CPF Account Value Thread 2023

[henrylbh]

The monthly payout for LIFE Basic and Standard slightly different only...why go for
LIFE Standard

The difference is very apparent when you live well beyond 90 but fat hope If got dementia before 90, whatever payout does not mean anything.

 

[henrylbh]

Shhhh!!!!! If more flock to Basic Plan , goalposts may shift or even worse Basic Plan gets scrapped altogether.

Scrapped? That's outright robbery of rights of freedom and people's money. Though intention may be good, all are forced to gamble CPF money with CPFL. And If more flock to basic, then payout need to be reduced substantially and that is tantamount to breach of trust. If more flock to basic means more do not want to gamble. Then might as well revert to old scheme and lengthen payout period from 20 to 25 years and each take care of their own funeral after 90.

 

[reddevil0728]

Scrapped? That's outright robbery of rights of freedom and people's money. Though intention may be good, all are forced to gamble CPF money with CPFL. And If more flock to basic, then payout need to be reduced substantially and that is tantamount to breach of trust. If more flock to basic means more do not want to gamble. Then might as well revert to old scheme and lengthen payout period from 20 to 25 years and each take care of their own funeral after 90.

Technically it’s only robbery of rights of freedom and people’s money if it’s ruled as unconstitutional.

 

[dork32]

If more flock to basic means more do not want to gamble. .

i agree. that is my reason for wanting to choose basic. but some people say taking basic is a gamble. we are gambling against being a destitute should we live long enough.

having said that, gambling cuts both ways. We, the players, are exposed to risk. The bankers are also exposed to risk. Basic is a scheme that lowers the risk on both sides.

 

[reddevil0728]

i agree. that is my reason for wanting to choose basic. but some people say taking basic is a gamble. we are gambling against being a destitute should we live long enough.

having said that, gambling cuts both ways. We, the players, are exposed to risk. The bankers are also exposed to risk. Basic is a scheme that lowers the risk on both sides.

Somehow I think someone going to disagree with you

 

[henrylbh]

Somehow I think someone going to disagree with you

I concur

 

[henrylbh]

i agree. that is my reason for wanting to choose basic. but some people say taking basic is a gamble. we are gambling against being a destitute should we live long enough.

having said that, gambling cuts both ways. We, the players, are exposed to risk. The bankers are also exposed to risk. Basic is a scheme that lowers the risk on both sides.

Destitute at start will be more destitute later with little payout and inflation, if he has little or not enough money in RA to start CPFL. Because of these group of destitute why must force all to gamble with their FRS/ERS as though they will be destitute in future.

 

[henrylbh]

Technically it’s only robbery of rights of freedom and people’s money if it’s ruled as unconstitutional.

Unconstitutional or undemocratic can be reversed Just like cannot stand for president when the slot is reserved against the policy of best man for the job or based on meritocracy

 

[havetheveryfun]

Shhhh!!!!! If more flock to Basic Plan , goalposts may shift or even worse Basic Plan gets scrapped altogether.

CPF already has hinted that Basic Plan is a "legacy plan", which means you can almost be sure it will be removed sometime later , or that new joiners to CPF Life will not be allowed to choose it anymore.

https://www.cpf.gov.sg/member/faq/r...w-that-cpf-life-basic-plan-is-a-legacy-option

 

[henrylbh]

CPF already has hinted that Basic Plan is a "legacy plan", which means you can almost be sure it will be removed sometime later , or that new joiners to CPF Life will not be allowed to choose it anymore.

https://www.cpf.gov.sg/member/faq/r...w-that-cpf-life-basic-plan-is-a-legacy-option

Legacy could mean for posterity.

 

[reddevil0728]

Unconstitutional or undemocratic can be reversed Just like cannot stand for president when the slot is reserved against the policy of best man for the job or based on meritocracy

Until it is, status quo remains lor

 

[reddevil0728]

Legacy could mean for posterity.

It’s a guess after all.

lets see what will happen

 

[henrylbh]

Until it is, status quo remains lor

What status quo? Status quo was changed and become irreversible just because someone who said it is the right thing to do.

 

[reddevil0728]

What status quo? Status quo was changed and become irreversible just because someone who said it is the right thing to do.

Status quo as in constitutional amendment.

I was saying it is technically not “robbery” unless changes to the law is ruled unconstitutional.

you are saying it can be made unconstitutional which I agree. But until it is, the status quo is that the changes is not “robbery”

 

[dork32]

Can I get some opinion of the following situation.

spouse CPF has minimal amount. Not sufficient for even BRS and no property pledge.

first batch to be under cpf life. Wasn’t familiar back then, and can’t remember if ownself selected standard or no reply hence auto standard.

in order to reduce the amount of interest “loss to the pool” (this is the primary objective, longevity risk not a concern in case someone brings that up as there are other sources of income),

Is the the best course of action is not to delay the monthly payout to 70, but to start payout as soon as possible?

this type must really do your maths. you draw earlier, you get your money earlier. you delay, you get a bigger payout.

estimate the age that spouse die. it to calculate the returns of investment for both withdrawing at 65 and 70.

 

[vitaminsmiles]

My EHG was credited few months back, but have yet to be deducted for the DP. Will it earn interest for the period it is in my account?

 

[reddevil0728]

My EHG was credited few months back, but have yet to be deducted for the DP. Will it earn interest for the period it is in my account?

How is my CPF interest computed and credited into my accounts?

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.

https://www.cpf.gov.sg/member/faq/g...terest-computed-and-credited-into-my-accounts

 

[BBCWatcher]

So basic is better for those who want to leave cash behind for their loved ones..

Not necessarily. Read on...

I suppose one will be getting higher monthly payout for standard & escalating plans.

The CPF LIFE Standard Plan provides higher monthly payouts for life than the Basic Plan. Or, if you prefer, the Basic Plan provides lower monthly payouts for life than the Standard Plan. If your retirement lifestyle is above what the Basic Plan supports then you will have to spend down other assets that much faster. Your heirs will thus not inherit assets that you've spent. And/or you cannot give them as much money during your lifetime because you have less lifetime income coming from CPF LIFE.

The CPF LIFE Escalating Plan is the Standard Plan but with a 2%/year escalating slope added to the payout schedule. It starts lower than both payout plans but keeps increasing at 2%/year for life. This is the only plan that helps its recipient maintain a more stable real lifestyle in the face of inflation.

If you can confidently predict a relatively short lifespan and have at least one heir you care about who can wait until you expire, AND you don't need the Standard Plan's payout level, then the Basic Plan can work well for your heir(s). If on the other hand (to pick a simple example) you have no heir(s) — not even a charity you particularly care about — then you really must not ever choose the Basic Plan. A permanently lower monthly payout is permanently lower, and you can't take any remaining assets with you after death. You might as well enjoy the higher payouts, probably in Escalating form unless you can confidently predict a short lifespan.

The monthly payout for LIFE Basic and Standard slightly different only...why go for
LIFE Standard

"Slightly" can add up. The typical CPF LIFE payout recipient receives decades of payouts. Every dollar you don't get from CPF LIFE that you need to spend on your retirement living expenses reduces the residual from other assets that your heirs get and reduces your gift giving ability while you're still alive. The money you need to live on has got to come from somewhere. How that all shakes out depends in part on your lifespan. If you can confidently, realistically predict your lifespan then maybe you play this game a little better.

Please do keep in mind that most people seriously underestimate their own longevity. For some weird reason(s) most of us are wired that way. It might have something to do with evolutionary pressures that were key to survival back when lifespans were typically much shorter.

Read on about age 65 v. age 70 payout start...

Can I get some opinion of the following situation.
spouse CPF has minimal amount. Not sufficient for even BRS and no property pledge.
first batch to be under cpf life. Wasn’t familiar back then, and can’t remember if ownself selected standard or no reply hence auto standard.

in order to reduce the amount of interest “loss to the pool” (this is the primary objective, longevity risk not a concern in case someone brings that up as there are other sources of income),
Is the the best course of action is not to delay the monthly payout to 70, but to start payout as soon as possible?

I don't think it makes a difference in that sense absent further information. Let's suppose your wife's OA+SA+RA is approaching $60,000 and she's approaching age 65 (or maybe past). I could be wrong about this, but I think she's still allowed to start monthly payouts under the classic Retirement Sum Scheme (RSS) arrangement since she's below the $60,000 "mandatory" CPF LIFE participation level. Delaying payout start might toss her into CPF LIFE, and if she really "hates" that then she could start payouts now.

But this is her decision, not yours. In that scenario her payouts would end in about 20 years, maybe less (or even much less) since there's a $250/month minimum payout to exhaustion. Women tend to have greater longevity risk than men (on average), and her longevity risk is that much greater because she doesn't have much (or any?) lifetime income in her pipeline — no longevity insurance to speak of. I respect my wife's decisions, but that's not the offer I personally make to her. I suggest that she nail down a decent or better lifetime income stream, and I have helped her fund it. Her Special Account hit the Full Retirement Sum almost as quickly as mine did as a result, and when the time comes (if she wishes) I'll be happy to help her boost her Retirement Account to the ERS and keep it there. But that's how we roll. Importantly, she gets to decide. If she wants greater financial security then I think that's a fine thing to support (and happily do so).

The other side of the age 65/age 70 decision is that you simply get more juicy 4+% interest (60 more months of it) in the run-up to CPF LIFE, and that's highly likely to be a very nice yield. Moreover, you get 5 years more information about your own expected longevity so that you can make a somewhat more informed decision about your payout plan. So my expectation is that we'll both wait until age 70 to start payouts. We'll see, but that's highly likely.

 

[BBCWatcher]

is it really the case? According to this link, there is no minimum.
https://www.cpf.gov.sg/member/faq/r...-much-cpf-savings-do-i-need-to-join-cpf-life-

There's no minimum to join CPF LIFE. But joining CPF LIFE isn't obligatory either unless your CPF balance(s) are "high enough." I believe that's OA+SA+RA=$60,000 (or more) when you're obliged to join CPF LIFE.

anyway account details did show that CPF LIFE standard plan has been chosen. believe that should be sufficient telltale sign it is indeed CPF LIFE?

Yup, I'd say so.

also understand that premium get deducted once at 55? and the rest at 65 from RA?

Not quite. This rule just recently changed. If any "second sweep" is required then the CPF Board will make that second sweep attempt just before CPF LIFE payout start. That could be just before age 70, the latest CPF LIFE payouts can start. It's no longer fixed at age 65. If the member does nothing it'll happen just before age 70.

so if that's the case, the amount in RA now might be net of the premium deducted at 55. so even though RA is below 60k now, it might in fact be more than 60k overall.

Possible. It depends on the member's cohort. It looks like that's what happened if the online "dashboard" is showing that the CPF LIFE Standard Plan was selected. Nowadays the premium isn't paid until just before CPF LIFE payouts start.

hmmm how did you conclude that based on her CPF situation alone?

You can ignore that part. You've since clarified that she's already on the CPF LIFE Standard Plan and most likely there was already a premium deduction of some kind.

as mentioned ignore longevity risk. her objective is to reduce any interest "loss" to the pool.

I don't think there's any further decision she could make along those lines, not much anyway. The CPF LIFE plan selection is done, apparently, so there's no plan selection on the table. I guess she might be able to make a lump sum withdrawal from RA if she wishes, and that might (at the margins) reduce possible inflow to the CPF Lifelong Income Fund (and reduce her claim share on it). But that'd also reduce her RA.

The only other variable I can think of that she still controls is the payout start age. Maybe that'd have a little effect, but it'd also probably affect how long (and how much) interest she earns on RA. When you whip out a dagger and try to strike at the pool you're also often striking at yourself, really.

If she were to delay payout start until age 70 (the default) and then die right around age 70 (or before) then there's no or minimal "loss" to the pool. So if she wants to reduce loss to the pool then I suppose that's one strategy. (Would she like to start smoking 3 packs of cigarettes per day?) But that involves death far too soon, so it's not the sort of "loss" you hope for, one would think. Even so, there you go, I guess that's one option (just wait as long as possible to start payouts). Another remote possibility is that the CPF Board introduces a new payout plan that she finds more attractive but before she starts payouts. In that event the CPF Board might allow her to switch from her Standard Plan to the new payout plan. (That happened in the past with the CPF LIFE Escalating Plan. There was a one-time limited time switching option available.) Terminating her Singaporean citizenship (or Singapore Permanent Residence) and leaving Singapore and West Malaysia also "works." Then she's not allowed to start CPF LIFE payouts and can either leave all dollars "on account" or withdraw all CPF dollars in a single, total balance lump sum. (No partial withdrawals allowed. It's a complete one-time cash out option.)

Can you tell I've run out of ideas?

 

[BBCWatcher]

yep so regardless, based on the account details it is CPFL, so unless i misinterpret, this will kinda be a moot point to investigate whether she is on CPFL or not?

I think if the dashboard says "CPF LIFE Standard Plan" it's most probably correct.

the first batch where CPFL is compulsory. so more of like the "OG"

See this infographic for the first CPF LIFE cohorts (born in 1958, 1959, 1960, and some of 1961). "Low balance(s)" members weren't (and still aren't) required to join CPF LIFE. That part fundamentally hasn't changed.

right. i hear you. but in the absence of all that. the next best way to reduce interest loss to the pool is to just start payout as soon as possible.

I don't see how that follows really. If she dies at age 68 for example she (well, her nominees really) has definitely "lost" more interest to the pool. If she waits until age 70 to start payouts and dies at 68 (same example) then the pool doesn't even factor.

One way to look at it is that Standard Plan payouts plus any residual will always equal or exceed principal. They'll initially equal principal and then, if she merely lives long enough, they'll exceed it. But if you start payouts 5 years later then that's 60 more months of "dying time" (to put it crudely) when there's zero interest "lost" to the pool within that additional 5 year window. And 60 more months of 4+% RA interest, of course. So I think that's the smart play here for her (odd?) objective, but it's up to her of course.