CPF Accounts Value thread

[kerwen]

CPFLife is the most cost effective annuity out there, including the portion from BRS to ERS. So if you want a life annuity plan, then CPFLife is a very good option.

For people who opt for BRS in order to limit their exposure to CPF, then I am not sure that it does. A corresponding value in their property in held-in-lieu of the amount that was withdrawn. In other words, your exposure to CPF remains unchanged. However if they want have more cash to spend at an earlier age, then it is a different story.

In most cases, by itself BRS would not be able to offer you enough money to live on. Even FRS offers "mere existence" cost of living in Singapore. ERS would make the retirement much more comfortable, hence it is my choice for my "final safety net".

Just trying to understand better why you choose ers basic.
Why not ers standard, then you should be getting slightly higher payout isn't it?

 

[JetStorm]

My guess its the better of both worlds if u are drawing down from your own investments.

By the time u draw down finish, and still alive at 90ish, the 2% escalating will pay off. If you kick the bucket at 80ish. U still have bequest to leave to your offspring.

Just trying to understand better why you choose ers basic.
Why not ers standard, then you should be getting slightly higher payout isn't it?

Sent from Samsung SM-G950F using GAGT

 

[SKenny]

Just trying to understand better why you choose ers basic.
Why not ers standard, then you should be getting slightly higher payout isn't it?

Basic plan has a better NPV if you die before your mid 80's due to the much higher bequest. This breakeven point is higher than the average lifespan of Singaporeans.

I have other sources of income and hence do not mind the lower payout.

 

[SKenny]

How do I choose between addition CPF Life payout of increased AMP? What's the pros and cons if someone can explain?

You have to opt in at every year after your CPFlife starts. Otherwise they will return the top up via AMP for you (I think they do this every July).

If you think that you live beyond mid to late 80's, then the additional CPFLife has higher NPV, or else the AMP has better NPV (Net Present Value).

 

[JuniorLion]

You have to opt in at every year after your CPFlife starts. Otherwise they will return the top up via AMP for you (I think they do this every July).

If you think that you live beyond mid to late 80's, then the additional CPFLife has higher NPV, or else the AMP has better NPV (Net Present Value).

Also depends on when you top up your RA. If you top up at 79, I guess, you're better off getting AMP.

 

[Battery Operator]

You have to opt in at every year after your CPFlife starts. Otherwise they will return the top up via AMP for you (I think they do this every July).

Skenny, I wasn't aware of this. If there is a link about this information, appreciate if you could share. Thanks!

On a personal note, I topped up my wife's RA account via Cash to ERS at age 56, (a year after she selected CPFLife Basic upon turning 55 and a small premium was deducted). It has been 3 years since the cash top up, does it mean that the cash top up will eventually be streamed as AMP until it runs out at age 90? Appreciate your input. Thanks

 

[angtc11]

CPFLife is the most cost effective annuity out there, including the portion from BRS to ERS. So if you want a life annuity plan, then CPFLife is a very good option.

For people who opt for BRS in order to limit their exposure to CPF, then I am not sure that it does. A corresponding value in their property in held-in-lieu of the amount that was withdrawn. In other words, your exposure to CPF remains unchanged. However if they want have more cash to spend at an earlier age, then it is a different story.

In most cases, by itself BRS would not be able to offer you enough money to live on. Even FRS offers "mere existence" cost of living in Singapore. ERS would make the retirement much more comfortable, hence it is my choice for my "final safety net".

CPF itself is a perpetual 'annuity' so long as the interest is sufficient to live on. I guess my reasoning for BRS is that cpf does not require me to buy risk transfer and is thus more cost efficient than cpf life. Basic requires a transfer of up to 20% as insurance premium and I believe this is applied uniformly regardless of BRS to ERS. Hence to reduce the insurance bought, I was inclined to BRS.

Separately, pledging a property does reduce exposure to cpf (not that this is my intent). In the sense that my property is still mine should cpf collapse and I continue staying in the property. The balances held with cpf will require review before it can be unfrozen for my use.

Again I am not insinuating there is a possibility of cpf collapse. Other sg asset classes would probably be in worse shape if cpf is insolvent

 

[lifeafter41]

Skenny, I wasn't aware of this. If there is a link about this information, appreciate if you could share. Thanks!

On a personal note, I topped up my wife's RA account via Cash to ERS at age 56, (a year after she selected CPFLife Basic upon turning 55 and a small premium was deducted). It has been 3 years since the cash top up, does it mean that the cash top up will eventually be streamed as AMP until it runs out at age 90? Appreciate your input. Thanks

I thought the selection of CPF Life, whether Basic, Stsndard or escalating will only when one reaches 65, or am I missing something there?

 

[Battery Operator]

I thought the selection of CPF Life, whether Basic, Stsndard or escalating will only when one reaches 65, or am I missing something there?

This was 5 years ago, when selection for CPF Life has to be made within a few months (not sure exactly, could be 6 months upon reaching 55). Hope that clarifies your question.

 

[maple96]

I thought the selection of CPF Life, whether Basic, Stsndard or escalating will only when one reaches 65, or am I missing something there?

Those who turned 55 before July 2015 were required to choose CPF Life Plan when they turn 55.

New CPF Life rules came into effect after July 2015 where u only need to choose CPF Life Plan when u start payout at payout eligibility age of 65, or choose to defer it till latest 70. U can choose to start payout between 65 to 70.

 

[maple96]

Skenny, I wasn't aware of this. If there is a link about this information, appreciate if you could share. Thanks!

On a personal note, I topped up my wife's RA account via Cash to ERS at age 56, (a year after she selected CPFLife Basic upon turning 55 and a small premium was deducted). It has been 3 years since the cash top up, does it mean that the cash top up will eventually be streamed as AMP until it runs out at age 90? Appreciate your input. Thanks

Under this old CPF Life Plan rules, I think about 10% went as premium when u choose basic at 55, the balance of about 10% will be deducted as premium when u start payout at 65.

Since u topup to ERS prior to start of payout, it will be used to calculate the CPF LIfe premium and balance will be payout as mthly payout under the CPF Life Basic Plan.

 

[BBCWatcher]

New CPF Life rules came into effect after July 2015 where u only need to choose CPF Life Plan when u start payout at payout eligibility age of 65

When you start payout, full stop. There's no age 65 requirement to start CPF LIFE payouts, and therefore there's no plan selection requirement at that age either. You can start CPF LIFE payouts as early as age 65 if you wish (and make a plan selection), but you don't have to. If you simply do nothing, payouts start at age 70 on the Standard Plan.

During the entire year of 2018 CPF allowed members who had already chosen any other payout plan to switch to the new Escalating Plan if they wished. It's possible CPF will allow future such plan switches whenever there's a new plan introduced, if there's a new plan introduced, although that's speculative.

 

[Battery Operator]

Under this old CPF Life Plan rules, I think about 10% went as premium when u choose basic at 55, the balance of about 10% will be deducted as premium when u start payout at 65.

Since u topup to ERS prior to start of payout, it will be used to calculate the CPF LIfe premium and balance will be payout as mthly payout under the CPF Life Basic Plan.

Thanks maple96. I was mindful of the 10% premium deduction (at age 65 eligibility) as pointed out by you; but I am now stumped about this information regarding the AMP and the need 'opt in at every year' after your CPFlife starts. Otherwise they will return the top up via AMP for you (I think they do this every July) as posted by Skenny above.

Any thoughts?

 

[BBCWatcher]

but I am now stumped about this information regarding the AMP and the need 'opt in at every year' after your CPFlife starts.

Once your CPF LIFE payouts start, whenever you start them (age 65, age 70, or any age in between), you are still free to top up your Retirement Account as often as you want up to the then current Enhanced Retirement Sum (ERS). Post payout start top ups can then be paid out in your choice of streams:

1. If you do nothing, then the following July CPF starts making additional monthly payments for a fixed term, similar to the old Retirement Sum Scheme.

2. Or, if you notify CPF in timely fashion, your top up(s) can be used to increase your CPF LIFE monthly payout for life.

If you make one or more top ups every year after you start CPF LIFE payouts, and if you want option #2, then you also need to make that request with CPF every year in timely fashion.

 

[wannabelazy]

Once your CPF LIFE payouts start, whenever you start them (age 65, age 70, or any age in between), you are still free to top up your Retirement Account as often as you want up to the then current Enhanced Retirement Sum (ERS). Post payout start top ups can then be paid out in your choice of streams:

1. If you do nothing, then the following July CPF starts making additional monthly payments for a fixed term, similar to the old Retirement Sum Scheme.

2. Or, if you notify CPF in timely fashion, your top up(s) can be used to increase your CPF LIFE monthly payout for life.

If you make one or more top ups every year after you start CPF LIFE payouts, and if you want option #2, then you also need to make that request with CPF every year in timely fashion.

I never knew this was possible. So this effectively means that you can have a CPF LIFE payout that exceeds what an ERS-level payout would ordinarily give you? E.g. You could have a payout equivalent to 2 x ERS if you top up your RA to ERS immediately after your payments begin?

Would you be able to point me to where you saw this information please?

 

[BBCWatcher]

So this effectively means that you can have a CPF LIFE payout that exceeds what an ERS-level payout would ordinarily give you? E.g. You could have a payout equivalent to 2 x ERS if you top up your RA to ERS immediately after your payments begin?

No. The BRS/FRS/ERS limits are applied once per member. They increase annually, at least at the present time, but (sadly) you don't get two ERS pots to play with.

For example, if you start FRS level CPF LIFE payouts, then make one or more RA top ups after your CPF LIFE payouts start, you can only top up to whatever the gap is between your FRS (back at your age 55 maybe) and the then current ERS.

 

[wannabelazy]

No. The BRS/FRS/ERS limits are applied once per member. They increase annually, at least at the present time, but (sadly) you don't get two ERS pots to play with.

For example, if you start FRS level CPF LIFE payouts, then make one or more RA top ups after your CPF LIFE payouts start, you can only top up to whatever the gap is between your FRS (back at your age 55 maybe) and the then current ERS.

Oh. Wishful thinking on my part

 

[maple96]

Thanks maple96. I was mindful of the 10% premium deduction (at age 65 eligibility) as pointed out by you; but I am now stumped about this information regarding the AMP and the need 'opt in at every year' after your CPFlife starts. Otherwise they will return the top up via AMP for you (I think they do this every July) as posted by Skenny above.

Any thoughts?

If u topup after payout starts, I would prefer AMP over buying additional CPF Life. I think CPF will write to u on the options and when to start. Need to read the rules in detail, need time to locate it.

 

[Battery Operator]

Once your CPF LIFE payouts start, whenever you start them (age 65, age 70, or any age in between), you are still free to top up your Retirement Account as often as you want up to the then current Enhanced Retirement Sum (ERS). Post payout start top ups can then be paid out in your choice of streams:

1. If you do nothing, then the following July CPF starts making additional monthly payments for a fixed term, similar to the old Retirement Sum Scheme.

2. Or, if you notify CPF in timely fashion, your top up(s) can be used to increase your CPF LIFE monthly payout for life.

If you make one or more top ups every year after you start CPF LIFE payouts, and if you want option #2, then you also need to make that request with CPF every year in timely fashion.

Thanks BBC; I got that now. The AMP is related to top ups post 65 and beyond.

 

[BBCWatcher]

If u topup after payout starts, I would prefer AMP over buying additional CPF Life.

You cannot really predict that and shouldn't, not now. It's an interesting way to take up-to-the-minute information about your health status then to play some small, clever games against the risk pool....

....Or you might assess the then current financial environment plus your personal financial situation and determine that longevity risk is a much bigger concern than you realized.

....Or the heir(s) you thought you were trying to help (badly; CPF LIFE isn't the right tool for this, not directly) predeceased you.

....Or some creditor or court judgment is on the horizon at that time.

....Or some combination.

I'm really fascinated by all these grossly premature decisions. I have an idea what I'll probably do when the time comes with respect to CPF LIFE starting age, participation level, and payout plan choice, but I'm certainly not firmly wedded to that idea and am actively seeking ways to maximize the range of choices I'll have.