Actually what happens if you start topping SA from a very young age, ignore the benefit of tax relief.
say there a kid, as soon as born and possible to top up their cpf, one shot top to top up to the prevailing FRS
then year after year when FRS keep increasing. You keep topping up.
That's not allowed under current rules, or at least it's not allowed more than once. The FRS increases have been running behind SA interest, and once your SA
balance hits the FRS you can't voluntarily add any more funds to SA, not in directed fashion.
This is also what's known as an "edge case," so edgy that I don't think I've ever seen a report in this forum from anyone in this particular position.
all these amount are technically “locked away” from withdrawal.
when the child starts to work also get employment contribution.
I understand that employment contribution can go above FRS.
Yes, that can. But annual FRS increases don't open up any more room for voluntary SA top ups with cash and/or transfers from OA. Except perhaps the first FRS increase depending on how much interest was earned.
When the child comes to the age where cpf can be withdrawn, say 55, the assuming choose FRS for cpf life and no properly pledge whatsoever, FRS amount will be transferred to RA right?
This part is unclear. What
probably happens is that
all the cash top ups into SA, and all accrued interest on those cash top ups, gets transferred into RA. Even if that means RA is above the FRS. All other SA dollars are then dumped into OA, available for withdrawal at any time.
But nobody seems to have experienced this particular scenario. It takes 55 years for a newborn Singaporean to celebrate his/her 55th birthday. Even if a generous parent, grandparent, or someone else deposited the FRS into a Singaporean newborn's SA ten years ago we'll still have to wait 45 years until that person can hop onto HardwareZone to report what happens — whether the CPF Board stops filling up a new RA at the current FRS (even if it means some accrued interest on top up cash ends up in OA) or if all the accrued interest attributable to that FRS-level top up cash ends up in RA, too (and thus pushes it above the current FRS). I
assume the latter, but that particular ruleset in CPFB's systems surely hasn't been exercised often.
what if (not sure if mathematically possible) say the top up + interest from top up exceeds the FRS then, does it make the excess from this type of voluntary contribution still be locked away?
That'd be my hunch, but nobody knows for sure except perhaps the CPFB.
When people have asked whether it makes sense to contribute to a Singaporean newborn's (or child's) CPF MA and/or SA, and how much, I've remarked on a related edge case: if the Singaporean child has another citizenship and is growing up in another country. Let's pick Austria as a random example. If a parent, grandparent, or other generous family member thinks this Singaporean-Austrian child will end up only Austrian as an adult then that means his/her CPF accounts will be liquidated and refunded roughly 20 years after deposit, with full accrued interest to that point. In which case that's not a bad college savings vehicle, for example. Even if it is in the "wrong" currency. Of course this outcome isn't
strictly guaranteed. The child could opt to remain Singaporean, or the Government of Singapore could change its nationality law such that there's no requirement to "choose sides" — that a child born with both Singaporean and Austrian citizenships can keep both.
