CPF Easy Info Thread. :)

[Moonwalker0921]

Banks compute monthly compounding interest. You be the judge whether the CPF practice is normal or not

oh . $400+ missing if 24k interest per annual .

 

[BBCWatcher]

It doesn't really matter, though. When you're comparing interest rates you look at the "per annum" rate (in Singapore). In the United States, to pick another example, it's "APR" (annual percentage rate). Same deal. That way you can compare offers between banks/CPF/whatever no matter how often they're compounding interest (daily, weekly, monthly, quarterly, annually).

What's more interesting perhaps is that CPF computes interest monthly based on the lowest balance within the month. (Although there's one exception I know of: when you transfer Ordinary Account dollars to your Special Account, the Special Account interest rate applies even for the same month that you transfer those dollars. There might be one or a couple other transfer exceptions.) Banks in Singapore typically compute interest daily. What this means in practice is that you generally want to move money into CPF on the last day (or second to last day) of the calendar month, and you generally want to move money out of CPF on the first day of the calendar month. "Generally" is doing a lot of heavy lifting here, though, because there are a couple notable exceptions:

1. If you're trying to beat a payroll cycle in terms of when you're moving money in, do that. Example: You want to push some cash into your MediSave Account (with tax relief perhaps) before your payroll cycle puts more dollars into MediSave.

2. Inflows and outflows that occur within the same calendar month. Using that payroll cycle example again, if your payroll cycle will put more funds into CPF on the 15th day of the month then it probably makes sense to wait for that to happen, then make your withdrawal immediately after that. That way your minimum balance for the month will be higher than if you reversed the order.

 

[Okenba]

oh , no monthly compounding . is it a normal practice ?

No. Not normal. Just like a 4% risk free rate is not normal I guess.

 

[slang]

Noob cpf question.

Can my parents currently age 70+ top up money into Retirement account to earn interest and received monthly payment from this account?
I was told putting in money here can earn ard 6% interest?

 

[reddevil0728]

Noob cpf question.

Can my parents currently age 70+ top up money into Retirement account to earn interest and received monthly payment from this account?
I was told putting in money here can earn ard 6% interest?

yea why not so long below ERS

 

[slang]

Thanks.
How does it work?

My dad has fulfilled the FRS and my mum has zero $ in her FRS.

Does that mean if my mum top up 20k into her RA, she will start earning 6% per annum for this 20k? And cpf will start crediting to her bank a % of this 20k+ interest?
Sorry really noob...tried reading cpf website but still catch no balls

 

[feetlebrash]

Noob cpf question.

Can my parents currently age 70+ top up money into Retirement account to earn interest and received monthly payment from this account?
I was told putting in money here can earn ard 6% interest?

I thought once there’s any positive inflow into RA, it will be automatically whisked away to increase CPF LIFE premium? Will it still earn interest once it has been earmarked for CPF LIFE??

 

[reddevil0728]

Thanks.
How does it work?

My dad has fulfilled the FRS and my mum has zero $ in her FRS.

Does that mean if my mum top up 20k into her RA, she will start earning 6% per annum for this 20k? And cpf will start crediting to her bank a % of this 20k+ interest?
Sorry really noob...tried reading cpf website but still catch no balls

I thought once there’s any positive inflow into RA, it will be automatically whisked away to increase CPF LIFE premium? Will it still earn interest once it has been earmarked for CPF LIFE??

https://www.cpf.gov.sg/member/faq/r...currently-receiving-additional-monthly-payout
it will increase the payout

 

[henrylbh]

Thanks.
How does it work?

My dad has fulfilled the FRS and my mum has zero $ in her FRS.

Does that mean if my mum top up 20k into her RA, she will start earning 6% per annum for this 20k? And cpf will start crediting to her bank a % of this 20k+ interest?
Sorry really noob...tried reading cpf website but still catch no balls

If both parents are 70+ by default they will be under the Retirement Sum Scheme where payouts from RA will last about 20 years from payout eligibility age which is likely to be 62 years old.

The first 30k will earn 6% and the next 30k will earn 5% and any balance above 60k will earn 4%. Isn't that yummy?

Even if no cash to top up mother's RA, your dad should transfer 60k (depending on his FRS at 55 as max transfer is half of FRS) from his RA to your mum's RA. After transfer your dad's monthly payout will decrease in the following month but your mum's monthly payout will commence the following month. Collectively, the two payouts would be higher his own payout without the transfer.

 

[henrylbh]

https://www.cpf.gov.sg/member/faq/r...currently-receiving-additional-monthly-payout
it will increase the payout

That rule is high handed. No more rights to have AMP from Nov 2021. Same as no more rights to withdraw interest accrued from OA and SA after meeting FRS. Can only withdraw principal sum first while accrued interest will only be credited at the end of the year and becomes principal sum in the respective OA and SA accounts. This change in rule adversely and materially affects my projected withdrawals to fund my retirement.

 

[Okenba]

That rule is high handed. No more rights to have AMP from Nov 2021. Same as no more rights to withdraw interest accrued from OA and SA after meeting FRS. Can only withdraw principal sum first while accrued interest will only be credited at the end of the year and becomes principal sum in the respective OA and SA accounts. This change in rule adversely and materially affects my projected withdrawals to fund my retirement.

What is the difference? I never quite understood the difference between AMP and more CPF life?

 

[andyhtc]

Noob cpf question.

Can my parents currently age 70+ top up money into Retirement account to earn interest and received monthly payment from this account?
I was told putting in money here can earn ard 6% interest?

Yes. Top ups will go into the RA to earn at least 4% interest. The monthly payout will automatically increase.

However, CPF Life may charge a slight premium to put into the common pool for lifetime payout. For Retirement Sum Scheme, there is no premium but the payout is limited to about 20 years.

 

[andyhtc]

Thanks.
How does it work?

My dad has fulfilled the FRS and my mum has zero $ in her FRS.

Does that mean if my mum top up 20k into her RA, she will start earning 6% per annum for this 20k? And cpf will start crediting to her bank a % of this 20k+ interest?
Sorry really noob...tried reading cpf website but still catch no balls

Your mum has lost out 6% interest in SA for decades

 

[BBCWatcher]

Your mum has lost out 6% interest in SA for decades

True, but better late than never (if this offer is otherwise attractive).

 

[Andrew833]

That rule is high handed. No more rights to have AMP from Nov 2021. Same as no more rights to withdraw interest accrued from OA and SA after meeting FRS. Can only withdraw principal sum first while accrued interest will only be credited at the end of the year and becomes principal sum in the respective OA and SA accounts. This change in rule adversely and materially affects my projected withdrawals to fund my retirement.

Can you share the source? Can't seem to find it.
This change in rule will affects my withdrawals plan for my retirement. thanks

 

[henrylbh]

Can you share the source? Can't seem to find it.
This change in rule will affects my withdrawals plan for my retirement. thanks

Ask BBC to provide the links cause I gave up looking into CPF website even those concerning me.

It was from here that understand that any withdrawal from OA/SA after 55 on meeting FRS will first come from principal sum in SA, followed OA and then interest.

From link provided by BBC, I learned that direct top up to MA is not affected by the annual contribution limits.

 

[vsvs24]

Can you share the source? Can't seem to find it.
This change in rule will affects my withdrawals plan for my retirement. thanks

Which rule ? The AMP or the SA OA withdrawal sequence

 

[BBCWatcher]

Can you share the source? Can't seem to find it.
This change in rule will affects my withdrawals plan for my retirement. thanks

This CPF announcement discusses the discontinuation of Additional Monthly Payouts (AMPs) for CPF LIFE participants. Now top ups/transfers to RA will exclusively boost CPF LIFE payouts. Existing AMP payout flows will continue until their natural ends.

Note carefully the "forced" monthly withdrawals of SA then OA once RA is drained for those CPF members who are still on the classic Retirement Sum Scheme payouts. CPF members still on the classic RSS payouts may wish to switch to CPF LIFE if it's not too late to join given these new SA/OA withdrawals.

 

[Andrew833]

Ask BBC to provide the links cause I gave up looking into CPF website even those concerning me.

It was from here that understand that any withdrawal from OA/SA after 55 on meeting FRS will first come from principal sum in SA, followed OA and then interest.

From link provided by BBC, I learned that direct top up to MA is not affected by the annual contribution limits.

Which rule ? The AMP or the SA OA withdrawal sequence

From BBC post it's AMP

This CPF announcement discusses the discontinuation of Additional Monthly Payouts (AMPs) for CPF LIFE participants. Now top ups/transfers to RA will exclusively boost CPF LIFE payouts. Existing AMP payout flows will continue until their natural ends.

Note carefully the "forced" monthly withdrawals of SA then OA once RA is drained for those CPF members who are still on the classic Retirement Sum Scheme payouts. CPF members still on the classic RSS payouts may wish to switch to CPF LIFE if it's not too late to join given these new SA/OA withdrawals.

As long as non AMP, the SA OA interest withdrawal sequence still the same, fine with me.

 

[BBCWatcher]

As long as non AMP, the SA OA interest withdrawal sequence still the same, fine with me.

The CPF Board reportedly changed SA/OA withdrawals. Previously the order of withdrawal (age 55+) was SA interest first, OA interest second, SA principal third, OA principal fourth. Now it's simpler: SA first, OA second. You cannot withdraw from OA until SA (principal and interest) is drained.

However, there's a potential workaround that still exists. If you have at least $21,000+ in your OA you can effectively withdraw the amount above $20,000 by buying a T-bill via the CPF Investment Scheme (OA). Then close your CPF Investment Account and transfer the T-bill to your CDP account. You have to wait about 6 months until your T-bill matures using this pathway, but the T-bill earns some interest. Alternatively if you want to (effectively) withdraw only roughly the OA interest first you could buy a long tenor Singapore Government Security (SGS), close your CPF Investment Account/transfer the bond to your CDP account, and collect the twice annual coupons. Long tenor SGSes are currently also yielding above the OA 2.5% interest rate, so this approach can be a very reasonable one for some people.