Retirement account question

[hyperfuse]

Have this question in mind that was ask by my uncle.

If i not wrong, in a CPF retirement account, if the amount inside hits the full retirement sum, this year for example, it is $186k, any amount above $186k in that retirement account, can be withdrawn anytime yet it still have 4 to 5 percent interest right? (Correct me if i am wrong)

So my uncle was asking, since his retirement account is already max out, why not ask me put money in his retirement account, example 100k and treat it as a liquid "fix deposit" whereby that $100k can generate 4 to 5 percent ( i not sure exactly how much interest) and anytime i want the money, my uncle can withdraw out for me.

Is there such a thing?

If there is, he can also do a CPF nomination in the event of death, to transfer my money back to me?

haha.. anyway not sure even if what he say is true. I sort of went to CPF site to read about retirement account, but still unsure.

 

[BBCWatcher]

Have this question in mind that was ask by my uncle.

If i not wrong, in a CPF retirement account, if the amount inside hits the full retirement sum, this year for example, it is $186k, any amount above $186k in that retirement account, can be withdrawn anytime yet it still have 4 to 5 percent interest right? (Correct me if i am wrong)

Money withdrawn from a Retirement Account no longer earns interest from CPF, and thus future CPF LIFE (or classic Retirement Sum Scheme) monthly payouts are lower. Funds remaining in a Retirement Account continue to earn interest.

To make a lump sum withdrawal from a CPF Retirement Account may require a property pledge or charge. It depends on the timing and amount of the lump sum withdrawal.

So my uncle was asking, since his retirement account is already max out, why not ask me put money in his retirement account, example 100k and treat it as a liquid "fix deposit" whereby that $100k can generate 4 to 5 percent ( i not sure exactly how much interest) and anytime i want the money, my uncle can withdraw out for me.

That might be nice, but no, it doesn't work that way. Cash top ups to a CPF Retirement Account are dedicated to CPF LIFE (or classic Retirement Sum Scheme-like) monthly payouts. Any lump sum withdrawal option that exists (via property pledge/charge) already exists and does not change with a cash top up.

It's still a very good deal, though.

However, if his CPF MediSave Account has reached the Basic Healthcare Sum (BHS) then an "all three account" Voluntary Contribution would land in his CPF Special Account and CPF Ordinary Account in a split that depends on his age. The VC must fit within the CPF Annual Limit. Those dollars are liquid from age 55, although lump sum withdrawals come first from the higher interest earning Special Account. Those dollars earn a blended interest rate of greater than 2.5%. (Exactly how much greater depends on his age.)

If there is, he can also do a CPF nomination in the event of death, to transfer my money back to me?

He can already do that, but his CPF nomination is solely his decision. You don't get to make that decision for him, and he can change his decision any time he wishes.

haha.. anyway not sure even if what he say is true. I sort of went to CPF site to read about retirement account, but still unsure.

It can be a VERY good idea to deposit funds into an elder's CPF Retirement Account, but it's not for fixed deposit-like purposes.

 

[hyperfuse]

Money withdrawn from a Retirement Account no longer earns interest from CPF, and thus future CPF LIFE (or classic Retirement Sum Scheme) monthly payouts are lower. Funds remaining in a Retirement Account continue to earn interest.

To make a lump sum withdrawal from a CPF Retirement Account may require a property pledge or charge. It depends on the timing and amount of the lump sum withdrawal.

oh i meant, not to withdraw right away.

For example, now he has $186k in his RA. I top up additional 100k so it becomes $286k. one year later, will that $100k i top up have interest generated? If yes, i can take it out after a year?

 

[BBCWatcher]

For example, now he has $186k in his RA. I top up additional 100k so it becomes $286k. one year later, will that $100k i top up have interest generated?

Yes.

If yes, i can take it out after a year?

No. You cannot make lump sum withdrawals from a CPF Retirement Account of cash top ups or of the accrued interest on those top ups.

 

[hyperfuse]

No. You cannot make lump sum withdrawals from a CPF Retirement Account of cash top ups or of the accrued interest on those top ups.

noted.
1) so that 100k on top of that full retirement sum, my uncle will not be able to withdraw at all?

2)So it will become utilised for CPF life?

 

[Smokey.B]

oh i meant, not to withdraw right away.

For example, now he has $186k in his RA. I top up additional 100k so it becomes $286k. one year later, will that $100k i top up have interest generated? If yes, i can take it out after a year?

lol, u are treating his RA as your own high yield savings account??

Anyway BBC has mentioned, cash top up will be "stuck" as CPF Life premium

On CPF website, I presume the whole RA represents the amount of CPF life premium, is there a segregation of the amount which was topped up?

 

[zoneguard]

2)So it will become utilised for CPF life?

It depends. The top-up can be used as additional CPF LIFE premium or if LIFE payout has begun, alternatively it flows out as AMP.
https://www.cpf.gov.sg/members/FAQ/...group=CPF LIFE&folderid=11673&ajfaqid=2186389
Do note that any top-up you have done to your uncle's RA is a gift to him and you lose all rights to your monies once it is in his RA.

And no lump sum withdrawals from RA for any top-ups.

 

[jayou8]

Just to clarify ...

In other words, am I correct to say TS's intention of using his uncle CPF account as a "high yield saving deposit" is still possible if it is done via VC into the OA, SA, MA accounts?

 

[BBCWatcher]

In other words, am I correct to say TS's intention of using his uncle CPF account as a "high yield saving deposit" is still possible if it is done via VC into the OA, SA, MA accounts?

Maybe, sort of. Any portion of an "all three account" Voluntary Contribution that lands in the MediSave Account cannot ordinarily be withdrawn in a lump sum. Some portion will land in MA if the MA is below the Basic Healthcare Sum. Also, the order of withdrawal is SA (higher interest earning) then OA (lower interest earning). And this VC must fit within the CPF Annual Limit ($37,740 currently).

Repayment of OA dollars used for housing may be possible, but note the order of withdrawal (SA then OA).

Funds deposited in this elder's account become his, as mentioned.

 

[reddevil0728]

lol, u are treating his RA as your own high yield savings account??

actually more like uncle suggesting.

 

[zoneguard]

Any portion of an "all three account" Voluntary Contribution that lands in the MediSave Account cannot ordinarily be withdrawn in a lump sum.

To add on, the VC follow the age band allocation ratios into the 3 accounts and the bulk of it end up in the lower yield OA. After 60, MA. If MA contributions overflow due to BHS, overflow to OA.

 

[BBCWatcher]

There will be some adjustments to the percentages for older workers and contributors effective January 1, 2022.

 

[zoneguard]

There will be some adjustments to the percentages for older workers and contributors effective January 1, 2022.

Yes, the new ratios.

 

[hyperfuse]

Okay pretty confusing to me..

So yea bottom line is, no point topping up my uncle's RA for the benefit of higher interest since my uncle can't withdraw it out and pass me back ya.

 

[henrylbh]

Have this question in mind that was ask by my uncle.

If i not wrong, in a CPF retirement account, if the amount inside hits the full retirement sum, this year for example, it is $186k, any amount above $186k in that retirement account, can be withdrawn anytime yet it still have 4 to 5 percent interest right? (Correct me if i am wrong)

So my uncle was asking, since his retirement account is already max out, why not ask me put money in his retirement account, example 100k and treat it as a liquid "fix deposit" whereby that $100k can generate 4 to 5 percent ( i not sure exactly how much interest) and anytime i want the money, my uncle can withdraw out for me.

Is there such a thing?

If there is, he can also do a CPF nomination in the event of death, to transfer my money back to me?

haha.. anyway not sure even if what he say is true. I sort of went to CPF site to read about retirement account, but still unsure.

Only those from age 55 will have a Retirement Account (RA) in addition the usual Ordinary Account, Medisave Account (MA) and Special Account (SA).

Whatever money in RA cannot be withdrawn but will be paid out in instalments which can commence anytime between age 65 to 70. However RA can still be topped up to prevailing FRS or ERS. So if there is still room, your top ups to his RA will be 'frozen'. (Part of RA money can be withdrawn under certain rules but you no need to know for the moment).

Any balance in OA and SA can be withdrawn in full, only after FRS is met at 55 age or after. For future withdrawal purpose, your voluntary contribution (your deposit) into his CPF will go into OA, SA and MA according to age band. The amount that goes into MA in excess of BHS will flow to OA, only if FRS has been met.

Just understanding this little info, how can you possibly take back your deposit when needed. No need to consider that he may have dementia or change of heart

How old Is your uncle and is he alone with no beneficiary? Of course he can made a nomination and he can change the nomination later in favour of his xxx.

A little knowledge is a dangerous thing.

 

[hyperfuse]

Only those from age 55 will have a Retirement Account (RA) in addition the usual Ordinary Account, Medisave Account (MA) and Special Account (SA).

Whatever money in RA cannot be withdrawn but will be paid out in instalments which can commence anytime between age 65 to 70. However RA can still be topped up to prevailing FRS or ERS. So if there is still room, your top ups to his RA will be 'frozen'. (Part of RA money can be withdrawn under certain rules but you no need to know for the moment).

Any balance in OA and SA can be withdrawn in full, only after FRS is met at 55 age or after. For future withdrawal purpose, your voluntary contribution (your deposit) into his CPF will go into OA, SA and MA according to age band. The amount that goes into MA in excess of BHS will flow to OA, only if FRS has been met.

Just understanding this little info, how can you possibly take back your deposit when needed. No need to consider that he may have dementia or change of heart

How old Is your uncle and is he alone with no beneficiary? Of course he can made a nomination and he can change the nomination later in favour of his xxx.

A little knowledge is a dangerous thing.

Yea he's a single. No dependants.

But yea we were just having casual chat about it. Thanks to all who clarified.

But then I just read. So the monies in SA and OA that leftover after the RA has FRS can be withdrawn in full? So which means if I top up his OA with 100k, can he withdraw after say a year later citing my same reasons treating it like a high yield Account?

 

[qhong61]

Okay pretty confusing to me..

So yea bottom line is, no point topping up my uncle's RA for the benefit of higher interest since my uncle can't withdraw it out and pass me back ya.

Dont stress him.

 

[henrylbh]

Yea he's a single. No dependants.

But yea we were just having casual chat about it. Thanks to all who clarified.

But then I just read. So the monies in SA and OA that leftover after the RA has FRS can be withdrawn in full? So which means if I top up his OA with 100k, can he withdraw after say a year later citing my same reasons treating it like a high yield Account?

Yes money in SA followed by OA can be withdrawn in full, if FRS is met at 55 or after. Note contribution that flows into MA is frozen, unless BHS is met and BHS keeps increasing till the amount is fixed at 65 and any shortfall later must be made good.

 

[highsulphur]

Can one have more than the existing ERS in RA?

 

[andyhtc]

Can one have more than the existing ERS in RA?

I don't think so based on the CPF balance charts (no longer available on the CPF website) that show the bestow amounts decreasing with age.

Assuming $300k in ERS and a simple 4% interest rate, the annual interest is $12k, so if the monthly payout is $2k or annually $24k, it will be a simple drawdown of RA after factoring in the accumulation from interest.