CPF Easy Info Thread. :)

[maple96]

If both myself and spouse each does $7k cash top-up to my parents' RA, will both of us enjoy income tax deduction??

They are playing guessing game with u

Best source of info is CPF website or IRAS website

CPF website here https://www.cpf.gov.sg/members/FAQ/...ping-Up Scheme&folderid=12543&ajfaqid=2188738

If your parents have RA, means they are above 55. If RA already hit FRS, no tax relief, otherwise can get tax relief if topup is below FRS, for each person limit is 7k. Next the total tax relief cap is 80k per year for each person.

If u dun meet the above criteria, no refund. Other conditions read CPF website eg must be singaporean.

(summarised from CPF website, details read the link above)

 

[celtosaxon]

I’ve been trying to find answers to what happens to CPF SA/MA after 55, 65, etc and cannot seem to find any good sources.

Does anything change with CPF SA/MA after CPF LIFE payments start?

Can SA/MA continue to be used as a high yield savings account as long as you live?

What happens when CPF SA/MA accounts exceed BRS/FRS limits after 55?

Is money ever forced back into OA?

Do amounts above the limit still earn higher interest?

Does the limit affect contributions?

 

[crimsontactics]

I’ve been trying to find answers to what happens to CPF SA/MA after 55, 65, etc and cannot seem to find any good sources.

Does anything change with CPF SA/MA after CPF LIFE payments start?

Can SA/MA continue to be used as a high yield savings account as long as you live?

What happens when CPF SA/MA accounts exceed BRS/FRS limits after 55?

Is money ever forced back into OA?

Do amounts above the limit still earn higher interest?

Does the limit affect contributions?

MA stays MA.

SA and OA used to form RA.

Money for RA comes from SA first.

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[celtosaxon]

Let’s say at 55, SA balance exceed ERS... RA will pull FRS out of SA, then the rest can be kept in SA as a high yield savings? Any catch?

MA stays MA.

SA and OA used to form RA.

Money for RA comes from SA first.

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[crimsontactics]

Let’s say at 55, SA balance exceed ERS... RA will pull FRS out of SA, then the rest can be kept in SA as a high yield savings? Any catch?

Yeap.

Only catch is that if you withdraw any money, it will come from your SA first before your OA.

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[DarkMage168]

So after 55, HDB loan still takes from OA 1st, but withdraw cash is from SA, correct?

Yeap.

Only catch is that if you withdraw any money, it will come from your SA first before your OA.

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[henrylbh]

So after 55, HDB loan still takes from OA 1st, but withdraw cash is from SA, correct?

You are correct.

To use OA after 55, you must have met FRS or have prearrangement for the use.

If still got SA above 55, likely FRS has been met. In that case, SA can be withdrawn in cash (and up to you to decide whether to use it for housing loan).

If not, SA must make good FRS before amount can be withdrawn.

 

[SKenny]

What is AMP?

I remember based on some people's calculation here, your own money in CPF Life would finish using up only in 93 (before insurance kicks in), so may be time to increase CPF Life payout to align their own money to finish at 90 too?

AMP is Additional Monthly Payment.

After your CPFLife starts, you can still continue to top-up your RA. This amount in your RA can either be withdrawn as;
1. Additional CPFLife payout, ie buy additional CPFLife annuity.
2. Payout as AMP till you are 90 years old (or 5 years from top-up). The amount is calculated from your top up amount, the prevailing interest, and the time till you are 90.

Option 2 is the default, if you chose not to be anything. This option is exercised once a year.

 

[highsulphur]

AMP is Additional Monthly Payment.

After your CPFLife starts, you can still continue to top-up your RA. This amount in your RA can either be withdrawn as;
1. Additional CPFLife payout, ie buy additional CPFLife annuity.
2. Payout as AMP till you are 90 years old (or 5 years from top-up). The amount is calculated from your top up amount, the prevailing interest, and the time till you are 90.

Option 2 is the default, if you chose not to be anything. This option is exercised once a year.

I didn't know this! So this is like the old Retirement Sum Scheme. We can have both RSS and Cpf life running concurrently?

 

[BBCWatcher]

So this is like the old Retirement Sum Scheme. We can have both RSS and Cpf life running concurrently?

Yes, with CPF LIFE you can effectively layer a fixed term annuity (AMPs) atop a lifetime annuity (CPF LIFE Basic, Standard, or Escalating Plan). Whether you should do this (versus simply stepping up your life annuity) is a separate question.

Please note that any AMPs cannot be directly funded until after CPF LIFE payouts start, meaning from age 65 (and 1 month) minimum. Only the lifetime annuity portion can benefit from attractive RA interest before age 65. Ten plus years of 4%/year annually compounded interest is very attractive indeed, so go right ahead and top up your RA at or close to age 55 if you want more retirement income from an attractive yield. Also, AMPs require a “do nothing” approach as mentioned, which means you have to wait some number of months until CPF catches up and takes action to start (or increase) AMPs. You don’t get an immediate bump up in your monthly payout with AMPs — there is some lag.

I don’t think the age 90 AMP term is a given. It depends on when you make the RA top up and when AMPs start from that top up. Obviously if you top up your RA at age 91 you don’t have an AMP term that ends at age 90.

 

[highsulphur]

Yes, with CPF LIFE you can effectively layer a fixed term annuity (AMPs) atop a lifetime annuity (CPF LIFE Basic, Standard, or Escalating Plan). Whether youshould do this (versus simply stepping up your life annuity) is a separate question.

Please note that any AMPs cannot be directly funded until after CPF LIFE payouts start, meaning from age 65 (and 1 month) minimum. Only the lifetime annuity portion can benefit from attractive RA interest before age 65. Ten plus years of 4%/year annually compounded interest is very attractive indeed, so go right ahead and top up your RA at or close to age 55 if you want more retirement income from an attractive yield. Also, AMPs require a “do nothing” approach as mentioned, which means you have to wait some number of months until CPF catches up and takes action to start (or increase) AMPs. You don’t get an immediate bump up in your monthly payout with AMPs — there is some lag.

I don’t think the age 90 AMP term is a given. It depends on when you make the RA top up and when AMPs start from that top up. Obviously if you top up your RA at age 91 you don’t have an AMP term that ends at age 90.

But the bequest for AMP will be transparent since there's no pooling?

 

[SKenny]

I didn't know this! So this is like the old Retirement Sum Scheme. We can have both RSS and Cpf life running concurrently?

Yes you can have both. I have a preference for AMP instead of more CPFLIFE.

I intend to make top up to my RA for as long as possible and covert these top up to AMP after I start my CPFLIFE payout.

 

[lifeafter41]

Yes you can have both. I have a preference for AMP instead of more CPFLIFE.

I intend to make top up to my RA for as long as possible and covert these top up to AMP after I start my CPFLIFE payout.

How does the math work for the AMP and CPF Life simultaneously?

 

[BBCWatcher]

But the bequest for AMP will be transparent since there's no pooling?

Bequests are transparent either way; that's not the right word. (CPF provides tons of information about how CPF LIFE residuals work.) But the second part is correct. There's no longevity risk pooling at all with AMPs, not even one dollar. They are term limited annuities, not life annuities.

As an important reminder, the total bequest you leave an heir (or, better yet, lifetime gifts) hugely depends on the net effective yield you enjoy, and for how long. If you're interested in AMPs, then you should be more interested in RA top ups at or near age 55.

 

[SKenny]

How does the math work for the AMP and CPF Life simultaneously?

AMP may only happen when you top up your RA AFTER you start your CPFLIFE payout. Any top-up before that, will form part of your CPFLIFE.

Your top-up amount, the prevailing interest rate, and the duration to age 90 (or 5 years from your top up whichever is later), will be used to calculate you AMP amount. The AMP is independent of the CPFLIFE payout. This calculation take place once a year and if you have done a RA top-up that year, then you will have an additional AMP.

Alternatively you can opt to use these top-up to buy more CPFLIFE.

 

[highsulphur]

AMP may only happen when you top up your RA AFTER you start your CPFLIFE payout. Any top-up before that, will form part of your CPFLIFE.

Your top-up amount, the prevailing interest rate, and the duration to age 90 (or 5 years from your top up whichever is later), will be used to calculate you AMP amount. The AMP is independent of the CPFLIFE payout. This calculation take place once a year and if you have done a RA top-up that year, then you will have an additional AMP.

Alternatively you can opt to use these top-up to buy more CPFLIFE.

Any balance to your amp top up will be available for bequest upon one's death?

 

[SKenny]

Any balance to your amp top up will be available for bequest upon one's death?

Yes. It is similar to the old Minimum Sum Scheme.

I prefer the AMP to CPFLife.

 

[BBCWatcher]

If you're looking to maximize the amount of interest you (and/or your CPF nominees) collect from a CPF Retirement Account, here's the basic formula:

1. On your 55th birthday, make sure your Retirement Account is funded up to the then current Full Retirement Sum. Do not withdraw any funds. (Thus there's no need for a property pledge.)

2. Within the same month as your 55th birthday, add funds to your Retirement Account (from lower yielding sources) to push it up to the then current Enhanced Retirement Sum (ERS).

3. Within every January thereafter, for the rest of your life, add funds to your Retirement Account (from lower yielding sources) to top it up to the new ERS. (Only principal is counted in determining how much more you can top up as the ERS is raised every January 1.)

4. Defer CPF LIFE payouts to age 70. Deferral means your full Retirement Account balance enjoys 5 more years of annually compounded interest.

You can then choose whatever CPF LIFE payout plan (and optionally AMP arrangement) you want from age 70. Whatever choices you make there, the input amount(s) are based on the maximum attainable interest earnings in a CPF Retirement Account.

 

[maple96]

Is CPF/CPF Life nothing but a bequest vehicle?

 

[crimsontactics]

Is CPF/CPF Life nothing but a bequest vehicle?

Nope. You can benefit a lot from it if you play it right.

Its like a bond plus annuity.

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