAGT

 

[BBCWatcher]

So e.g 55 on Nov then buying G3B on Sep and sell all on Jan?

No, that’s not allowed. You’d use a bond unit trust held for mere days across your 55th birthday. Perhaps you could review the details already posted in this thread.

 

[antro65]

Many thanks, BBCWatcher and tangent314, for the method and recommendations. Will check out Peoms.


I also initially thought just holding for a few months will be OK, but after reading the blog in the thread, then know must hold for
1 to 3 years, to not considered as an offence.

 

[blackvice]

do remember to do the cpf self assessment questionaire as require if anyone is intending to invest using their OA/SA for CPFIS.

https://www.cpf.gov.sg/eSvc/Web/Schemes/CPFISSelfAwarenessQuestionnaire/Declaration

 

[lifeafter41]

wow … 600k in SA really?

That why in MM, many hidden tigers and crouching dragons.....
600K in SA.....jskm!!!

 

[rrr2015]

Thanks BBCWatcher! Learn something new again! .

No, that's not a requirement. For example, you could swoop in with a cash top up to your Retirement Account as soon as it's formed.

 

[rrr2015]

Yalor … 一山比一山高 there's always another higher mountain

That why in MM, many hidden tigers and crouching dragons.....
600K in SA.....jskm!!!

 

[antro65]

No, that’s not allowed. You’d use a bond unit trust held for mere days across your 55th birthday. Perhaps you could review the details already posted in this thread.

After setting up my Poems and tested water with a small amount,
I found that there is a 7 days cooling off period, to return the Unit Trust.
Suddenly I have another thought for the shielding, what if we buy the UT 4 work days before 55years,
and then exercise the cool off 2 days after => still not allowed?

Maybe for me,as the saying goes, smart is enough, don't act smart.

 

[BBCWatcher]

After setting up my Poems and tested water with a small amount,
I found that there is a 7 days cooling off period, to return the Unit Trust.
Suddenly I have another thought for the shielding, what if we buy the UT 4 work days before 55years,
and then exercise the cool off 2 days after => still not allowed?

Maybe for me,as the saying goes, smart is enough, don't act smart.

You could do that and probably pull it off, but personally I wouldn't cut it that close. And if you're going to try this maneuver you'd increase the front side to 5 or even 6 days, since your SA deduction MUST strictly precede your Retirement Account's formation. Meeting the cooling off period deadline is very, very optional.

It's helpful if your birthday isn't too close to either "edge" of the calendar month, but that part you cannot control -- it is what it is. If your birthday is close to the beginning or end of the month, then you'll probably just have to accept your loss of 2 months of SA interest instead of 1. The shielding is still worth doing, but it'll cost a little more. Blame your mother and father for bad timing.

 

[tornedo]

Many thanks, BBCWatcher and tangent314, for the method and recommendations. Will check out Peoms.


I also initially thought just holding for a few months will be OK, but after reading the blog in the thread, then know must hold for
1 to 3 years, to not considered as an offence.

Really need to hold the investment for 1-3years for the shielding?

 

[antro65]

Really need to hold the investment for 1-3years for the shielding?

I saw it in this blog,
https://smartinvesting18.blogspot.com/2019/04/cpf-special-account-hack-are-you-ready_27.html
shared in post #132 to #133 of this thread.

 

[tangent314]

That's just the opinion of one blogger.

 

[tornedo]

That's just the opinion of one blogger.

Yes, but a more clearer clarity will be more welcomed. Its either cpf officially close it. Or give clear definition of mid-to-long term investment period. Otherwise, very ambiguous. Someone will likely be made example for penalisation

 

[BBCWatcher]

There is a clear intention here to invest for the medium to long term, just not specifically in a bond unit trust. You would never do this if you planned to make a CPF withdrawal any time soon.

The CPF Board references a list of bad behaviors here. All of the examples involve individuals who were trying to get money out of their CPF accounts before age 55. "SA shielding" is exactly the opposite: keeping more money in CPF, for longer.

Here's where the CPF Board explains what these "offences" are:

Q. What constitutes "offences" under the CPF Investment Scheme?

A. Manipulating investment transactions so that a member may siphon his CPF savings in cash thereby withdrawing the savings prematurely, is an offence under CPF Investment Scheme.

"SA shielding" is the opposite: to keep cash in CPF.

The actual governing law is the Central Provident Fund Act, in particular section 58A ("Offences relating to investments"). I don't see anything to hang your hat on there.

Heck, The Straits Times explained how "SA shielding" works.

 

[rrr2015]

just pondering, if one have sufficient cash fund BRS / FRS, does it make sense to shield OA as well?

 

[Okenba]

Depends on how high you value the 2.5%, how much total assets you have, and how much you actually want to sink into the bond component.

Retirement can be a long time and some feel that there is still room to have a % in equities instead of being 100% bonds.

Also, some would have greater leeway to bank more into OA via accrued interest. It is much harder to get money into SA. In that sense, shielding OA is not as critical as shielding SA.

 

[rrr2015]

thanks for sharing your thoughts. agree, actually given the average bank interest rate to be around 1.5%, 1% increase may notbe worth the effort

Depends on how high you value the 2.5%, how much total assets you have, and how much you actually want to sink into the bond component.

Retirement can be a long time and some feel that there is still room to have a % in equities instead of being 100% bonds.

Also, some would have greater leeway to bank more into OA via accrued interest. It is much harder to get money into SA. In that sense, shielding OA is not as critical as shielding SA.