CPF Easy Info Thread. :)

[mata_hippo]

Ma limit is not bhs?

He was saying once ma reach limit it'll go to sa?

Apologies if I misunderstood

 

[crimsontactics]

They say they compute interest monthly, but I think they simply calculate at the end of the year. If you have any excess VC (end of the year is the only time they know for sure), they can insert a deduction of the excess amount right after the offending top up, then calculate all interests of all months.

I heard is compound yearly.

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[crimsontactics]

Ma limit is not bhs?

He was saying once ma reach limit it'll go to sa?

Apologies if I misunderstood

Yes.

MA overflows into SA until FRS.

Then it will overflow to OA.

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[apatheticme]

I heard is compound yearly.

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Yes it is. They are very specific about it. Compute monthly and compound yearly. But strictly doing that means they need to re-run all calculations for anyone that exceed the annual contribution limit, which doesn't make much sense. Might as well do just once after all excess contribution has been taken out.

 

[crimsontactics]

Yes it is. They are very specific about it. Compute monthly and compound yearly. But strictly doing that means they need to re-run all calculations for anyone that exceed the annual contribution limit, which doesn't make much sense. Might as well do just once after all excess contribution has been taken out.

I don't know about that...

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[apatheticme]

I don't know about that...

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I have not run the numbers, but I don't think it makes too much of a difference. By the way your constant use of is quite annoying. Be a little more positive.

 

[RoLanTo]

another trick i heard of, pre-requisite, your OA must hit FRS or above.

before 55, build up your FRS and let it grow till fat fat, then use all of it buy an investment product, FD, or whatever

on 55, CPF deduct all OA to fill into RA because SA is empty. sell your SA-purchased investment/FD/whatever, funds refund back to SA.. it will earn 4.5% yearly... do note: 55 and above, we can no longer top up SA or whatever, normal VC still can but too small amount to see a difference.

assume 166k back to SA. every month u get 1.xK from CPF life + 622.5 (4.5% interest
in monthly basis.) .. roughly can get 2k per month for spending.. and 166k in SA still sitting there

 

[apatheticme]

another trick i heard of, pre-requisite, your OA must hit FRS or above.

before 55, build up your FRS and let it grow till fat fat, then use all of it buy an investment product, FD, or whatever

on 55, CPF deduct all OA to fill into RA because SA is empty. sell your SA-purchased investment/FD/whatever, funds refund back to SA.. it will earn 4.5% yearly... do note: 55 and above, we can no longer top up SA or whatever, normal VC still can but too small amount to see a difference.

assume 166k back to SA. every month u get 1.xK from CPF life + 622.5 (4.5% interest
in monthly basis.) .. roughly can get 2k per month for spending.. and 166k in SA still sitting there

Think you left out mentioning SA specifically somewhere, other than that this has been discussed before and looks promising, besides the fact you can't empty out your SA through investments. You need to keep at least $40k in SA. See "How much CPF savings can I invest?" in https://www.cpf.gov.sg/Members/Schemes/schemes/optimising-my-cpf/cpf-investment-schemes

 

[crimsontactics]

I have not run the numbers, but I don't think it makes too much of a difference. By the way your constant use of is quite annoying. Be a little more positive.

Why so mean?

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[crimsontactics]

another trick i heard of, pre-requisite, your OA must hit FRS or above.

before 55, build up your FRS and let it grow till fat fat, then use all of it buy an investment product, FD, or whatever

on 55, CPF deduct all OA to fill into RA because SA is empty. sell your SA-purchased investment/FD/whatever, funds refund back to SA.. it will earn 4.5% yearly... do note: 55 and above, we can no longer top up SA or whatever, normal VC still can but too small amount to see a difference.

assume 166k back to SA. every month u get 1.xK from CPF life + 622.5 (4.5% interest
in monthly basis.) .. roughly can get 2k per month for spending.. and 166k in SA still sitting there

Waiting for real life example.

I think CPF knows this trick...

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[elnewbie]

Let's say I were to invest most of my SA but keep the requisite 40k in SA but I only have 120k in OA

When I'm 55, RA will have 40+120k which is still 6k short of FRS.

What happens when my investment matures and I have 200k going back to my SA account ?

Will CPF refund the 120k back to my OA and take out 126k from SA ? Or will CPF just take out 6k from SA ?

I'm really hoping for many free lunches here...

Waiting for real life example.

I think CPF knows this trick...

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[bladez87]

Yes it is. They are very specific about it. Compute monthly and compound yearly. But strictly doing that means they need to re-run all calculations for anyone that exceed the annual contribution limit, which doesn't make much sense. Might as well do just once after all excess contribution has been taken out.

thats why! i was thinking how do they determine the excess on a monthly basis.
actually they should include the mandatory contribution as part of the monthly balance to calculate the interest on...

 

[elnewbie]

Walked into the lion's den to get the answer. So this is what happens:

1. On your 55th birthday, SA plus OA will go to RA. If RA is short of FRS, nothing will happen until....

2. 9 months before your 65th birthday, Board will look at each individual member's accounts again. This will be the 2nd pull transaction. SA will again be emptied into RA.

3. If RA still has a shortfall after step 2, then Board will write to the member to decide what he wants to do with his OA. This is because member may still be using OA for mortgage reasons or whatever.

I think I tio marked liao...

 

[elnewbie]

If such an arbitrage opportunity exists, even the coffeshop uncle and PRC beer lady will also jump in and do this. No free lunch bro...

thats why! i was thinking how do they determine the excess on a monthly basis.
actually they should include the mandatory contribution as part of the monthly balance to calculate the interest on...

 

[henrylbh]

Let's say I were to invest most of my SA but keep the requisite 40k in SA but I only have 120k in OA

When I'm 55, RA will have 40+120k which is still 6k short of FRS.

What happens when my investment matures and I have 200k going back to my SA account ?

Will CPF refund the 120k back to my OA and take out 126k from SA ? Or will CPF just take out 6k from SA ?

From what I know, nothing will happen until you made a decision in the next step.

 

[elnewbie]

See the answer from cpf in my later post.

From what I know, nothing will happen until you made a decision in the next step.

 

[oceanicmanta]

Walked into the lion's den to get the answer. So this is what happens:

1. On your 55th birthday, SA plus OA will go to RA. If RA is short of FRS, nothing will happen until....

2. 9 months before your 65th birthday, Board will look at each individual member's accounts again. This will be the 2nd pull transaction. SA will again be emptied into RA.

3. If RA still has a shortfall after step 2, then Board will write to the member to decide what he wants to do with his OA. This is because member may still be using OA for mortgage reasons or whatever.

I think I tio marked liao...

So ...
- between 55 & 64.75yo, can enjoy 4% in RA & monthly drawn down ?
- before 64.75yo, empty again using investment ?
- 66yo, unwind investment into RA ?

would there be a 3rd pull ?

 

[henrylbh]

thats why! i was thinking how do they determine the excess on a monthly basis.
actually they should include the mandatory contribution as part of the monthly balance to calculate the interest on...

Assuming your MC is 1k per month.

The best you can expect is they ignore your VC completely and calculate interest on your monthly MC. At end of year, they total your MC and recognise the difference between annual limit and total MC to derive the allowable VC and calculate interest on the allowable VC from Jan.

At worst the allowable VC is eventually recognised in Dec and no interest in Dec. Amount in excess of allowable VC will be refunded the following year.

 

[henrylbh]

See the answer from cpf in my later post.

I know the answer but .....

 

[henrylbh]

another trick i heard of, pre-requisite, your OA must hit FRS or above.

before 55, build up your FRS and let it grow till fat fat, then use all of it buy an investment product, FD, or whatever

on 55, CPF deduct all OA to fill into RA because SA is empty. sell your SA-purchased investment/FD/whatever, funds refund back to SA.. it will earn 4.5% yearly... do note: 55 and above, we can no longer top up SA or whatever, normal VC still can but too small amount to see a difference.

assume 166k back to SA. every month u get 1.xK from CPF life + 622.5 (4.5% interest
in monthly basis.) .. roughly can get 2k per month for spending.. and 166k in SA still sitting there

Firstly, you can't empty your SA as you need to leave behind 40k.

Secondly, post 55 SA earns normal 4% and not 4.5%.