About CPF life premium

[royalmix]

I guess BBC
- doesn't have cpf or;
- doesn't belong to 1959 or 1960 cohort or;
- didn't opt for basic plan

You dun need to meet Konan's criteria to answer his questions!

You just need to know and understand the CPF Life policies during that period to answer all his questions.

 

[BBCWatcher]

I guess BBC
- doesn't have cpf or;

You guess incorrectly, as it happens.

- doesn't belong to 1959 or 1960 cohort or;
- didn't opt for basic plan

These guesses are correct, but since I'm not even close to age 69.9 there's no payout plan to choose yet.(*)

You dun need to meet Konan's criteria to answer his questions!

We agree on this point at least.

You just need to know and understand the CPF Life policies during that period to answer all his questions.

Yes. In summary, the first iteration of CPF LIFE consisted of 4 payout plan choices. Back then you chose your payout plan earlier, at age 55, and an initial premium was deducted at that earlier age. Fairly soon thereafter the government reduced the number of payout plans to 2. It kept the Basic Plan but added a Standard Plan which is a composite of 2 of the legacy plans. It dropped the pure life annuity/zero residual plan. Later, the Escalating Plan was introduced, and members were able to switch to it. Another set of changes involved deferring the payout plan selection to shortly before payout start, setting the default payout plan to the Standard Plan, and setting the default payout starting age to age 70.

There've been other changes such as reducing the classic Retirement Sum Scheme's terminal age target (i.e. increasing the rate of drawdown, and the minimum payout amount), forced drawdowns from age 70, continuation of automatic classic RSS drawdowns from OA balances, not allowing nominees to keep earning 4+% interest on remaining inherited CPF savings, increasing the Enhanced Retirement Sum from 3X to 4X the Basic Retirement Sum, knocking ex-Singaporeans and ex-Singapore Permanent Residents out of CPF (and CPF LIFE) completely, closing Special Accounts at age 55, introducing the Matched Retirement Savings Scheme (and then making it more generous), modifying the tax relief rules associated with MA/SA/RA top ups, making full CPF contributions mandatory for platform workers (younger cohorts, being phased in now), allowing severely disabled members to draw income from MediSave, and some other tweaks. These various rule changes did not occur at the same time, so depending on what age you are and when you made certain decisions you may have different outcomes.

(*) If you're sensible, if you can afford it, and if you're in a cohort that allows it, you'd start CPF LIFE payouts at the current default age: 70.

 

[royalmix]

You just need to know and understand the CPF Life policies during that period to answer all his questions.

Yes. In summary, the first iteration of CPF LIFE consisted of 4 payout plan choices. Back then you chose your payout plan earlier, at age 55, and an initial premium was deducted at that earlier age. Fairly soon thereafter the government reduced the number of payout plans to 2. It kept the Basic Plan but added a Standard Plan which is a composite of 2 of the legacy plans. It dropped the pure life annuity/zero residual plan. Later, the Escalating Plan was introduced, and members were able to switch to it. Another set of changes involved deferring the payout plan selection to shortly before payout start, setting the default payout plan to the Standard Plan, and setting the default payout starting age to age 70.

There've been other changes such as reducing the classic Retirement Sum Scheme's terminal age target (i.e. increasing the rate of drawdown, and the minimum payout amount), forced drawdowns from age 70, continuation of automatic classic RSS drawdowns from OA balances, increasing the Enhanced Retirement Sum from 3X to 4X the Basic Retirement Sum, knocking ex-Singaporeans and ex-Singapore Permanent Residents out of CPF (and CPF LIFE) completely, closing Special Accounts at age 55, introducing the Matched Retirement Savings Scheme (and then making it more generous), modifying the tax relief rules associated with MA/SA/RA top ups, making full CPF contributions mandatory for platform workers (younger cohorts, being phased in now), allowing severely disabled members to draw income from MediSave, and some other tweaks. These various rule changes did not occur at the same time, so depending on what age you are and when you made certain decisions you may have different outcomes.

Your answer double confirms you dun!
You just come here to confuse others!
All these are not relevant and you still have not answered Konan's questions!

Unless Konan come back, I will not be back, even if he comes?

 

[BBCWatcher]

Your answer double confirms you dun!

With due respect, you've disqualified yourself as an "expert" after you've failed to distinguish between a CPF member and his/her nominee(s). That's utterly basic, pun intended.

 

[Potent]

To ask:
If 55 yo, oa: 40000, sa:410000. Both will combine into ra:450000.
Assuming Frs is 300000, the balance 150000 can take out at 55yo?
Or jus 40000 from oa. Sa money is stuck forever.

 

[BBCWatcher]

To ask:
If 55 yo, oa: 40000, sa:410000. Both will combine into ra:450000.

No. At age 55 by default the CPF Board will try to sweep the Full Retirement Sum ($213,000 in 2025) into a new Retirement Account. In this case the CPF Board will succeed, and the new RA will have $213,000 (if created in 2025). The remaining SA and OA dollars will end up in OA.

If you want more in RA, you can. But you have to make that happen.

Assuming Frs is 300000, the balance 150000 can take out at 55yo?

Yes. And you can withdraw even more if you want to make a property pledge/charge and draw down your new RA below the FRS. Of course the less you have in RA, the lower your lifetime retirement income will be.

Or jus 40000 from oa. Sa money is stuck forever.

No.

 

[Potent]

No. At age 55 by default the CPF Board will try to sweep the Full Retirement Sum ($213,000 in 2025) into a new Retirement Account. In this case the CPF Board will succeed, and the new RA will have $213,000 (if created in 2025). The remaining SA and OA dollars will end up in OA.

If you want more in RA, you can. But you have to make that happen.

Yes. And you can withdraw even more if you want to make a property pledge/charge and draw down your new RA below the FRS. Of course the less you have in RA, the lower your lifetime retirement income will be.

No.

Thank you for the answers.
So no harm transferring all. Oa. To sa to. Get more interest yah?
Since at 55 it becomes ra and is withdrawable.

 

[BBCWatcher]

So no harm transferring all. Oa. To sa to. Get more interest yah?

SA earns higher interest than OA. However, SA has more limited uses before age 55: it cannot be used for housing or education, and there are fewer investment choices available via the CPF Investment Scheme.

Note that you can transfer your OA dollars to a qualified family member's (or more than one family member's) SA or RA. For example, if your spouse has low or zero CPF savings then he/she can earn 5% interest on his/her SA (below age 55) or even potentially 6% interest on his/her RA (age 55+).

Since at 55 it becomes ra and is withdrawable.

OA to SA transfers do not affect how much you can withdraw from CPF at age 55+ except that you'll have more available to withdraw because SA earns higher interest.

But SA does not "become RA" as such. The CPF Board will only fund your new RA at age 55 up to the Full Retirement Sum if it's possible to do so. All remaining SA and OA dollars above the FRS end up in OA, not in RA. If you want more than the FRS in your RA, you have to add dollars to your RA voluntarily — with cash and/or transfers.

 

[Potent]

SA earns higher interest than OA. However, SA has more limited uses before age 55: it cannot be used for housing or education, and there are fewer investment choices available via the CPF Investment Scheme.

Note that you can transfer your OA dollars to a qualified family member's (or more than one family member's) SA or RA. For example, if your spouse has low or zero CPF savings then he/she can earn 5% interest on his/her SA (below age 55) or even potentially 6% interest on his/her RA (age 55+).

OA to SA transfers do not affect how much you can withdraw from CPF at age 55+ except that you'll have more available to withdraw because SA earns higher interest.

But SA does not "become RA" as such. The CPF Board will only fund your new RA at age 55 up to the Full Retirement Sum if it's possible to do so. All remaining SA and OA dollars above the FRS end up in OA, not in RA. If you want more than the FRS in your RA, you have to add dollars to your RA voluntarily — with cash and/or transfers.

Thank you. So will continue to shift to sa until 55

 

[vsvs24]

Thank you. So will continue to shift to sa until 55

You can't shift to SA once SA hit FRS.

But employment contribution can continue to grow SA.

 

[henrylbh]

To ask:
If 55 yo, oa: 40000, sa:410000. Both will combine into ra:450000.
Assuming Frs is 300000, the balance 150000 can take out at 55yo?
Or jus 40000 from oa. Sa money is stuck forever.

If FRS at 55 is 300k, 300k will be deducted from SA of 410k and the balance of 110k will be transferred to OA and OA of 40k plus transfer of 110k from SA will be fully withdrawable thereafter at anytime in any amount, till OA is exhausted.

Thank you for the answers.
So no harm transferring all. Oa. To sa to. Get more interest yah?
Since at 55 it becomes ra and is withdrawable.

Before 55 you can only transfer OA to SA to prevailing FRS amount. After 55 no more SA and any SA balance, after meeting FRS, will be transferred to OA. If you wish you can transfer OA to RA to max of 4x BRS

 

[BBCWatcher]

Thank you. So will continue to shift to sa until 55

You can't shift to SA once SA hit FRS..

Yes, that’s why I mentioned the “qualified family member” option. In these circumstances OA dollars can be transferred to a spouse’s and/or other qualified family member’s SA/RA either if:

1. The family member is under age 55, a Singaporean citizen or Singapore Permanent Resident, and their SA hasn’t yet reached the Full Retirement Sum;
2. The family member is 55 or older, a SC or SPR, and their RA has not reached the Enhanced Retirement Sum (based on principal only and including any lump sum withdrawals).

 

[gold_eagle36]

Govt should make escalating plan more attractive. This is what I got from chatgpt.

Assuming inflation of 2%
Payout age 65
When would escalating start to beat standard.

### Conclusion with 2% inflation:

* The **breakeven point is around age 90**
* If you **live beyond 90**, the **Escalating Plan gives more lifetime purchasing power**
* If you pass **before 90**, the **Standard Plan is better**

This makes Escalating Plan a **longevity hedge** — better if you’re in excellent health or expect to live long.


| Scenario | Real Escalating Payout Over Time | Breakeven Age |
| -------------------- | -------------------------------- | ------------- |
| Inflation = **1.5%** | Real payout **increases** | \~85 |
| Inflation = **2.0%** | Real payout **flat** | \~90 |
| Inflation = **2.5%** | Real payout **declines** | **Never** |
| Inflation > **2.5%** | Real payout declines **faster** | Never ever |

So When Is Escalating Better?
Only when:

Inflation stays below 2% (e.g. 1.5% long-term), or

You live well past 90, and you value higher payouts in old age (perhaps due to medical costs), or

You want payouts that match lifestyle inflation, even if it underperforms in early years

 

[evildoer]

Govt should make escalating plan more attractive. This is what I got from chatgpt.

Assuming inflation of 2%
Payout age 65
When would escalating start to beat standard.

### Conclusion with 2% inflation:

* The **breakeven point is around age 90**
* If you **live beyond 90**, the **Escalating Plan gives more lifetime purchasing power**
* If you pass **before 90**, the **Standard Plan is better**

This makes Escalating Plan a **longevity hedge** — better if you’re in excellent health or expect to live long.


| Scenario | Real Escalating Payout Over Time | Breakeven Age |
| -------------------- | -------------------------------- | ------------- |
| Inflation = **1.5%** | Real payout **increases** | \~85 |
| Inflation = **2.0%** | Real payout **flat** | \~90 |
| Inflation = **2.5%** | Real payout **declines** | **Never** |
| Inflation > **2.5%** | Real payout declines **faster** | Never ever |

So When Is Escalating Better?
Only when:

Inflation stays below 2% (e.g. 1.5% long-term), or

You live well past 90, and you value higher payouts in old age (perhaps due to medical costs), or

You want payouts that match lifestyle inflation, even if it underperforms in early years

how come they keep increasing the FRS by 3% each year ?

 

[wutawa]

how come they keep increasing the FRS by 3% each year ?

So that ppl will put more and more into cpf.
Sa/oa frs/brs keep increasing until 55 yo.
Ers changed from 3x brs to 4x brs in 2025.
Ma bhs also keep increasing until 65 yo.

 

[BBCWatcher]

how come they keep increasing the FRS by 3% each year ?

The three biggest reasons are probably:

1. Singapore dollar inflation.
2. Singaporeans keep living longer, on average.
3. Singaporeans are having fewer children, on average.

These three factors require more savings for retirement needs, other things being equal.

 

[royalmix]

how come they keep increasing the FRS by 3% each year ?

Ask CPFB. The answer is posted at CPFB website!

The increase in retirement sums is due to the following:

1. Increase in cost of living
   As prices of goods and services rise over time, we will need to save more for retirement to ensure that our savings will still be sufficient to cover higher expenses in the future.
   
   
2. Increase in life expectancy
   As people are living longer, we will need more savings to last throughout our retirement.
   
   
3. Increase in standard of living
   As incomes increase over time, our basic retirement expectations and expenses will also naturally increase. Setting aside more savings allows us to receive higher monthly payouts to afford higher retirement expenses in future.

read more here: https://www.cpf.gov.sg/service/article/why-are-the-retirement-sums-increasing-yearly

"Overall, the goal of increasing retirement savings is to help individuals build a financial foundation that will enable them to support themselves through retirement."

 

[evildoer]

The 8k cpf annual top rebate for income tax.. is not actually 8k off your payable tax right ? It's the amount that is accessible for tax.. like your income - deductible - 8k x (ur income rate Bracket) right.. it benefit greatly if u are near the floor to ur current tax bracket. like if this 8k can bring you down to the lower bracket. then its good to top up right ?

like if your assessment.. your income come out to be 121,000 then this 8k self top up to cpf will greatly benefit you, cause bring you down to the lower bracket ?

First $120,000
Next $40,000

 

[reddevil0728]

The 8k cpf annual top rebate for income tax..

the label used is a relief not a rebate.

is not actually 8k off your payable tax right ? It's the amount that is accessible for tax.. like your income - deductible - 8k x (ur income rate Bracket) right..

Yes reduces your taxable income by the amount topped up, up to 8k.

it benefit greatly if u are near the floor to ur current tax bracket. like if this 8k can bring you down to the lower bracket. then its good to top up right ?

It benefits at every level. Doesn’t matter whether drop bracket or not.

like if your assessment.. your income come out to be 121,000 then this 8k self top up to cpf will greatly benefit you, cause bring you down to the lower bracket ?

First $120,000
Next $40,000

Cannot think like that.

in your scenario. Only $1k gets taxed at the higher bracket.

and the $7k get taxed at the lower bracket.

dropping to the Lower bracket doesn’t change ur $1k tax treatment.

 

[BBCWatcher]

The 8k cpf annual top rebate for income tax.. is not actually 8k off your payable tax right ? It's the amount that is accessible for tax.. like your income - deductible - 8k x (ur income rate Bracket) right..

Basically correct. The $8,000 (or $16,000 if you're including contributions/top ups to one or more family members) of tax relief means $8,000 (or $16,000) is subtracted from your taxable income. Please note that total tax relief is limited to $80,000 per person.

it benefit greatly if u are near the floor to ur current tax bracket. like if this 8k can bring you down to the lower bracket. then its good to top up right ?

It doesn't really matter whether you're straddling a tax bracket or not. Any tax savings is a nice bonus, and the more tax savings the better.

like if your assessment.. your income come out to be 121,000 then this 8k self top up to cpf will greatly benefit you, cause bring you down to the lower bracket ?
First $120,000
Next $40,000

You may be overthinking this.