CPF Account Value Thread 2024

[royalmix]

CPFB is not a bank. It has a "very complicated"** way of doing things.

It definitely pays to understand the nitty gritty how it works, then you can see the indepth pros and cons of each CPF Life Plan, what and when actions to be taken, if you want to "max your interest earnings"!

So much "hints" for now!

(If you are interested to learn more, just google hardwarezone for the respective CPF threads for the discussions.)

** why "very complicated"? cos you cannot find the answers even after reading thru all the lines in the website!

https://blog.seedly.sg/cpf-interest-rate-computation/

What you are writing is a convoluted way of saying the **lowest balance of the month**.

Firstly, Seedly is not CPF and thus might have misinterpreted CPF to begin with.

Search "How is my CPF interest computed and credited into my accounts?" and go to CPF's FAQ section

"CPF balances used for interest computation are affected by the transactions in your account. For instance, contributions (including refunds) received this month start earning interest next month. Withdrawals/deductions in this month will not earn interest from this month onwards."

It is not the lowest balance for the month, but previous end-of-month's balance - withdrawals this month.
Note: Deposits this month do not qualify for immediate interest for the same month.

For people above 55 who can start withdrawing money, they might assume "lowest balance of the month" as you or Seedly has pointed out and plan their withdrawals after their employer deposit into their CPF, hence achieving a higher "lowest balance of the month". These people will not receive the "extra" interest from CPF they thought they would by delaying their withdrawals.

Remember my recent hints?

This is one example of CPF rules which is "very complicated" because you cannot find it when you read every line at the website. It is written all over the website and you need to know how to "consolidate to find the final correct answer"! There are "some hidden rules"!

So both of you are still not totally correct! Only CPFB knows, unless you ask!

 

[royalmix]

Do you know the answer?

CPFB is not a bank. It has a "very complicated"** way of doing things.

It definitely pays to understand the nitty gritty how it works, then you can see the indepth pros and cons of each CPF Life Plan, what and when actions to be taken, if you want to "max your interest earnings"!

So much "hints" for now!

(If you are interested to learn more, just google hardwarezone for the respective CPF threads for the discussions.)

** why "very complicated"? cos you cannot find the answers even after reading thru all the lines in the website!

Read my hints again! Bolded above! Good luck!

 

[bargin]

Every CPF member below age 65 has room for Voluntary Contributions (VCs) to MA whenever the Basic Healthcare Sum (BHS) increases. (The BHS is increasing from $71,500 to $75,500 on January 1, 2025, for members that haven't reached age 65 yet.) And every CPF member using MediSave to pay insurance premiums (MediShield Life, Integrated Shield, CareShield Life) and/or medical spending opens up room below the BHS for VCs.

Do we need to top up MA once to $75,500 in January 2025 or we need to top up as and when MA fall below $75,500 when there is deduction to pay insurance premium, medical spending

 

[BBCWatcher]

Do we need to top up MA once to $75,500 in January 2025 or we need to top up as and when MA fall below $75,500 when there is deduction to pay insurance premium, medical spending

You don’t need to do either. Voluntary Contributions are voluntary. For tax relief purposes you typically want to make Voluntary Contributions just ahead of payroll-related compulsory contributions and ahead of other MediSave deposits such as reimbursements from insurance. But that too is a choice, not an obligation.

 

[hwmook]

Do we need to top up MA once to $75,500 in January 2025 or we need to top up as and when MA fall below $75,500 when there is deduction to pay insurance premium, medical spending

What are you trying to achieve? If you want to get maximum tax relief from MA top up then you need to top up whenever you got the opportunity. If you know your CPF contribution is coming in 12Jan then you just top up before that to maximize the amount you can top up and thus maximize tax relief. I have a deduction coming in Feb so I will also top up after deduction and before the next contribution come in to maximize the tax relief you can get. Excess contribution will also flow over to SA and then OA so I am trying to get more amount into OA which I will then use for mortgage repayment.

 

[bargin]

What are you trying to achieve? If you want to get maximum tax relief from MA top up then you need to top up whenever you got the opportunity. If you know your CPF contribution is coming in 12Jan then you just top up before that to maximize the amount you can top up and thus maximize tax relief. I have a deduction coming in Feb so I will also top up after deduction and before the next contribution come in to maximize the tax relief you can get. Excess contribution will also flow over to SA and then OA so I am trying to get more amount into OA which I will then use for mortgage repayment.

Thks for your explanation. Got deduction coming this Jan and Feb for insurance, thus might consider to top up MA, With the closing of SA in Jan, any excess will flow to OA, right ? Don't need to max tax relief purpose.

 

[hwmook]

Thks for your explanation. Got deduction coming this Jan and Feb for insurance, thus might consider to top up MA, With the closing of SA in Jan, any excess will flow to OA, right ? Don't need to max tax relief purpose.

If SA or RA already more than FRS then naturally will just overflow to OA.

 

[artncraft]

ChatGPT knows quite a lot about CPF Life. I'm not sure if the remaining (excess) RA can be withdrawn though.


Will I get to keep the interest from my CPF Life in my RA before my payout starts at 70?

Yes, the interest earned in your Retirement Account (RA) before your CPF Life payout starts at 70 will continue to accumulate.

Since you are deferring your payout start age to 70, your RA savings will continue to earn interest (up to 6% per annum, depending on your balance) until the payout begins. The accumulated interest will increase your CPF LIFE monthly payouts when they start at 70.

This means your payout at 70 will be higher than if you started at 65, as both your principal and the compounded interest will contribute to a larger annuity pool.


Will I get to keep the interest from my CPF Life in my RA after my payout starts at 70?

No, once your CPF LIFE payouts start at 70, the savings used for CPF LIFE are pooled into the CPF LIFE scheme, and you will no longer directly receive interest from your Retirement Account (RA). Instead, your monthly payouts are funded by the annuity pool, which is managed by CPF.

However, CPF LIFE is designed so that your payouts remain stable and lifelong, regardless of how long you live. The interest earned on the pooled funds is shared among all CPF LIFE members to sustain the payouts.

In short:

• Before 70: Your RA savings continue to earn interest, increasing your eventual payout.
• After 70: Your RA savings are transferred to CPF LIFE, and you receive fixed monthly payouts for life, but you no longer receive RA interest directly.

So after my CPF Life starts at 70, my RA will have the CPF Life FRS or ERS amount deducted?

Yes, once your CPF LIFE payouts start at 70, the amount required for CPF LIFE—whether it's the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS)—will be deducted from your Retirement Account (RA) and transferred into CPF LIFE.

What happens to your RA at 70?​

1. CPF LIFE Deduction:
   • The amount required for your CPF LIFE plan (FRS or ERS) will be fully deducted from your RA and transferred into the CPF LIFE annuity pool.
   • This means your RA will no longer hold these funds after the transfer.
2. Remaining RA Savings (if any):
   • If you have more than the required CPF LIFE sum in your RA at 70, the excess will remain in your RA and continue earning interest (up to 6% per annum).
   • You can withdraw this excess anytime if you wish.

Summary:​

• The FRS/ERS amount is deducted from your RA and transferred into CPF LIFE.
• Any excess in RA stays and continues to earn interest.
• Your RA will not earn interest on the transferred CPF LIFE amount since it is now part of the CPF LIFE annuity pool.

 

[reddevil0728]

ChatGPT knows quite a lot about CPF Life. I'm not sure if the remaining (excess) RA can be withdrawn though.


Will I get to keep the interest from my CPF Life in my RA before my payout starts at 70?

Yes, the interest earned in your Retirement Account (RA) before your CPF Life payout starts at 70 will continue to accumulate.

Since you are deferring your payout start age to 70, your RA savings will continue to earn interest (up to 6% per annum, depending on your balance) until the payout begins. The accumulated interest will increase your CPF LIFE monthly payouts when they start at 70.

This means your payout at 70 will be higher than if you started at 65, as both your principal and the compounded interest will contribute to a larger annuity pool.


Will I get to keep the interest from my CPF Life in my RA after my payout starts at 70?

No, once your CPF LIFE payouts start at 70, the savings used for CPF LIFE are pooled into the CPF LIFE scheme, and you will no longer directly receive interest from your Retirement Account (RA). Instead, your monthly payouts are funded by the annuity pool, which is managed by CPF.

However, CPF LIFE is designed so that your payouts remain stable and lifelong, regardless of how long you live. The interest earned on the pooled funds is shared among all CPF LIFE members to sustain the payouts.

In short:

• Before 70: Your RA savings continue to earn interest, increasing your eventual payout.
• After 70: Your RA savings are transferred to CPF LIFE, and you receive fixed monthly payouts for life, but you no longer receive RA interest directly.

So after my CPF Life starts at 70, my RA will have the CPF Life FRS or ERS amount deducted?

Yes, once your CPF LIFE payouts start at 70, the amount required for CPF LIFE—whether it's the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS)—will be deducted from your Retirement Account (RA) and transferred into CPF LIFE.

What happens to your RA at 70?​

1. CPF LIFE Deduction:
   • The amount required for your CPF LIFE plan (FRS or ERS) will be fully deducted from your RA and transferred into the CPF LIFE annuity pool.
   • This means your RA will no longer hold these funds after the transfer.
2. Remaining RA Savings (if any):
   • If you have more than the required CPF LIFE sum in your RA at 70, the excess will remain in your RA and continue earning interest (up to 6% per annum).
   • You can withdraw this excess anytime if you wish.

Summary:​

• The FRS/ERS amount is deducted from your RA and transferred into CPF LIFE.
• Any excess in RA stays and continues to earn interest.
• Your RA will not earn interest on the transferred CPF LIFE amount since it is now part of the CPF LIFE annuity pool.

Did you validate if all these are true?

 

[artncraft]

Did you validate if all these are true?

The part on Ra withdrawal is strange. That's why I pasted here to check

 

[chong18]

The part on Ra withdrawal is strange. That's why I pasted here to check

It depends on the plan you choose, whether basic, standard or escalating plan. For both standard and escalating plan, at age 70(or payout start age), the full RA balance will be deducted and paid into the common pool as premium. RA becomes 0. For basic plan, only 10-20% of RA is deducted, the remaining balance will continue to sit in RA and earn interest.

 

[maumu]

at the end of the day, it depends on how much you have in the RA account right?

I don't really get the "only 10-20% of RA is deducted" part for 'basic' plan.

 

[chong18]

at the end of the day, it depends on how much you have in the RA account right?

I don't really get the "only 10-20% of RA is deducted" part for 'basic' plan.

This is what I understand from the CPF website, all RA will be used for CPF life premium regardless of how much you have if you choose standard or escalating plan. Meaning you are buying a bigger annuity plan, less premium for basic plan so less coverage for the annuity(longevity insurance) less payout

 

[BBCWatcher]

It depends on the plan you choose, whether basic, standard or escalating plan. For both standard and escalating plan, at age 70(or payout start age), the full RA balance will be deducted and paid into the common pool as premium. RA becomes 0. For basic plan, only 10-20% of RA is deducted, the remaining balance will continue to sit in RA and earn interest.

at the end of the day, it depends on how much you have in the RA account right?
I don't really get the "only 10-20% of RA is deducted" part for 'basic' plan.

These details simply don't matter, and frankly it's misleading to focus on them. They're mere bookkeeping artifacts. No matter which CPF LIFE payout plan you choose the CPF Board will do a great job making sure you and your CPF nominee(s) receive every penny you should for both monthly payouts and residuals (if any). And all payout plans factor in exactly the same CPF interest rates.

The Basic Plan offers a permanently lower monthly payout than the Standard Plan does. In exchange, the Basic Plan tries to cling to a somewhat larger residual somewhat longer. That's it; that's the only difference.

The Escalating Plan is the Standard Plan but with a +2%/year payment escalation slope incorporated into the payout schedule. Payouts start lower than the Standard Plan's payouts then rise annually for the rest of your life, however long it lasts. The Escalating Plan is the only CPF LIFE payout plan that even tries to combat the stark, inexorable reality of Singapore dollar inflation. It's the only payout plan that will support a particular near-level real retirement lifestyle. How nearly level will depend on how close Singapore dollar inflation actually is to the 2%/year slope.

There you go — it's as simple as that in terms of describing the 3 payout plans. Which payout plan is best for you will depend on your situation at the age when you make that decision, not before then. For example, if you do not have any nominee you particularly care about then you should definitely NOT choose the Basic Plan. As another example, if you're in genuinely poor health when the time comes to make a payout plan decision then you probably should not choose the Escalating Plan.

 

[chong18]

For me, it's either basic or standard since I don't foresee myself living beyond 90yo based on family history and current health. Although I'm single with no dependents, I do have family members I care about (like most people) and would rather they receive a larger bequest. Of course if they are very rich by the time I need to make the decision then I'm ok to choose standard plan and let the 'forfeited interest' benefit CPF life common pool, treat it as doing good deeds lol

 

[maumu]

This is what I understand from the CPF website, all RA will be used for CPF life premium regardless of how much you have if you choose standard or escalating plan. Meaning you are buying a bigger annuity plan, less premium for basic plan so less coverage for the annuity(longevity insurance) less payout

so what's the "only 10%-20% of RA is deducted from" come from for the basic plan? if Peter has $1 mil in RA and Susan has $100k, and both choose basic plan, they will have different amounts deducted?

 

[chong18]

so what's the "only 10%-20% of RA is deducted from" come from for the basic plan? if Peter has $1 mil in RA and Susan has $100k, and both choose basic plan, they will have different amounts deducted?

Supposedly yes, of course their payout amount also will be different.

 

[BBCWatcher]

so what's the "only 10%-20% of RA is deducted from" come from for the basic plan? if Peter has $1 mil in RA and Susan has $100k, and both choose basic plan, they will have different amounts deducted?

I'm genuinely curious: why do you care about how the CPF Board conducts this bookkeeping? The CPF Board tracks everyone's individual life annuity claims on the CPF Lifelong Income Fund. If you have more dollars tracked in a Retirement Account you have fewer dollars tracked in the CPF Lifelong Income Fund, and vice versa. Why should you care about that detail?

What you should focus on is what real results you want when it's time to make a payout plan decision. Unless perhaps you work for the CPF Board why should you care about how they track claims — in which electronic database records your claims are reliably tracked?

 

[maumu]

Supposedly yes, of course their payout amount also will be different.

copy and paste from CPF site after Googling..

If you opt for the Basic Plan, about 80-90% of your Retirement Account (RA) savings will be directly used to provide payouts until age 90. The remaining 10-20% will be deducted as your CPF LIFE premium when you join CPF LIFE and used to provide payouts from age 90 for the rest of your life.

Err.. so they're going to deduct 10-20% of the RA savings (regardless of how much you have) and then only use it to payout IF you can live beyond 90?

LOL. sounds like a scam leh.