Put all $$$ into Cpf special account, pay housing loan using cash.

[sandwicher]

If you want to compare the pros and cons. The temasek bond wins yours hands down.

1) Once investment graded bond changes to $1000 per lot, you can easily compound to any safe instrument you like.

2) The bond has a maturity date, yours you will almost never get back your full principal amount ever.

3) The bond has a fix coupon rate, yours changes every quarter.

4) The bond does not have any variables, everything is set in stone, yours, changes as and when the issuer likes without your consent.

5) Lets say a super safe bond comes out with 5-6% coupon, those invested in Temasek bond, can sell and buy into it, whereas you are forever stuck with what cpf wants you to have.

Point 2: I may be wrong, but your interest portion would because a HUGE portion. In actual fact, you shouldn't have a problem getting your principal back, just now the full interest earned.

 

[SCG8866T]

Point 2: I may be wrong, but your interest portion would because a HUGE portion. In actual fact, you shouldn't have a problem getting your principal back, just not the full interest earned.

Why short change yourself?

 

[martin]

I like this topic because i have never thought about this. I have idle funds in my OA, so i would like to understand more about this transfer. From cpf website.

"Transfer the savings from your OA to your SA for higher interest if you do not intend to use your OA for housing. You can transfer an amount up to the prevailing Minimum Sum (MS) of $117,000* in your SA."

I don't understand the above. Does it mean that if my SA has more than 117k, i cannot transfer any more from OA to SA?

Or

Does it mean the max amount one can transfer to SA is 117k?

 

[antonpoh]

you are wrong. you can withdraw at all except your min sum at 55.
https://mycpf.cpf.gov.sg/Members/schemes/schemes/retirement/cpf-withdrawals-at-55-years-old

you can draw on your cpf life at 65
https://mycpf.cpf.gov.sg/Members/schemes/schemes/retirement/cpf-life

That's good.. I just need the Basic Retirement Sum. Will withdraw the rest.

 

[edwinttt1978]

I like this topic because i have never thought about this. I have idle funds in my OA, so i would like to understand more about this transfer. From cpf website.

"Transfer the savings from your OA to your SA for higher interest if you do not intend to use your OA for housing. You can transfer an amount up to the prevailing Minimum Sum (MS) of $117,000* in your SA."

I don't understand the above. Does it mean that if my SA has more than 117k, i cannot transfer any more from OA to SA?

Or

Does it mean the max amount one can transfer to SA is 117k?

That appears to be a non-updated link.

The correct sentence should read:
"The maximum amount that you can transfer from your OA to your SA is the difference between the current Full Retirement Sum ($161,000 from 1 July 2015 to 31 December 2016) and the sum of your SA savings and SA withdrawn under the CPF Investment Scheme (CPFIS-SA)."

So, if SA has 161k, no more transfers are permitted for now.

https://mycpf.cpf.gov.sg/Members/FAQ/schemes/retirement/retirement-sum-scheme

 

[oceanicmanta]

Oooo I learnt something new today. Cool.

Meaning, on top of the tax reduction for your monthly CPF contributions you are still able to have more reduction by topping up $7k in your SA with cash.

Thanks.

To elaborate, you have to consider the tax bracket you are in ... if you are gonna be taxed at 16%, you save $1,120 (16% of $7k) in taxes that year. However, if you r in the 3% tax bracket, u save $210.

 

[pcmdan]

To elaborate, you have to consider the tax bracket you are in ... if you are gonna be taxed at 16%, you save $1,120 (16% of $7k) in taxes that year. However, if you r in the 3% tax bracket, u save $210.

thanks. sadly i dont fall under the 3%. but i get the gist thanks

 

[highsulphur]

thanks. sadly i dont fall under the 3%. but i get the gist thanks

You should be happy you get to pay more tax

 

[havetheveryfun]

I am a bit curious how you got so much money in SA when you are only 30. Suppose you transferred everything from OA to SA right after you started getting the first paycheck also doesn't justify for that much, unless you pumped a lot of cash into it voluntary

he just earns a lot

 

[deathman91]

he just earns a lot

Figured that out after reading the thread. Oh well, idk but if he can earn that much, I suppose he could have have gotten a better yield elsewhere than putting it in the cpf.

But like he said, he wanted to minimize the risk and the cpf is pretty much risk free and effortless like some had mentioned. The only downside is the goal post keep shifting and like everything, nothing is certain.


The cpf is actually a good scheme for those that are not investment savvy until they decided to lock up ur $ unless u hit MS and do a monthly payout.

On a side note, I wanna ask something, the bequest on the cpf life is paid cash to the beneficiaries right?

 

[dork32]

Figured that out after reading the thread. Oh well, idk but if he can earn that much, I suppose he could have have gotten a better yield elsewhere than putting it in the cpf.

But like he said, he wanted to minimize the risk and the cpf is pretty much risk free and effortless like some had mentioned. The only downside is the goal post keep shifting and like everything, nothing is certain.


The cpf is actually a good scheme for those that are not investment savvy until they decided to lock up ur $ unless u hit MS and do a monthly payout.

On a side note, I wanna ask something, the bequest on the cpf life is paid cash to the beneficiaries right?

the bequest for cpf life standard is a joke

 

[deathman91]

the bequest for cpf life standard is a joke

Yes it seems like a joke, not sure how they did the calculations. If it is cold hard cash to beneficiaries, the basic plan is seems so much like a better deal to me.

Take for example, I have $100k and from the CPF Calculator, the result is as follows.

Standard Plan
Monthly payout from 65 : $779 - $856
Bequest at age 65 : $108,669 - $110,058
Bequest at age 75 : $13,153 - $15,105
Bequest at age 85 : $0
Bequest at age 95: $0

Basic Plan
Monthly payout from 65 : $701 - $772
Bequest at age 65 : $139,059 - $144,844
Bequest at age 75 : $100,967 - $106,450
Bequest at age 85 : $46,187 - $48,515
Bequest at age 95: $0

Just a $80 reduce in monthly payout, I get so much more bequest. I ran through excel the calculate how much would I get if I invest the $80 monthly that pays 5% PA, compounded monthly.

$986.40 $2,023.27 $3,113.18 $4,258.86 $5,463.16 $6,729.06 $8,059.74 $9,458.49 $10,928.80 $12,474.34

Suppose the person died at age 75, I only get 12.5k(invest the $80 monthly)+15k(Standard life bequest at age 75) while I would have $100k bequest if on basic plan.

Also, at age 65 when payout haven even started, the bequest is already different?
Am I missing something here?

 

[henrylbh]

My aunty was born in 1921. She had life pension of $750 pm from age 55. At 80 she opted for lump sum payment of 40k plus thinking she doesn't have much time left. Now she is 94 and broke.

 

[dork32]

Yes it seems like a joke, not sure how they did the calculations. If it is cold hard cash to beneficiaries, the basic plan is seems so much like a better deal to me.

Take for example, I have $100k and from the CPF Calculator, the result is as follows.

Standard Plan
Monthly payout from 65 : $779 - $856
Bequest at age 65 : $108,669 - $110,058
Bequest at age 75 : $13,153 - $15,105
Bequest at age 85 : $0
Bequest at age 95: $0

Basic Plan
Monthly payout from 65 : $701 - $772
Bequest at age 65 : $139,059 - $144,844
Bequest at age 75 : $100,967 - $106,450
Bequest at age 85 : $46,187 - $48,515
Bequest at age 95: $0

Just a $80 reduce in monthly payout, I get so much more bequest. I ran through excel the calculate how much would I get if I invest the $80 monthly that pays 5% PA, compounded monthly.

$986.40 $2,023.27 $3,113.18 $4,258.86 $5,463.16 $6,729.06 $8,059.74 $9,458.49 $10,928.80 $12,474.34

Suppose the person died at age 75, I only get 12.5k(invest the $80 monthly)+15k(Standard life bequest at age 75) while I would have $100k bequest if on basic plan.

Also, at age 65 when payout haven even started, the bequest is already different?
Am I missing something here?

if you plan to die at 75, better dont get standard

 

[dork32]

for standard, bequest is from annuity.

for basic, bequest is from retirement account.

annuity is meant to cheat you.

 

[deathman91]

if you plan to die at 75, better dont get standard

One can't really 'plan' to die hahaha. So one can only do a guesstimate. From what it seems, it would only be better to be on the standard plan if you are able to live beyond age where the bequest would have been 0 on both plan. Which seems to be at around the age 90.

 

[kehyi4]

Also, at age 65 when payout haven even started, the bequest is already different?
Am I missing something here?

I did some research into this recently.

From what I found out:
At 55, RA is created with BRS/FRS or whatever sum you have. The amount is left to earn interest until 65.
At 65, CPF Life policy is issued:

For Standard Plan - the entire savings in RA is deducted as the annuity premium which starts paying out at 65. Amount left in RA would become ZERO. No bequest for you...

For Basic Plan - a portion of RA (estimated to be 20%? no one knows for sure) is deducted as the annuity premium which starts paying at 90. From 65 to 90, the CPF Life payments come from your own RA. Bequest is whatever sum is left in your RA when you kick the bucket...

This explains the difference in the bequests for the two plans.

edit - CPF FAQ has one on this topic. But i think it doesn't really answer the question.

Q: Why is the bequest for LIFE Basic Plan and LIFE Standard Plan so different?

A: Under the CPF LIFE Standard Plan, the interest earned on the annuity premium (including extra interest earned on your combined CPF balances) will be paid into the Lifelong Income Fund to provide you with a higher monthly payout. On the other hand, under the LIFE Basic Plan, the remaining Retirement Account savings will continue to earn interest (including extra interest earned on your combined CPF balances) in your Retirement Account. This accounts for the different bequest under LIFE Standard and Basic Plan.

 

[martin]

That appears to be a non-updated link.

The correct sentence should read:
"The maximum amount that you can transfer from your OA to your SA is the difference between the current Full Retirement Sum ($161,000 from 1 July 2015 to 31 December 2016) and the sum of your SA savings and SA withdrawn under the CPF Investment Scheme (CPFIS-SA)."

So, if SA has 161k, no more transfers are permitted for now.

https://mycpf.cpf.gov.sg/Members/FAQ/schemes/retirement/retirement-sum-scheme

Thanks. This is much clearer now.

 

[martin]

Yes it seems like a joke, not sure how they did the calculations. If it is cold hard cash to beneficiaries, the basic plan is seems so much like a better deal to me.

Take for example, I have $100k and from the CPF Calculator, the result is as follows.

Standard Plan
Monthly payout from 65 : $779 - $856
Bequest at age 65 : $108,669 - $110,058
Bequest at age 75 : $13,153 - $15,105
Bequest at age 85 : $0
Bequest at age 95: $0

Basic Plan
Monthly payout from 65 : $701 - $772
Bequest at age 65 : $139,059 - $144,844
Bequest at age 75 : $100,967 - $106,450
Bequest at age 85 : $46,187 - $48,515
Bequest at age 95: $0

Just a $80 reduce in monthly payout, I get so much more bequest. I ran through excel the calculate how much would I get if I invest the $80 monthly that pays 5% PA, compounded monthly.

$986.40 $2,023.27 $3,113.18 $4,258.86 $5,463.16 $6,729.06 $8,059.74 $9,458.49 $10,928.80 $12,474.34

Suppose the person died at age 75, I only get 12.5k(invest the $80 monthly)+15k(Standard life bequest at age 75) while I would have $100k bequest if on basic plan.

Also, at age 65 when payout haven even started, the bequest is already different?
Am I missing something here?

Is the monthly payout fixed for the rest of your life? For eg,if you opt for basic as above, it says payout is $701-$772, but does this amount increase gradually to account for inflation so it increases as you grow older?

 

[kehyi4]

Is the monthly payout fixed for the rest of your life? For eg,if you opt for basic as above, it says payout is $701-$772, but does this amount increase gradually to account for inflation so it increases as you grow older?

From CPF FAQ:

Q: Is the CPF LIFE monthly payout fixed?

A: CPF LIFE payouts are designed to be stable. However, we may adjust your monthly payout for the following reasons.

• Changes in mortality experience. If more people live longer than expected, the monthly payout might be lower, and vice versa
• Changes in interest rates. If interest rates are higher than expected, the monthly payout might be higher, and vice versa.
• Transactions which affect your Retirement Account balance, for example, refund of money made from selling property, top-ups, lump-sum withdrawals and so on.
• If you had chosen the LIFE Basic Plan, the reduction in any extra interest earned and paid out as the combined balances in your CPF accounts, including the amount committed to CPF LIFE, falls below $60,000.