CPF Account Value Thread 2023

[BBCWatcher]

As Royalmix suggests, and now that we know her SA and OA balances, any second "sweep" should be small. Therefore the timing of her second sweep won't matter much. And therefore, to achieve her goal, she may wish to withdraw the maximum she's allowed from RA/SA/OA at age 65 (to reduce the second premium) and start payouts at age 65. She'll need to inform the CPF Board of her wishes at about age 64 years 9 months.

 

[dork32]

a lot of people come in here and gave half baked info eg i am 56 years and i have 100k in my oa. how ah? the experts here start making assumptions and gave advice based on these assumptions which turn our to be inappropriate.

 

[BBCWatcher]

a lot of people come in here and gave half baked info....

Who? If you see something you disagree with, quote it and respond to it, with civility. It's not hard to do that.

 

[royalmix]

almost 65.

already checking with CPF what will be happening.

but posting her to ask about the thought process about minimising interest loss to the pool which CPF wouldn't be able to advise.

about 3 mths before her 65th birthday month, CPF will send her a letter telling her she can decide to defer payout and to arrange for a meeting with them. Should go meet up , before the next letter about 1 mth before birthday month telling her how much CPF will deduct for the second/final premium and payout will start birthday mth if she did not inform them in writing she wants to defer.

The second premium is a no choice, ie whatever she has in CPF is at risk, less amount she can withdraw about 5k. Check if she is qualified to withdraw a lumpsum for her cohort, but I doubt if she is below FRS for her CPF Life premium. It was a "mistake" joining CPF Life Standard Plan (Blame CPFB out to con the pioneer batch of old folks as they did not disclose about the treatment of interests during 55 talks, then subsequently changed the policy to delay joining to 65 in 2015 and start to talk about risk pooling later ), only way is to start payout to reduce whatever that could be lost, should she die earlier than 80 - 88. Whenever I mention interest lost, I am referring to should she die earlier than 80 cos the interests in the pool will only be paid to her after 80 to 88. Not forgetting the continued CPFL eating up her extra interest too until her CPF combined balances are zero!

Even if her CPF life premium is below her cohort's FRS, it is no problem once she reach 65 and start payout. That should stop CPFB from taking more premiums from her, unless she make a mistake to topup to RA after 65! Discuss and confirm all these with CPFB when u and her meet up with them to finalise her CPF Life Policy.

 

[BBCWatcher]

about 3 mths before her 65th birthday month, CPF will send her a letter telling her she can decide to defer payout and to arrange for a meeting with them. Should go meet up , before the next letter about 1 mth before birthday month telling her how much CPF will deduct for the second/final premium and payout will start birthday mth if she did not inform them in writing she wants to defer.

Didn't the "do nothing" default payout age change even for older cohorts? (Age 64 now isn't that old, to be clear.) But I don't think it's too important since she'll affirmatively make a decision here either way.

The second premium is a no choice, ie whatever she has in CPF is at risk, less amount she can withdraw about 5k.

She can withdraw up to 20% based on her RA balance at age 65, inclusive of any prior lump sum withdrawal. (She was born in 1958, I think we learned.)

It was a "mistake" joining CPF Life Standard Plan...

I realize you put quotation marks around the word mistake, and they're important. It's entirely possible, even likely, that she made the best decision based on the information available at the time. She may still have made the best decision. If (as only one example) she lives to age 110 (as we all hope for her, and more) then it'll be a fine decision. Except for the 20% withdrawal decision that she's evidently about to do.

Even if her CPF life premium is below her cohort's FRS, it is no problem once she reach 65 and start payout. That should stop CPFB from taking more premiums from her, unless she make a mistake to topup to RA after 65!

That's not necessarily a mistake. As one example, she may gain further insight into her own longevity and get quite tired of zero or negative interest rates in a future economic environment in Singapore. You're allowed to change your mind, especially when you have more information to arrive at different conclusions. I sometimes make different decisions as more information is available and/or circumstances change.

To pick another example, if she gets in trouble such that a party is going to grab most of her remaining assets then she might be very wise indeed to stuff as much as she can into CPF (for asset protection reasons).

Discuss and confirm all these with CPFB when u and her meet up with them to finalise her CPF Life Policy.

Absolutely, good advice there. Consider your (few) choices, make an informed decision, and be open to other decisions if/when circumstances change and information develops.

 

[toBfair]

Parent age79, cpf RA = $166k, under older cpf cohorts, RSS scheme.
Never opt for a single payout, until recent yr2023 budget cpf changes and will auto force to receive payout once parent's birthdate reached this year.

Since my parent got a choice to join in cpf life before she turns 80 but to stay at old RSS scheme payout, looks to be a better take. Any advise on my thought and calculation below?

1) RSS, estimate monthly payout for 5yrs = $3000 ($3000x12x5 = total payout received = $180k, at age 85)
2 CPFL Basic plan, estimate monthly payout for life time = $1000 ($1000x12x15yrs = $180k, at age 95?)

Thanks in advance for all your inputs.

 

[dork32]

Parent age79, cpf RA = $166k, under older cpf cohorts, RSS scheme.
Never opt for a single payout, until recent yr2023 budget cpf changes and will auto force to receive payout once parent's birthdate reached this year.

Since my parent got a choice to join in cpf life before she turns 80 but to stay at old RSS scheme payout, looks to be a better take. Any advise on my thought and calculation below?

1) RSS, estimate monthly payout for 5yrs = $3000 ($3000x12x5 = total payout received = $180k, at age 85)
2 CPFL Basic plan, estimate monthly payout for life time = $1000 ($1000x12x15yrs = $180k, at age 95?)

Thanks in advance for all your inputs.

very unfair comparison.

what is missing in your equation is the bequest

 

[andyhtc]

Parent age79, cpf RA = $166k, under older cpf cohorts, RSS scheme.
Never opt for a single payout, until recent yr2023 budget cpf changes and will auto force to receive payout once parent's birthdate reached this year.

Since my parent got a choice to join in cpf life before she turns 80 but to stay at old RSS scheme payout, looks to be a better take. Any advise on my thought and calculation below?

1) RSS, estimate monthly payout for 5yrs = $3000 ($3000x12x5 = total payout received = $180k, at age 85)
2 CPFL Basic plan, estimate monthly payout for life time = $1000 ($1000x12x15yrs = $180k, at age 95?)

Thanks in advance for all your inputs.

Based on what I have gathered:

RSS is better for those who don't think they will live very long since very few live past 90 years old and the earned interest does not go into the common pool.

CPF Life is designed such that the rest use their earned interest to subsidise those who live beyond 90 years old.

 

[BBCWatcher]

I think that’s basically correct. More succinctly if she’s in poor health she might want to stay on the classic Retirement Sum Scheme payout schedule (which is now forced payouts for everyone, and on classic RSS they’re rather fast paced payouts). If she’s in decent or better health then the longevity insurance aspects of CPF LIFE (guaranteed payouts for life, however long it lasts) could be quite attractive. The longevity insurance aspects also allow her to be more generous sooner — to give away more of her money and enjoy it with others while she’s still alive — if she wishes. That’s because she cannot exhaust all retirement income when she has a CPF LIFE income stream.

In both cases if she has room below the Enhanced Retirement Sum she can add funds to her Retirement Account, including funds that have been paid out, if she wishes. In both cases funds added to her RA will boost payouts and residuals. With CPF LIFE the payout boost is for life. So she’s not necessarily obliged to spend the payouts. She may be able to plow them right back into CPF RA, subject to the ERS limit.

 

[toBfair]

very unfair comparison.

what is missing in your equation is the bequest

the CPFL payout is given estimated and will receive a known payout sum monthly for lifetime. But for the bequest portion is not so transparent and Its may vary in future if everyone really can live beyond 100 and also the bequest balance will become 0 at somewhere age 88 or 90? Not so sure.

 

[toBfair]

Based on what I have gathered:

RSS is better for those who don't think they will live very long since very few live past 90 years old and the earned interest does not go into the common pool.

CPF Life is designed such that the rest use their earned interest to subsidise those who live beyond 90 years old.

yes for my understanding after all readout good info from all helpful fellow forumers given, the RSS remaining balance still can earn annual cpf interest at approx 4-5%. CPF life's earned interest will share in the pool only.

 

[BBCWatcher]

But for the bequest portion is not so transparent...

It's really not confusing.

All three CPF LIFE payout plans currently available guarantee that monthly payouts plus the residual (if any) will at least equal the input premium (the amount in your CPF Retirement Account when you start payouts). So that's the bequest portion (residual, more properly) if there is one.

All three CPF LIFE payout plans feature declining residuals once payouts start, and all three CPF LIFE payout plans feature zero residuals at some point after payouts start if you merely live long enough. None of the CPF LIFE payout plans guarantees a bequest, although all can help defend a particular bequest from other assets — and the plans vary in how well they do that.

 

[DevilPlate]

I thought RSS payout up to 90yo?

 

[BBCWatcher]

yes for my understanding after all readout good info from all helpful fellow forumers given, the RSS remaining balance still can earn annual cpf interest at approx 4-5%. CPF life's earned interest will share in the pool only.

....And you (the beneficiary) have a pro-rata claim on the pool. It's an insurance pool like any other, at least in terms of core principles. One key difference: there's no insurance company sucking profits from the pool.

Don't worry about the interest as such. Worry about what it gets you. If you're age 79 years 10 months or younger and trying to decide then simply evaluate (dispassionately) your health status. If you're in poor health then the classic Retirement Sum Scheme is likely to work well for you. If you're in decent or better health then you should seriously consider CPF LIFE so you guarantee you won't run out of retirement income for the rest of your life, however long it lasts. I think it's really that simple.

 

[BBCWatcher]

I thought RSS payout up to 90yo?

It varies. It depends on the Retirement Account balance, starting payout age, and a couple other factors. The government recently increased the minimum monthly payout from $250 to $350, and that change alone reduces the maximum payout age for low Retirement Account balance members.

The various classic Retirement Sum Scheme rule changes are all reducing the maximum payout age, it's fair to say. Or, said another way, these rule changes are making it more likely that classic RSS recipients will run out of retirement income. It could be the CPF Board's way of nudging members (who can still choose) to choose CPF LIFE. But that's speculation. All we can really say is what the net impacts are of these rule changes, and undoubtedly they tend to reduce the final monthly payout age for classic RSS.

 

[toBfair]

I think that’s basically correct. More succinctly if she’s in poor health she might want to stay on the classic Retirement Sum Scheme payout schedule (which is now forced payouts for everyone, and on classic RSS they’re rather fast paced payouts). If she’s in decent or better health then the longevity insurance aspects of CPF LIFE (guaranteed payouts for life, however long it lasts) could be quite attractive. The longevity insurance aspects also allow her to be more generous sooner — to give away more of her money and enjoy it with others while she’s still alive — if she wishes. That’s because she cannot exhaust all retirement income when she has a CPF LIFE income stream.

In both cases if she has room below the Enhanced Retirement Sum she can add funds to her Retirement Account, including funds that have been paid out, if she wishes. In both cases funds added to her RA will boost payouts and residuals. With CPF LIFE the payout boost is for life. So she’s not necessarily obliged to spend the payouts. She may be able to plow them right back into CPF RA, subject to the ERS limit.

Fortunately, my parent is still in good health. Every day is a good new day. RSS will force in monthly $3000 payout which she does not need to have that much sum to spend at current state. We might plow partially received sum back into her RA to prolong her RSS payout date further, hopefully can stretch the payout beyond her 90. Under RSS, CPF RA balance is transparent updated and belong to the cpf holder too.

 

[BBCWatcher]

Fortunately, my parent is still in good health. Every day is a good new day. RSS will force in monthly $3000 payout which she does not need to have that much sum to spend at current state. We might plow partially received sum back into her RA to prolong her RSS payout date further, hopefully can stretch the payout beyond her 90. Under RSS, CPF RA balance is transparent updated and belong to the cpf holder too.

Well, if she lives to 105 (as one example) she'll be kicking herself if she didn't choose CPF LIFE.

I don't think this decision is complicated. I'd simply base it on health status, dispassionately evaluated. In fact, she's in the perfect position to make this decision relative to the rest of the risk pool. She's in good health and gets to make this decision later than everyone else (with more health status information than everyone else). That's a big advantage for her. I personally would take CPF LIFE in her situation given her inherent advantages in this decision, but it's up to her of course.

 

[andyhtc]

Well, if she lives to 105 (as one example) she'll be kicking herself if she didn't choose CPF LIFE.

I don't think this decision is complicated. I'd simply base it on health status, dispassionately evaluated. In fact, she's in the perfect position to make this decision relative to the rest of the risk pool. She's in good health and gets to make this decision later than everyone else (with more health status information than everyone else). That's a big advantage for her. I personally would take CPF LIFE in her situation given her inherent advantages in this decision, but it's up to her of course.

COVID alone took so many lives away before 80. Hitting 85 without too many health complications is already a huge blessing from heaven.

 

[BBCWatcher]

COVID alone took so many lives away before 80. Hitting 85 without too many health complications is already a huge blessing from heaven.

It took some away (although mercifully not as many in Singapore as it could've been), so she's already beaten the risk pool in that sense. I guess we all have if we're still around. But I'm talking about the future, and when you get to make this decision at age 79 (the latest possible age) you have a substantial advantage. Nobody else in the risk pool has more information than you have about individual health status, so the odds are in your favor when making a health-informed decision.

Like I wrote, I personally would choose CPF LIFE in this situation. It'd be an easy decision for me, actually, simply based on the logic I've outlined (and no complicating factors, notably immediately needing the higher classic RSS payout to survive; she doesn't have that problem).

My current plan is to wait until age 69 years 10 months (whatever the latest possible date is) then, if I'm in decent or better health, choose the CPF LIFE Escalating Plan. This'll mean I get 5 years more information about my health status than many other members (who start payouts at age 65) have, and that'll help. Plans are subject to change, of course. But she has 10 more years of health status information than even I'll have. Good for her!

 

[royalmix]

Fortunately, my parent is still in good health. Every day is a good new day. RSS will force in monthly $3000 payout which she does not need to have that much sum to spend at current state. We might plow partially received sum back into her RA to prolong her RSS payout date further, hopefully can stretch the payout beyond her 90. Under RSS, CPF RA balance is transparent updated and belong to the cpf holder too.

RSS vs CPF Life, which to choose?

Those who are normally "greedy" and "fear" of living beyond 95, would suggest you choose CPF Life so you can live on other people's CPF Life interest in the pool. But you need to pay the cost of insurance to do that. If you choose Basic CPF Life Plan, the cost of insurance is the compound interest of 10-20% of RA as premium in the pool from date of joining (ie 4% per annum). Assuming she joins with 166k, 20% is 33.2k @4% compounded.

That is not the end since she plan to "reinvest" her payout of 3k back into RA as CPF will continue to deduct 10-20% of all amounts topped up into RA as premium. ie her cost of insurance will continue to "increase".

RSS - since she plan to reinvest her payout back into RA, she will continue to earn more interest in RA to support her for the rest of her life. No need to pay any cost of insurance if she live longer or die earlier. If her children are willing to support her for the rest of her life, then there is no concern of her RA running out. There is also a possibility she can invest her payout elsewhere if she can get more than 4%, like the current interest rate environment ( some savings account pay more than 4%, some endowment products pay 4%, etc)

Death? Health is not the only factor which determines longevity as there are many causes of death you need to consider too. For eg Creative CEO died suddenly in his sleep?

Bequest? To me, it is not about bequest, it is about cost of insurance you are willing to pay to bet on free monies to live for the rest of your life if you live beyond 95. RSS will payout till 95.

You have a choice to use her RA as investment vehicle if she is under RSS, not many people have this luxury to enjoy! (not until the interest rate became so attractive recently, but how long can it last?)

Some factors for your consideration.