CPF after 55

[Value.Matrix]

The group is good for those who are quite lost about CPF. They are very patient. Always have new people joining and asking basic questions so have to keep repeating the answers.

But I find them over optimistic. Quite alarmed to see very young people in 30s and 40s chasing for 1 million target in CPF by putting their funds (aside from emergency funds) to topup SA or invest in S&P 500. And encouraging topup to the max for ERS. They don't seem to be concerned about liquidity.

And topping up children SA.

You brought up the questionable answers. Also, talking about patience, I lost patience having to repeat having flexibility In your financial plan is far more important than chasing for returns or a target lime 1M65.

I also lost patience repeating opportunity cost as being the next best alternative, not double counting on cpf interest and accrued interest.

 

[Value.Matrix]

I think people seeking to optimize their CPF will find some nuggets and inspirational stories in that group.

Once you consider the chat content repetitive I suppose that means you have learnt most of the tips and tricks available.

I gave free talks on such which is much more flexible and accounts for more variables. Even for self employed. So honestly I see no value.

It's like saying you should surrender your endowments and whole life plans and invest in the S&P 500 without context.

 

[vsvs24]

That is quite restrictive as I intend to keep my principal sum in SA intact and take out the interests earned from both OA and SA, which cannot be done.

The most is I take out the interest earned in SA while the OA snowsball.

Hence, SA shielding does have a benefit for me since I can't take out OA interest without using up my SA.

I will write to CPF to check if interest-only withdrawals on OA can be done.

Appreciate if you can share with us when CPF replies.

I have just received email reply from CPF that as at 9 Jan 2022, SA and OA interest will not be in the withdrawal sequence.

Would be good to have another confirmation.

 

[vsvs24]

Hi everyone,

CPF Board has confirmed by email that wef 2022 there is a change in the withdrawal sequence for partial withdrawal from SA and OA above FRS after age 55.

*****
My email to CPF Board :

Dear CPF,

My friend told me that for partial payment from SA/OA after RA is created with full FRS, the sequence is as follows :

1. SA accrued interest
2. OA accrued interest
3. SA contribution for the month
4. OA contribution for the month
5. SA balance
6. OA balance

Please confirm if the above is correct. Eg on 2 Nov 2022, if I withdraw some money, it will take from the SA and OA interest earned from Jan 2022 to Oct 2022 first, then from SA balance.

If accrued interest is no longer withdrawn first anymore, please advise if this is a change with effect from 2022, because my friend say he has been withdrawing interest amounts keeping his SA and OA at the same amount as when he turn 55.

This information is important as I plan to do the same ie in Nov/Dec every year just withdraw the amount of interest earned for that year.

Thank You.

*****
CPF reply on 17 Jan 2022 :

Dear XXXX

Thank you for your reply on 12 January 2022.

As at 9 January 2022, there are several changes to the deduction sequence for CPF withdrawals in the following order:

• Contributions/refund to the SA in withdrawal month
• Remaining SA balance
• Contributions/refund to the OA in withdrawal month
• Remaining OA balance

As part of the Board’s ongoing efforts to ensure our administrative practices are aligned with the market practice, we have revised our practice such that only the savings in your CPF accounts can be withdrawn. While interest is earned every month, it is only credited into your CPF accounts to form part of the account balances at the beginning of each year, and withdrawable from then on.

 

[polyglob]

As at 9 January 2022, there are several changes to the deduction sequence for CPF withdrawals in the following order:

• Contributions/refund to the SA in withdrawal month
• Remaining SA balance
• Contributions/refund to the OA in withdrawal month
• Remaining OA balance

Thanks for confirming with CPF and sharing.

Bummer. This means change in plan...

 

[andyhtc]

Hi everyone,

CPF Board has confirmed by email that wef 2022 there is a change in the withdrawal sequence for partial withdrawal from SA and OA above FRS after age 55.

*****
My email to CPF Board :

Dear CPF,

My friend told me that for partial payment from SA/OA after RA is created with full FRS, the sequence is as follows :

1. SA accrued interest
2. OA accrued interest
3. SA contribution for the month
4. OA contribution for the month
5. SA balance
6. OA balance

Please confirm if the above is correct. Eg on 2 Nov 2022, if I withdraw some money, it will take from the SA and OA interest earned from Jan 2022 to Oct 2022 first, then from SA balance.

If accrued interest is no longer withdrawn first anymore, please advise if this is a change with effect from 2022, because my friend say he has been withdrawing interest amounts keeping his SA and OA at the same amount as when he turn 55.

This information is important as I plan to do the same ie in Nov/Dec every year just withdraw the amount of interest earned for that year.

Thank You.

*****
CPF reply on 17 Jan 2022 :

Dear XXXX

Thank you for your reply on 12 January 2022.

As at 9 January 2022, there are several changes to the deduction sequence for CPF withdrawals in the following order:

• Contributions/refund to the SA in withdrawal month
• Remaining SA balance
• Contributions/refund to the OA in withdrawal month
• Remaining OA balance

As part of the Board’s ongoing efforts to ensure our administrative practices are aligned with the market practice, we have revised our practice such that only the savings in your CPF accounts can be withdrawn. While interest is earned every month, it is only credited into your CPF accounts to form part of the account balances at the beginning of each year, and withdrawable from then on.

Effectively, if one intends to keep the SA and OA intact, SA shielding is the way to go to maintain a high SA and 4% interest payment. In addition, there is only now SA interest to withdraw.

I have recently activated my CPFIS and I will test it a few months before I reach 55 years old, assuming it is still a viable method by then.

 

[a4973]

Thanks for the update. This is bad news.

Effectively, if one intends to keep the SA and OA intact, SA shielding is the way to go to maintain a high SA and 4% interest payment. In addition, there is only now SA interest to withdraw.

I have recently activated my CPFIS and I will test it a few months before I reach 55 years old, assuming it is still a viable method by then.

So to just withdraw SA Interest under the new rules, would be to withdraw the incremental difference between SA amount on 31 Dec and 1 January?

 

[Okenba]

As at 9 January 2022, there are several changes to the deduction sequence for CPF withdrawals in the following order:

• Contributions/refund to the SA in withdrawal month
• Remaining SA balance
• Contributions/refund to the OA in withdrawal month
• Remaining OA balance

As part of the Board’s ongoing efforts to ensure our administrative practices are aligned with the market practice, we have revised our practice such that only the savings in your CPF accounts can be withdrawn. While interest is earned every month, it is only credited into your CPF accounts to form part of the account balances at the beginning of each year, and withdrawable from then on.

So basically, no more withdrawal of interest.
The issue of withdrawal of contributions is relevant to those who are working and getting monthly CPF contributions. But even then, the order is such that we won't be able to withdraw even OA contributions until SA is entirely withdrawn.

I really don't understand this insistence on making us withdraw SA instead of OA. Makes me think that they may close the practise of Shielding soon... =/

 

[vsvs24]

So basically, no more withdrawal of interest.
The issue of withdrawal of contributions is relevant to those who are working and getting monthly CPF contributions. But even then, the order is such that we won't be able to withdraw even OA contributions until SA is entirely withdrawn.

I really don't understand this insistence on making us withdraw SA instead of OA. Makes me think that they may close the practise of Shielding soon... =/

The email reply is somewhat worse than what I was told at the CPF counter on 11 Jan.

Email said sequence is SA for the month, SA bal, OA for the month, OA bal.

Counter staff told me SA for the month, OA for the month, SA bal, OA bal.

It would be better if another person can write to CPF to just to get another confirmation. For those working, still makes some difference.

 

[vsvs24]

Means just withdraw SA interest every Jan instead of withdraw SA and OA interest in Dec.

With this info, will withdraw a bit more money than initially planned from OA before unshield SA.

In Feb can verify somewhat if accrued interest is removed from withdrawal sequence. By checking withdrawal amount vs SA and OA balance

 

[BBCWatcher]

I really don't understand this insistence on making us withdraw SA instead of OA. Makes me think that they may close the practise of Shielding soon... =/

It makes perfect sense from the CPF Board's point of view. Higher interest earning dollars come out first, then the lower interest earning ones. At least this revised order of withdrawal is stone simple now: SA first, OA second.

 

[vsvs24]

It makes perfect sense from the CPF Board's point of view. Higher interest earning dollars come out first, then the lower interest earning ones. At least this revised order of withdrawal is stone simple now: SA first, OA second.

I suspect this could also be due to huge growth in SA in recent years. Many people topping up SA when young to compound it and then shielding it. Now people are even topuping up SA of young children

4% not easy to sustain. And to govt, SA has already met it's objective once you hit 55.

It is probably the first action to tame the growth of SA. Likely more to come.

 

[andyhtc]

It is quite a hassle. I will not touch my OA and SA. Between 60 and 65 years old, I will just rely on my passive income. At 65 years old, I can activate my CPF Life if needed or leave it until 70 years old.

 

[BBCWatcher]

There are some "tricks" you can still play to tap OA ahead of SA. One example if you're married: reciprocal OA to RA transfers. You may also have some opportunities to transfer OA dollars to elders' RAs.

 

[vsvs24]

If there is any tips to use OA after 55 that don't involve other people let me know. Now can only think of CPFIS.

 

[lzydata]

Actually, we can do this here. Set up a sticky thread with FAQs about questions on CPF.
I'm sure can find a lot of questions and answers in MM.
Just needs someone to take charge.

I think some expert can publish an entire book on CPF at 55 and it will sell well.

 

[polyglob]

It is quite a hassle. I will not touch my OA and SA. Between 60 and 65 years old, I will just rely on my passive income. At 65 years old, I can activate my CPF Life if needed or leave it until 70 years old.

At some point you still want to spend that money no? Even if intent is to bequeath, ok to treat ownself to some of that money, IMO.

 

[andyhtc]

At some point you still want to spend that money no? Even if intent is to bequeath, ok to treat ownself to some of that money, IMO.

I don't spend a lot. Surfing the Internet for news and interesting concepts, growing some plants or taking a walk in the park in the evening makes me quite happy already.

If insurance is not factored in and assuming that I no longer drive in my 60s and 70s, I only need about $1k at most for food ($600), public transport ($100), bills ($100) and miscellaneous ($200).

 

[a4973]

Waiting for the inevitable complaints about CPF shifting goalposts and comparisons against other annuities / retirement plans.

 

[Andrew833]

Base on recent letter from CPF posted by @vsvs24
At or after 55, if need money from your CPF;
1) Monthly contribution from SA then OA (if you still working)
2) Ever year Jan after interest credited, SA interest then OA interest.

If money still not enough, shield your SA again to withdraw your OA but $40K from SA will have to withdraw first.
More for last choice bah. While you shielding, no interest for that month too.