CPF SA Shielding hack - RIP (Obsolete)

[henrylbh]

Ok understand now

Understand what?

 

[henrylbh]

"Generally, when you turn 55, you can withdraw at least $5,000 or any amount in excess after setting aside your Full Retirement Sum (FRS).

If you are born in 1958 and after, when you turn 65, you can withdraw an additional amount of up to 20% of your retirement savings. See more details on the withdrawal rules."
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Of course, if what you want to do is to only set aside BRS, you will have to pledge property, that decision must also be made at 55, but that will be a different scenario from setting aside FRS/ERS.

I don't think the system allows you to change your mind in the 10 years from 55 to 65, i.e, FRS at 55 then change to BRS then.

What does it say that decision must also be made at 55?

 

[henrylbh]

I never heard of anyone able to do this. Do you have any source for this?

Not only can you withdraw anytime after age 55. You can also apply to withdraw little by little as and when you need, i.e. no need 20% at one go.

 

[highsulphur]

Let's have a illustration

You turn 55 in 2025. BRS is 106.5k. FRS 213k. ERS is 426k

You have 300k in SA and 200k in OA before RA is formed. Once RA is formed, 213k from SA will be swept into RA and balance 87k transferred from SA to OA.

RA: 213k
OA: 287k

Suppose you want to top up your RA to ERS, you transfer 213k from OA to RA
RA: 426k
OA :74k

Assuming RA interest for the next 10 years is 4% and there is no other inflow into RA. Your RA after 10 years will be 1.04^10*426=630.5k

How much can I withdraw at 65Y (after 10Y from 55Y)? Will it be
1) 20% of 213k (original FRS into RA)
2) 20% of 426k (original ERS into RA)
3) 20% of 630.5k (final RA at 65)

My interpretation is (1) 42.6k. Leaving 587.9k in RA for CPF Life payment to start at 65. Did I get it right? I avoid pledging property in this example first.

 

[henrylbh]

Top up RA is irreversible.

Also not part of the 20% lump sum that can be withdrawn anytime for those born in or after 1958.

 

[sohguanh]

Let's have a illustration

You turn 55 in 2025. BRS is 106.5k. FRS 213k. ERS is 426k

You have 300k in SA and 200k in OA before RA is formed. Once RA is formed, 213k from SA will be swept into RA and balance 87k transferred from SA to OA.

RA: 213k
OA: 287k

Suppose you want to top up your RA to ERS, you transfer 213k from OA to RA
RA: 426k
OA :74k

Assuming RA interest for the next 10 years is 4% and there is no other inflow into RA. Your RA after 10 years will be 1.04^10*426=630.5k

How much can I withdraw at 65Y (after 10Y from 55Y)? Will it be
1) 20% of 213k (original FRS into RA)
2) 20% of 426k (original ERS into RA)
3) 20% of 630.5k (final RA at 65)

My interpretation is (1) 42.6k. Leaving 587.9k in RA for CPF Life payment to start at 65. Did I get it right? I avoid pledging property in this example first.

My interpretation of that 20% is not 20% of the capital amount. It is 20% of the total interest for that 10 years excluding the capital.

 

[Guojing88]

Not only can you withdraw anytime after age 55. You can also apply to withdraw little by little as and when you need, i.e. no need 20% at one go.

we are talking about withdrawing from Ra


Read HWZ Forum Rules!

 

[dgeralds]

I have a feeling that there will be policy 'U' turn or slight adjustments to this new policy .....

 

[henrylbh]

we are talking about withdrawing from Ra


Read HWZ Forum Rules!

2 types of withdrawal from RA is allowed. One without property pledge and another one with property pledge.

 

[fr33d0m]

Let's have a illustration

You turn 55 in 2025. BRS is 106.5k. FRS 213k. ERS is 426k

You have 300k in SA and 200k in OA before RA is formed. Once RA is formed, 213k from SA will be swept into RA and balance 87k transferred from SA to OA.

RA: 213k
OA: 287k

Suppose you want to top up your RA to ERS, you transfer 213k from OA to RA
RA: 426k
OA :74k

Assuming RA interest for the next 10 years is 4% and there is no other inflow into RA. Your RA after 10 years will be 1.04^10*426=630.5k

How much can I withdraw at 65Y (after 10Y from 55Y)? Will it be
1) 20% of 213k (original FRS into RA)
2) 20% of 426k (original ERS into RA)
3) 20% of 630.5k (final RA at 65)

My interpretation is (1) 42.6k. Leaving 587.9k in RA for CPF Life payment to start at 65. Did I get it right? I avoid pledging property in this example first.

based on the illustration from CPF, it should be (630.5k - 213k) * 20% - 5k = 78.5k

 

[fr33d0m]

2 types of withdrawal from RA is allowed. One without property pledge and another one with property pledge.

henry, need your expertise on this.

how does one withdraw without property pledge? any actual experience to share?

 

[highsulphur]

based on the illustration from CPF, it should be (630.5k - 213k) * 20% - 5k = 78.5k

Can you sic the illustration from cpf? I don't recall actual numbers

 

[fr33d0m]

Can you sic the illustration from cpf? I don't recall actual numbers

https://www.cpf.gov.sg/member/faq/r...awals/how-is-the-withdrawable-amount-computed

A is CPF balance at 65, so in your case should be 630.5K

 

[BBCWatcher]

I have a feeling that there will be policy 'U' turn or slight adjustments to this new policy .....

In some alternate policy reality it would be interesting if the government partially "shielded" SA for everyone. How about this alternative arrangement to fund Retirement Accounts:

• Sweep the amount in SA above $40,000 into RA;
• Then, if necessary, sweep OA to RA;
• Then, if necessary, sweep remaining SA to RA.

Any credits to SA from the CPF Investment Scheme (SA) from age 55 onward would be refunded first to RA (to make the Full Retirement Sum) then, thereafter, to OA. (Same as the new 2025 policy.)

The portion of compulsory contributions (and VC3As) allocated to SA would instead flow to RA from age 55 to make the Full Retirement Sum. Thereafter, to OA. (Same as the new 2025 policy.)

SA would be effectively frozen at (up to) $40,000 for age 55+ cohorts. Withdrawals could be made in any amount at any time. Withdrawals would come first from SA (same as current policy).

In other words, don't take all SA away. Allow the age 55+ cohort to keep up to $40,000 of SA. That way many pre-retirees and retirees would have both life annuity income and an up to $40,000 high interest buffer for "lumpy" expenses. That'd be a good combination for retirees, and it wouldn't cost too much.

 

[fr33d0m]

In some alternate policy reality it would be interesting if the government partially "shielded" SA for everyone. How about this alternative arrangement to fund Retirement Accounts:

• Sweep the amount in SA above $40,000 into RA;
• Then, if necessary, sweep OA to RA;
• Then, if necessary, sweep remaining SA to RA.

Any credits to SA from the CPF Investment Scheme (SA) from age 55 onward would be refunded first to RA (to make the Full Retirement Sum) then, thereafter, to OA. (Same as the new 2025 policy.)

The portion of compulsory contributions (and VC3As) allocated to SA would instead flow to RA from age 55 to make the Full Retirement Sum. Thereafter, to OA. (Same as the new 2025 policy.)

SA would be effectively frozen at (up to) $40,000 for age 55+ cohorts. Withdrawals could be made in any amount at any time. Withdrawals would come first from SA (same as current policy).

In other words, don't take all SA away. Allow the age 55+ cohort to keep up to $40,000 of SA. That way many pre-retirees and retirees would have both life annuity income and an up to $40,000 high interest buffer for "lumpy" expenses. That'd be a good combination for retirees, and it wouldn't cost too much.

why so complicated? what stops the government from allowing up to 40K (5k if you don't fulfill FRS) to be withdrawn from CPF RA?

https://www.cpf.gov.sg/member/faq/r...n-i-choose-which-cpf-account-to-withdraw-from

the actual order of withdraw is:

1. CPF RA
2. CPF SA
3. CPF OA

 

[vsvs24]

I have a feeling that there will be policy 'U' turn or slight adjustments to this new policy .....

Fat hope. Unless it is for the worse.

Like maybe they will change to under 55 once SA hit FRS, RA created and SA close.

 

[QinWei]

maybe they will change to under 55 once SA hit FRS, RA created and SA close.

Wow, a fantastic proposal!!!!

Too bad u dont work for them

 

[jeffong]

As i said earlier, there's nothing to stop MIW from re-writing the rules on withdrawal. The trust has already been broken and it's up to each individual to determine how much you want to believe their ******** going forward. For me, I'll keep my RA to FRS and find other ways of investing all my OA once I empty it when I hit 55.

 

[sohguanh]

Fat hope. Unless it is for the worse.

Like maybe they will change to under 55 once SA hit FRS, RA created and SA close.

Well one can take SA and invest to prevent it from reaching FRS earlier before 55. But of cuz finding SA investment to beat 4% a bit hard but not zero chance. Now cannot but way before 2020 it is doable.

 

[sohguanh]

As i said earlier, there's nothing to stop MIW from re-writing the rules on withdrawal. The trust has already been broken and it's up to each individual to determine how much you want to believe their ******** going forward. For me, I'll keep my RA to FRS and find other ways of investing all my OA once I empty it when I hit 55.

The trust has been broken so much earlier. Withdraw all at age 55 was the start and they broke it since then. Never trust them ever since.