Contribution to Parents CPF

[donald83]

Just read a recent article in Sunday Times that some are making contributions to their parents CPF accounts to fund for their retirement.

Anyone doing the same?

Understand that once you hit 55, a "Retirement Account" will be created and funds will be moved from OA/SA to this RA.

1) If i want to contribute, which account do i deposit into?

2) Will i get tax relief for these contribution?

3) If parents do not have the minimum retirement sum in the account, i can just contribute monthly until they turn 65 and can withdraw everything or buy annuity?

I'm confused about the purpose of Special Account and Retirement account

 

[SBC]

Yes, I have been topping 7k into pearant RA account. He is under MSS.
Start from almost zero. Now RA at 30k plus. Account is earning about $1800 per year.

Started drawn down at 62. Each month drawing about $500.

 

[rrr2015]

I'm also considering but still working if it will benefits us.
but let me share what i read up so far ... hopefully others could correct me if i made any errs

Understand that once you hit 55, a "Retirement Account" will be created and funds will be moved from OA/SA to this RA.

depends if you opt for Basic (BRS) or Full retirement scheme (FRS), any excess can be withdrawn.

1) If i want to contribute, which account do i deposit into?
2) Will i get tax relief for these contribution?

i believe you can find answers here
https://www.iras.gov.sg/IRASHome/In...tions-for-Individuals/CPF-Cash-Top-up-Relief/

3) If parents do not have the minimum retirement sum in the account, i can just contribute monthly until they turn 65 and can withdraw everything or buy annuity?

any contribution to retirement account (RA) can't be taken out, but will be use for payout (MSS) and/or buy CPF life annuity

I'm confused about the purpose of Special Account and Retirement account

Special Account for **"For old age and investment in retirement-related financial products."

Retirement Account will be created on 55 for retirement payout & cpf life

 

[rrr2015]

Yes, I have been topping 7k into pearant RA account. He is under MSS.
Start from almost zero. Now RA at 30k plus. Account is earning about $1800 per year.

Started drawn down at 62. Each month drawing about $500.

may i know when the payout started, did CPF advise how long will the MSS fund last?

 

[SBC]

Dun think so.

Initial monthly drawn-down is $297. It increases as the year goes, when I did more top up.

6% interest for the outstanding amount. Good returns.

Any fee when topping up with Dinners Club CC?

 

[henrylbh]

Yes, I have been topping 7k into pearant RA account. He is under MSS.
Start from almost zero. Now RA at 30k plus. Account is earning about $1800 per year.

Started drawn down at 62. Each month drawing about $500.

I transferred my OA to my father's RA and he got his payout of $1,100 immediately the month after This Jan I am going to transfer some more to his RA and I estimated that the monthly payout will be about $2,300

 

[SBC]

Whau! Very huge fund there.

Monthly payout is much higher CPF Life.

 

[tomicaguy]

That means your OA is more than $161,000? Can't top up parents with your own OA if not more than this.

Sent from Kalimantan using GAGT

 

[rrr2015]

I transferred my OA to my father's RA and he got his payout of $1,100 immediately the month after This Jan I am going to transfer some more to his RA and I estimated that the monthly payout will be about $2,300

good idea if one already have sufficient to cover own's FRS
but i believe your dad needs to be in MSS. it's even better being only son so no complications later ...

but how to calculate MSS payout? i guess all remaining MSS amount will be returned in the end?

 

[henrylbh]

Whau! Very huge fund there.

Monthly payout is much higher CPF Life.

Not huge as you imagined.

 

[joanie_dan]

What's the requirements to use own OA to top up dad's RA? Minimum sum left? Or doesn't matter what amounts, can just transfer everything in my OA to Dad's RA?

I need to go read up abit on CPF rules. Obviously the high interest plus compounding effect is an interesting option, however the complications as to when the dad passes on, and the distribution of his cpf monies, whether Sg govt changes any regulations after some years which has an effect on existing monthly payouts etc

 

[henrylbh]

What's the requirements to use own OA to top up dad's RA? Minimum sum left? Or doesn't matter what amounts, can just transfer everything in my OA to Dad's RA?

I need to go read up abit on CPF rules. Obviously the high interest plus compounding effect is an interesting option, however the complications as to when the dad passes on, and the distribution of his cpf monies, whether Sg govt changes any regulations after some years which has an effect on existing monthly payouts etc

You can top up parents RA to prevailing min sum of 161k using either cash (with tax relief) or transfer (no tax relief) from your OA, if you meet certain conditions. Go website to find out more.

All I can say is, if you top up with cash its' considered an outright gift in the recipient's RA and he can have nominee or leave it to estate.

But if you transfer your OA to the recipient's RA, any balance, up to the amount you transferred, in the recipient's RA will return to your OA. Recipient's nomination does not apply to money transferred from your OA.

Last time, cash top up would return to the giver. They changed the rule some years back, but that did affect cash top-up made before the new rule like in my case.

Reply from CPF -
"your father’s RA balance consist of both your Cash and CPF top-up ($7,000 and $58,000), your father’s monthly payout will be paid from the pool of funds.

You will receive the full principal top-up amount in the event of his death if his RA balance is more than $65,000 back to your Ordinary Account (OA). Any residual balance will be paid to his nominees"

 

[oceanicmanta]

Transfer OA to Parent's RA (MSS)

looking to transfer my OA to my dad's RA, who is on MSS

CPFB provided explanations on my 2 options for lump sum transfer :

1) 10k lump sum transfer. Monthly draw down amount is $297 for 30 months

2) 27.4k lump sum. Monthly draw down is $502 for approx. 60 months

It seems the first option has "better IRR" at 3.52% pa vs 3.25% for the latter ?

Does it look correct ?

My dad's current RA is zero.

 

[henrylbh]

How old is your father?

Nothing to do with IRR. His balance will earn 6% pa.

 

[oceanicmanta]

will be 81 yo later this year

 

[henrylbh]

At that age, whatever sum you top up, the top up will be paid over a period of about 5 years or a min of $297 pm. In other words, if the top-up is little, he will get min 297 until amount in RA is exhausted and if you top up more, he will get more - calculated to last about 5 years.

 

[oceanicmanta]

thanks ... so 5 years is the max withdrawal period under MSS ?

And, 5 years is from the start of first withdrawal date ?

CPFB dint mention this when i asked them on such scenarios ...

 

[henrylbh]

thanks ... so 5 years is the max withdrawal period under MSS ?

For his age, yes.

And, 5 years is from the start of first withdrawal date ?

From first withdrawal.

CPFB dint mention this when i asked them on such scenarios ...

They avoid confusing the public unless you ask further.

 

[oceanicmanta]

They avoid confusing the public unless you ask further.

ok thanks haha guess it's for our own good

 

[thekang]

thanks ... so 5 years is the max withdrawal period under MSS ?

And, 5 years is from the start of first withdrawal date ?

CPFB dint mention this when i asked them on such scenarios ...

5 years isn't the max normally, it's meant to last 20 years from retirement age. Just that your dad is 81 years old already.