CPF chats

[peppermint7]

At top right corner of graph, there's buttons to select to view total payout or bequests instead of default payouts.

iirc, using the CPF Tool, there are different buttons to choose to show Payout or Bequests for the graph

Ohh I didn't realise that!! Thank you so much for the info will go find the button

 

[peppermint7]

Ohh I didn't realise that!! Thank you so much for the info will go find the button

Lol now I know why I didn't see the graph u guys are talking about as I was all along using mobile instead of web.

After I changed my setting to desktop view. The graph pops out

 

[BBCWatcher]

Hi need some advice for a 40+.
I have around 90K in my OA/120K in SA and 60K MA.

I'm using my OA mainly for housing since my wife is a SAHM looking after 2 kids. I was thinking of topping up my wife CPF since i have some spare cash now. Is it advisable to do that or should i use my cash to pay off some of my HDB loan first? Or should i transfer my OA to SA first then pay fully the HDB by cash?

OK, so first of all if your wife qualifies for bonus interest — if the total balance across all her CPF accounts is less than $60,000 -or- if her CPF MA+SA+RA is under $40,000 — then she clearly wins. Assuming her global income is low (under $4,000), you could put $7,000 into her SA (or into her RA if she’s age 55 or older), with tax relief and 5% interest. That’s an awesome deal, obviously. You always want to strive for both spouses — both you and your wife — to hit maximum bonus interest at the very least. You’re already there, but if she isn’t, that’s what you should clearly focus on first.

OK, then you ought to decide how much Ordinary Account “buffer” you want to maintain. Right now you have $90K which seems like a lot. How many months of HDB loan payments can you make with $90K? And is your wife a co-owner, and how much is in her OA? Fundamentally you should figure out how many months of buffer makes sense — 12 for example? — for your emergency reserve. If you can answer these questions, I’ll come back with some more suggestions.

If I'm u and I can afford to pay off my loan by cash, I will go for it.

Good Lord, no! I’ve explained this many times: do NOT accelerate repayment on a cheap loan if you are a responsible individual. Especially on HDB leaseholds (you cannot borrow against this equity), and HDB loans are still cheap loans. (If you’re irresponsible and will blow your cash on...well, on blow for example, different story.)

My priority will be make sure my SA meet FRS 1st

Which contradicts what you suggested, and no, not if your spouse qualifies for bonus interest and you don’t. That’s likely a bad idea, too.

if me in your situation, me will trans from OA to SA and max SA. use cash to pay monthly HDB mortgage, no real need to pay off some of the loan with cash unless can reduce loan by a lot or even fully pay it off. the remaining OA for backup just in case income affected. also some cash on hand is better these days.

He cannot do that, not all of it. The Full Retirement Sum is $181,000 in 2020, so only $61,000 can be transferred from OA to SA at most, leaving $29,000 in OA. It’s quite likely some transfer out of OA will be a good idea, but let’s understand the facts first.

 

[BBCWatcher]

Anything into RA CANNOT be withdrawn. Except pledging of property.

That’s not correct. Practically everyone with a Retirement Account can withdraw up to 20% at age 65 (inclusive of the up to $5,000 RA withdrawal allowed from age 55). A property pledge or charge is not required for these withdrawals.

Whether it’s a good idea to make such withdrawals is a separate question. Usually not.

 

[reddevil0728]

If one has already reach minimum sum and can withdraw cpf money, any thing stopping one from doing a VC to CPF OA account (not RA) at the stop of the year, and withdraw it at the end of the year and just get 2.5% interest since it is guaranteed?

 

[Squaredot]

I forgot to mention, another important consideration why I will choose Basic CPF Life Plan: I can convert it into a "CI policy" which gives me more payout anytime I want, for treatment, enjoy my last days, etc, upon confirmation of terminal illness or tpd. Standard/Escalating - no way, just compare the bequest to be given to bene, in this case will be yourself.

hi maple, i don't understand this part.
Do u mind explaining it again? Thanks

 

[peppermint7]

That’s not correct. Practically everyone with a Retirement Account can withdraw up to 20% at age 65 (inclusive of the up to $5,000 RA withdrawal allowed from age 55). A property pledge or charge is not required for these withdrawals.

Whether it’s a good idea to make such withdrawals is a separate question. Usually not.

Thanks for pointing that out

 

[huitay]

Yes she is not there yet that why my initial thought was to top hers first since she is sacrificing to take care of my kids.

Her OA has been wiped off earlier to pay part of the HDB loan. And her remaining SA/MA is definitely lower than 60/40K. She is a few years younger than me and I dont need the tax relief at the moment since i'm still using my child parenthood relief.

Lastly, yes she is the co-owner and i paying $1K from OA monthly to pay of my HDB loan and another $1K cash.

OK, so first of all if your wife qualifies for bonus interest — if the total balance across all her CPF accounts is less than $60,000 -or- if her CPF MA+SA+RA is under $40,000 — then she clearly wins. Assuming her global income is low (under $4,000), you could put $7,000 into her SA (or into her RA if she’s age 55 or older), with tax relief and 5% interest. That’s an awesome deal, obviously. You always want to strive for both spouses — both you and your wife — to hit maximum bonus interest at the very least. You’re already there, but if she isn’t, that’s what you should clearly focus on first.

OK, then you ought to decide how much Ordinary Account “buffer” you want to maintain. Right now you have $90K which seems like a lot. How many months of HDB loan payments can you make with $90K? And is your wife a co-owner, and how much is in her OA? Fundamentally you should figure out how many months of buffer makes sense — 12 for example? — for your emergency reserve. If you can answer these questions, I’ll come back with some more suggestions.


Good Lord, no! I’ve explained this many times: do NOT accelerate repayment on a cheap loan if you are a responsible individual. Especially on HDB leaseholds (you cannot borrow against this equity), and HDB loans are still cheap loans. (If you’re irresponsible and will blow your cash on...well, on blow for example, different story.)


Which contradicts what you suggested, and no, not if your spouse qualifies for bonus interest and you don’t. That’s likely a bad idea, too.


He cannot do that, not all of it. The Full Retirement Sum is $181,000 in 2020, so only $61,000 can be transferred from OA to SA at most, leaving $29,000 in OA. It’s quite likely some transfer out of OA will be a good idea, but let’s understand the facts first.

 

[yoongf]

Earning the extra 1% in wife CPF first 60k is something to consider.
If her name is also in the flat, then any funds in her OA can help clear loan if the need ever arises.

Personally, i rather hv zero loan and a low SA rather than a high SA with outstanding loan. The 60yr age lease buyback safety net is only applicable if there is no outstanding loan.

Hi need some advice for a 40+.
I have around 90K in my OA/120K in SA and 60K MA.


I'm using my OA mainly for housing since my wife is a SAHM looking after 2 kids. I was thinking of topping up my wife CPF since i have some spare cash now. Is it advisable to do that or should i use my cash to pay off some of my HDB loan first? Or should i transfer my OA to SA first then pay fully the HDB by cash?

 

[peppermint7]

If one has already reach minimum sum and can withdraw cpf money, any thing stopping one from doing a VC to CPF OA account (not RA) at the stop of the year, and withdraw it at the end of the year and just get 2.5% interest since it is guaranteed?

Vc goes into 3 acc. It can't specifically go into OA only. Only refund to housing goes directly into OA alone

 

[Squaredot]

Yah. Sometimes wonder if I should be nicer to myself and not be so thrifty. Now we like keep chasing interest. Just for a little bit more interest need to play musical chair and get headache over tnc and how to avoid fall below fee.

I feel it too. Headache to look high and low for best returns, moving money etc.
Now deposit rates falling like dead flies, more sian.
Want to go holiday also cannot due to Covid. Damn sian Cannot even go to a pub for a beer, no TGIF feel

 

[vsvs24]

Yes she is not there yet that why my initial thought was to top hers first since she is sacrificing to take care of my kids.

Her OA has been wiped off earlier to pay part of the HDB loan. And her remaining SA/MA is definitely lower than 60/40K. She is a few years younger than me and I dont need the tax relief at the moment since i'm still using my child parenthood relief.

Lastly, yes she is the co-owner and i paying $1K from OA monthly to pay of my HDB loan and another $1K cash.

Actually I have a different view from the rest. You have 2 kids and the only breadwinner. So you should not be just thinking of how to maximise CPF interest. If there is a way to transfer your CPF to your spouse to earn higher interest overall, it is fine (not sure if can though, maybe the others can advise).

But think again before putting cash into CPF or more cash for loan. Once the action is taken, you cannot reverse and get your cash back. You need to keep cash for kids expenses, loss of income or job given the COVID-19 (touchwood), healthcare etc etc. Make sure you keep cash savings.

A few of us here are talking about putting into CPF as a short term FD as we are not far from 55 and we have hit FRS. So we can withdraw excess over FRS if we wish to.

 

[BBCWatcher]

If one has already reach minimum sum and can withdraw cpf money, any thing stopping one from doing a VC to CPF OA account (not RA) at the stop of the year, and withdraw it at the end of the year and just get 2.5% interest since it is guaranteed?

Vc goes into 3 acc. It can't specifically go into OA only. Only refund to housing goes directly into OA alone

But it still works pretty well, just a little differently.

First of all, an “all three account” Voluntary Contribution must fit within the CPF Annual Limit. Second, it’s helpful if MA has reached the Basic Healthcare Sum ($60,000 in 2020) since the portion of the VC for MA will then spill over to SA or, more likely, OA. Third, we’re assuming the Retirement Account is at least adequately funded.

OK, then what happens in this scenario is most of the VC ends up in OA with a little bit in SA. Since this hypothetical member is age 55 or older (and with a RA funded at least well enough), these funds in SA and OA can be withdrawn at any time, partially or fully. SA has to be drained first when withdrawing, but >2.5% interest on a “piggybank” that can accept up to $37,740 per year is a very good deal.

Yes she is not there yet that why my initial thought was to top hers first since she is sacrificing to take care of my kids.

Absolutely. Among all the options you’ve listed, she comes first. And while it could be her MA, her SA is likely the better choice. June 29, 2020, via PayNow QR would be great if it’s cash. (But we’ll get to that.)

Her OA has been wiped off earlier to pay part of the HDB loan. And her remaining SA/MA is definitely lower than 60/40K. She is a few years younger than me and I dont need the tax relief at the moment since i'm still using my child parenthood relief.

So you’re expecting zero income tax? OK, that’s fine, but even without tax relief her 5% interest opportunity wins. So assuming her OA is zero if you can get her MA+SA up to at least $60,000 total, that’d be terrific. How much would that be?

Lastly, yes she is the co-owner and i paying $1K from OA monthly to pay of my HDB loan and another $1K cash.

OK, so with $90K of household OA (yours) and a $2,000/month HDB loan payment you have 45 months of loan buffer in your OA alone, excluding your cash reserves. That’s a lot. So how much buffer do you feel comfortable with? Let’s suppose it’s 16 months of HDB loan buffer in your OA. That would mean you could leave $32,000 in OA and transfer the rest. But if you don’t mind my asking, excluding your HDB loan payment how many months of ordinary household expenses would your current cash reserve sustain?

OK, eventually you figure out the amount of “surplus” cash and OA, above your desired reserve. Cash obviously can do pretty much anything, such as CPF top ups. Your surplus OA is available for two purposes: it can be transferred into your own SA, but it can also be transferred into your wife’s SA since you have reached the Basic Retirement Sum already. But I’ll pause there and await additional answers on just how much surplus you have available.

Personally, i rather hv zero loan and a low SA rather than a high SA with outstanding loan. The 60yr age lease buyback safety net is only applicable if there is no outstanding loan.

This doesn’t make logical sense for several reasons. The HDB loan term rarely runs into HDB Lease Buyback Scheme timeframes even when paid down at normal pace. And if you have fatter Special Accounts (which also means fatter Retirement Accounts) — and you surely will since SA/RA interest beats 2.6% every month — then you’re much less likely to need the HDB Lease Buyback Scheme.

DO NOT accelerate repayment on cheap loans if you’re a reasonably financially responsible person. “Cheap” means compared to best available alternatives and consistent with maintaining at least adequate liquidity, as always. (HDB leasehold equity is highly illiquid, please note.)

 

[vsvs24]

If one has already reach minimum sum and can withdraw cpf money, any thing stopping one from doing a VC to CPF OA account (not RA) at the stop of the year, and withdraw it at the end of the year and just get 2.5% interest since it is guaranteed?

If you can withdraw cpf money means already hit 55. Once you hit 55, cannot topup to OA and SA, only to RA. After 55, only the Salary CPF contribution can go to OA and SA. This is my understanding.

 

[vsvs24]

If u do cash topup to SA, u have less flexibility to withdraw those monies after they are transferred to RA. Cash topups to SA are meant for retirement and will be locked, to be streamed out as CPF Life payouts.

So if I want to have flexibility to withdraw monies from RA via the various schemes after 55/65, I would prefer to do OA to SA transfer, VC and last cash topups to SA. Altho people do cash topups to SA to enjoy tax relief, they have to sacrifice ie cannot enjoy fully schemes which allow withdrawals from RA. When I plan, I want to have a plan B just in case something happens after 55-65, plus other opportunities.

Read the CPF rules and obtain written confirmation from CPFB if u are unsure.

Edit: We must think, why gov so good, ask u do cash topup to CPF so u can get tax relief? So they can lock your monies until CPF Life payout starts

(disclaimer: I am not affected, so much I can share)

This is what Maple posted in the other thread.

I just know that at 55, SA followed by OA upto FRS amount will be transferred to RA.

Did not realise that how SA is achieved has an impact on what we can do with RA at 55/65. Only cash topup to SA has this restriction ?

 

[huitay]

Why the below date 29th Jun?

Yes zero income tax at the moment but I will top up once I used up my parenthood relief.

I need to check with her on the cpf balance and get back to you.

And lastly i dont really track my expenses but I can say it pretty low.
Did i answer all your questions?

I really appreciate your response so far.

But it still works pretty well, just a little differently.

Absolutely. Among all the options you’ve listed, she comes first. And while it could be her MA, her SA is likely the better choice. June 29, 2020, via PayNow QR would be great if it’s cash. (But we’ll get to that.)


So you’re expecting zero income tax? OK, that’s fine, but even without tax relief her 5% interest opportunity wins. So assuming her OA is zero if you can get her MA+SA up to at least $60,000 total, that’d be terrific. How much would that be?


OK, so with $90K of household OA (yours) and a $2,000/month HDB loan payment you have 45 months of loan buffer in your OA alone, excluding your cash reserves. That’s a lot. So how much buffer do you feel comfortable with? Let’s suppose it’s 16 months of HDB loan buffer in your OA. That would mean you could leave $32,000 in OA and transfer the rest. But if you don’t mind my asking, excluding your HDB loan payment how many months of ordinary household expenses would your current cash reserve sustain?

OK, eventually you figure out the amount of “surplus” cash and OA, above your desired reserve. Cash obviously can do pretty much anything, such as CPF top ups. Your surplus OA is available for two purposes: it can be transferred into your own SA, but it can also be transferred into your wife’s SA since you have reached the Basic Retirement Sum already. But I’ll pause there and await additional answers on just how much surplus you have available.

 

[huitay]

Yes I understand where you coming from as well as this also come to my mind. I just want to maximize my cash in the bank at the moment since the interest is pretty low at the moment.

As for the CPF to my wife directly, i dont think that is possible. Will leave to the expert to add on/correct us.

Actually I have a different view from the rest. You have 2 kids and the only breadwinner. So you should not be just thinking of how to maximise CPF interest. If there is a way to transfer your CPF to your spouse to earn higher interest overall, it is fine (not sure if can though, maybe the others can advise).

But think again before putting cash into CPF or more cash for loan. Once the action is taken, you cannot reverse and get your cash back. You need to keep cash for kids expenses, loss of income or job given the COVID-19 (touchwood), healthcare etc etc. Make sure you keep cash savings.

A few of us here are talking about putting into CPF as a short term FD as we are not far from 55 and we have hit FRS. So we can withdraw excess over FRS if we wish to.

 

[luvpraline]

This is what Maple posted in the other thread.

I just know that at 55, SA followed by OA upto FRS amount will be transferred to RA.

Did not realise that how SA is achieved has an impact on what we can do with RA at 55/65. Only cash topup to SA has this restriction ?

I thought any amount above FRS at 55 will remain in SA (where it originally was parked) and can be withdrawn, even if it came from cash top ups?

 

[Andrew833]

Actually I have a different view from the rest. You have 2 kids and the only breadwinner. So you should not be just thinking of how to maximise CPF interest. If there is a way to transfer your CPF to your spouse to earn higher interest overall, it is fine (not sure if can though, maybe the others can advise).

But think again before putting cash into CPF or more cash for loan. Once the action is taken, you cannot reverse and get your cash back. You need to keep cash for kids expenses, loss of income or job given the COVID-19 (touchwood), healthcare etc etc. Make sure you keep cash savings.

A few of us here are talking about putting into CPF as a short term FD as we are not far from 55 and we have hit FRS. So we can withdraw excess over FRS if we wish to.

Agree. Cash into CPF is one way ticket. Unless your are near to 55.
Cash can park somewhere else, not that difficult to get 2.5%.
When you need cash, you can take out sooner and easier.

 

[zoneguard]

I thought any amount above FRS at 55 will remain in SA (where it originally was parked) and can be withdrawn, even if it came from cash top ups?

I interpret it as:
1. If the remaining amount is still in SA (after FRS met and transferred to RA at 55), even if it came from cash top up, you can withdraw the amount.
2. If you did cash top up with RSTU to SA, after RA is formed, and you do property pledge so that you can keep only BRS in RA and you want to withdraw the difference, you cannot do so if the top up amount was through cash top up. See the FAQ and the illustration: (c) -(b) -(d) for member B.

Can the experts confirm or correct my statement?