CPF Account Value Thread 2024

[andyhtc]

Seeking some views on my parent's CPF life planning. She is approaching 70 and will be getting the monthly payout soon as deferred previously. I realise she is under CPF life Basic which has a very different mechanism from Standard and Escalating since RA is not zerorised and monthly payout is from RA first.

Recently, I helped to increase the CPF life premium from <10k to about 35k (funded from the RA) so as to increase the monthly payout. Is increasing the contribution to the premium the best way to increase monthly payout (is there even any alternative way)? I assume even if topup RA without increasing the premium, it wouldn't affect the monthly payout as it stays within the RA due to the mechanism of Basic plan.

Or is it better not to increase the CPF life premium paid as it reduces the amount in the RA which the monthly payout draws from first?

You can choose to top up RA or CPF Life? I don't see these options in my mother's CPF dashboard.

I helped my mother top up her RA until ERS. She is currently getting a payout of $2k+ at early 70+.

I also give her some allowance each month. Her lifestyle is quite simple so the overall should be sufficient for her.

 

[royalmix]

You can choose to top up RA or CPF Life? I don't see these options in my mother's CPF dashboard.

I helped my mother top up her RA until ERS. She is currently getting a payout of $2k+ at early 70+.

I also give her some allowance each month. Her lifestyle is quite simple so the overall should be sufficient for her.

Understand how CPF Life works!

Be specific what she has when you compare with what his mum has, ie is your mum on CPF Life Standard/Escalating?

If she is on Standard/Escalating, all topups into RA will be swept into the CPF Life pool as CPF Life Premium. That is what CPF tnc meant when he refers to CPF terminology "topup to CPF Life Premium to increase payout."

CPF website FAQ is misleading if you dun understand how CPF Life works for each of the 3 types of plan with regards to topups. There was a change in tnc last year on treatment of topups, I think is "immediate" revision of your policy to include the topup as Premium (for Standard/Escalating) and a % for Basic Plan.

His is complicated, and I need more time to explain to him. For Basic, topup to RA and about 90% will stay in RA and 10% goes to CPF Life Pool as Premium.

 

[BBCWatcher]

It really doesn’t matter how the CPF Board expresses RA balances vis a vis payout plans once you’re on CPF LIFE. What counts are the payouts (definitely) and residuals (sometimes). If for example the CPF Board happened to display your RA balance as $0 while on CPF LIFE Basic Plan payouts and residuals that’d still work perfectly well. There’s no need to understand how CPF handles its backend bookkeeping or which database table(s) they use to track your claims. They do a good job handling all that for all payout plans.

 

[gnooliew]

What I know for sure based on the CPF confirmation letter for increase of CPF Life Premium for the Basic plan is that it uses more savings from the RA to "buy" premium, hence providing with higher monthly payout.

This is unlike the Standard and Escalating plan which uses ALL the RA to "buy" premium.

The other point I noted from the confirmation letter is that when the monthly payout starts at 70, any subsequent inflows to the RA will automatically be used to increase the premium to increase higher monthly payout. This point should be similar across all 3 plans.

 

[edmwing]

I have been a believer of cpf since I started work and wondered how fast I can hit 1m even before the 1m65 movement started .

Transferred from OA to SA while in my first job and was blindsided when CPF life took effect. Subsequently when I was earning more, I missed out the opportunity to get tax relief from topping up my SA due to me hitting my FRS early (due to transfer from OA).

Nonetheless I kept trying to optimise my CPF balance all these years. Didn't invest in anything except in TBills since end of last year. Finally I managed to hit the 1m milestone on 1 Jan before I hit 48 (have to include the TBills yet to mature though).

Amazing! Are/were you a civil servant? Quite common for civil servants (once they cross 6k per month) to hit or get close to the annual contribution cap due to high bonus.

 

[edmwing]

What I know for sure based on the CPF confirmation letter for increase of CPF Life Premium for the Basic plan is that it uses more savings from the RA to "buy" premium, hence providing with higher monthly payout.

This is unlike the Standard and Escalating plan which uses ALL the RA to "buy" premium.

The other point I noted from the confirmation letter is that when the monthly payout starts at 70, any subsequent inflows to the RA will automatically be used to increase the premium to increase higher monthly payout. This point should be similar across all 3 plans.

You cannot directly top up CPF Life Premium - it is topped up through your RA top up. You rightly pointed out for Std/Esc plan all will be used; and for Basic, 10-20% of RA top-up will be used to top up the premium. This maintains the constant RA:CPF Life ratio at about 9:1 to 8:2.

Is increasing the contribution to the premium the best way to increase monthly payout (is there even any alternative way)? I assume even if topup RA without increasing the premium, it wouldn't affect the monthly payout as it stays within the RA due to the mechanism of Basic plan.

Or is it better not to increase the CPF life premium paid as it reduces the amount in the RA which the monthly payout draws from first?

The only way to increase monthly payout is to increase RA contribution (regardless which plan). Given the constant ratio and instant recalculation, topping up RA will not deplete the RA portion faster i.e. the rate of RA depletion remains the constant as you are also paying more CPF Life premium (10-20%) to ensure the monthly payout sustain at that increased level (will eventually fall a little when RA depletes below 60k, and fall further below 30k balance, as the additional interest rate will no longer be optimised from those points).

Assuming CPF is the best option for her, I'd suggest she tops up periodically from her payout leftover. E.g. if her payout is $800, she only spends $600 by month end, put the $200 back to RA. This increases her following monthly payout by a tiny bit (to progressively help mitigate inflation over longer term).

 

[highsulphur]

Amazing! Are/were you a civil servant? Quite common for civil servants (once they cross 6k per month) to hit or get close to the annual contribution cap due to high bonus.

No. Worked in financial sector

 

[gnooliew]

You cannot directly top up CPF Life Premium - it is topped up through your RA top up. You rightly pointed out for Std/Esc plan all will be used; and for Basic, 10-20% of RA top-up will be used to top up the premium. This maintains the constant RA:CPF Life ratio at about 9:1 to 8:2.


The only way to increase monthly payout is to increase RA contribution (regardless which plan). Given the constant ratio and instant recalculation, topping up RA will not deplete the RA portion faster i.e. the rate of RA depletion remains the constant as you are also paying more CPF Life premium (10-20%) to ensure the monthly payout sustain at that increased level (will eventually fall a little when RA depletes below 60k, and fall further below 30k balance, as the additional interest rate will no longer be optimised from those points).

Assuming CPF is the best option for her, I'd suggest she tops up periodically from her payout leftover. E.g. if her payout is $800, she only spends $600 by month end, put the $200 back to RA. This increases her following monthly payout by a tiny bit (to progressively help mitigate inflation over longer term).

Thanks for the insights! Do you know if the 10-20% premium is automatically calculated and deducted from RA or is it manually at request? Becoz I noted previously the premium was only <$10k (i assume calculated at 65). Only recently when we triggered a request to increase premium then it increased to $35k.

 

[henrylbh]

Thanks for the insights! Do you know if the 10-20% premium is automatically calculated and deducted from RA or is it manually at request? Becoz I noted previously the premium was only <$10k (i assume calculated at 65). Only recently when we triggered a request to increase premium then it increased to $35k.

With CPFL Basic, whatever amount you top up to RA, part of that amount will be used automatically as annuity premium and the balance will remain in RA to increase the monthly payout from RA. How much is used to pay for annuity premium is not transparent.

 

[edmwing]

Thanks for the insights! Do you know if the 10-20% premium is automatically calculated and deducted from RA or is it manually at request? Becoz I noted previously the premium was only <$10k (i assume calculated at 65). Only recently when we triggered a request to increase premium then it increased to $35k.

The 10-20% is determined by CPF, I believe by some unknown formula considering the person age, gender... In the past the premium was deducted in 2 parts. IIRC, first around 55yo when joining CPF Life, then around 60+yo. Along the way, there were some adjustments to these age e.g. the latter deduction became just before payout 65-70yo. Now there seems to be only 1 deduction just before payout.

It could be your mum had some premium (smaller %) deducted before and now the remaining + excess from your top-up (bigger %).. hence the difference.

 

[royalmix]

Thanks for the insights! Do you know if the 10-20% premium is automatically calculated and deducted from RA or is it manually at request? Becoz I noted previously the premium was only <$10k (i assume calculated at 65). Only recently when we triggered a request to increase premium then it increased to $35k.

Based on your first post, you mentioned she deferred payout. She is age 70 and already joined CPF Life Basic, so pls check her historical CPF statements if you want to know the history which should help you answer your questions:

1. she is likely to be under the old scheme of RSS, but opted to join CPF Life after 55 for some reasons, maybe some join bonus payout.
2. Under the old scheme of CPF Life, she likely joined CPF Life Basic with 50% of RA with 10% paid into CPF LIfe pool as premium. CPF statement should reflect this.
3. At 65, the remaining 50% of RA with another 10% (to makeup up to 20% premium, how much only CPFB knows the formula). Whether CPFB deferred this deduction if she opt to defer payout to 70, I am not sure. You check CPF statements
4. When you request to start payout now, CPF will use whatever is remaining in RA to recalculate the Premium again. That was my understanding after discussing with CPFB sometime ago after they revised the Rules.

I dun understand what you mean by triggered a request to increase premium? how do you trigger? You topup RA again or request to start payout? Using what form or online request procedure?

Always check CPF statements, it should show total premium paid, balance in RA, CPF Life Plan joined. From there, you should be able to estimate the % premium against RA. Then discuss with CPFB if you have any queries.

CPFB refuse to give me a written reply, they chose to call me to answer all my queries about the change in Rules. Based on your previous post about CPFB's written reply to you, looks like I need to raise some queries to them!

Why I will choose CPF Life Basic? Then I can come here and join " showoff" in future - my interest earned on CPF and check/calculate CPFB's calculation!

 

[laokorkor]

1M52

 

[crimsontactics]

1M52

Power lah Bro laokorkor!!!

 

[Shion]

This year, I invested in 2 x 6-month t-bill using my CPFOA.

1 in Jan and 1 in Jun.

 

[sohguanh]

1M52

Although STI ETF is a basket of stocks it is too Spore centric. For that same sum of monies I would have invested in many mutual funds that span across the world. India Japan Asia Pacific US Europe etc.

 

[Jirachi]

1M52

Nice! Awesome bro!

 

[limster]

1M52

Congrats. My largest CPFIS investment is also in STI ETF.
I just checked and discovered that thanks to STI good performance, I am also a CPF millionaire

 

[royalmix]

Interest rate for CPF Special, Medisave and Retirement accounts dips to 4% in Q1 2025!​

 

[laokorkor]

Interest rate for CPF Special, Medisave and Retirement accounts dips to 4% in Q1 2025!​

4% interest rate is still pretty high. So it's possible to optimise with some strategy such as if you buy a HDB, instead of paying it in full with OA cash, just take a HDB loan at 2.6% interest rate and transfer a portion of OA cash to SA, earn the interest rate difference, and repay the HDB with your job's OA stream. Of course, there might be complication since we're talking about the unknown future. YMMV! LOL!

 

[lzydata]

Also, next year's Basic Healthcare Sum is $75,500, from $71,500 now.

https://www.straitstimes.com/singap...t-accounts-dip-to-4-for-first-quarter-of-2025