CPF Easy Info Thread. :)

[Bizaxx]

Thanks BBCWatcher for such clear instructions. If you don’t mind, I have another question - if due to some complication that I don’t manage to transfer to CPF by the deadline, what will be my next best option? Is maximising my SRS recommended? Thanks again!

 

[BBCWatcher]

Thanks BBCWatcher for such clear instructions. If you don’t mind, I have another question - if due to some complication that I don’t manage to transfer to CPF by the deadline, what will be my next best option? Is maximising my SRS recommended?

You can also contribute up to $15,300 before year end to a Supplementary Retirement Scheme account, but you would prioritize that option below the available CPF tax reliefs. Also bear in mind that you’re likely driving yourself down into a low or lowish tax bracket already with these CPF reliefs, and there are some persuasive arguments that the SRS only starts to get attractive when you’re still in the 11% tax bracket or higher after your other reliefs.

Finally, the deadlines are substantially the same, within hours of each other: before 10:00 a.m. with (a) paper check(s) physically handed to a CPF customer service officer on December 31, 2019, and branch closing (or perhaps a bit earlier) on the very same day for the SRS. Try to avoid cutting it close, of course.

 

[BBCWatcher]

Bizaxx, I’ve been assuming you officially became a PR within November, 2019. Please check the date on your blue NRIC and correct me if otherwise.

Looking ahead, assuming I have your correct status change month, and assuming CPF contribution rules don’t change, you’ll also be able to squeeze in at least a small MediSave top up for tax relief in January, 2021. That’s because you’ll be at least $1,560 shy of the CPF Annual Limit in 2021 since the first two months of that year will be your last two months within the provisionally lower PR contribution rate period. So you can plan another $1,560 into your MA then if you wish, maybe more if you have a good feel that your variable pay in 2021 will be less than $30,000. Plus your annual $7,000 into SA.

 

[babyrobo]

For direct cash topups to SA under RSTU (topup), is the amount taken into consideration of FRS? E.g. Over 10 working years a total cash topup of $40k under RSTU has been topped up into SA. SA as of current year is at $200k [inclusive of the $40k RSTU] at 55, and FRS for the cohort is at $200k. are u considered to have reached FRS?

 

[henrylbh]

Hi,
Would appreciate some advise on voluntary contribution. I’ve just gotten my PR last month, therefore the mandatory contribution is virtually none. Question, if I contribute 50k into MA before year end, will I get the full 50k tax relief for 2019? Is it permissible? Thanks in advanced

Limit of BHS in MA is 57,200. But you can contribute up to 37,740 (CPF annual limit) less mandatory contributions for the current year.

As first year SPR, your mandatory contribution for Nov/Dec including additional wages won't be much, which is 9% (including employer's share) of total wages.

Max tax relief on voluntary contribution to MA is 7k.

 

[henrylbh]

For direct cash topups to SA under RSTU (topup), is the amount taken into consideration of FRS? E.g. Over 10 working years a total cash topup of $40k under RSTU has been topped up into SA. SA as of current year is at $200k [inclusive of the $40k RSTU] at 55, and FRS for the cohort is at $200k. are u considered to have reached FRS?

Don't confuse yourself with previous topping ups.

You can only top up to prevailing FRS in SA less what's you have in SA at the time of topping up.

 

[BBCWatcher]

For direct cash topups to SA under RSTU (topup), is the amount taken into consideration of FRS? E.g. Over 10 working years a total cash topup of $40k under RSTU has been topped up into SA. SA as of current year is at $200k [inclusive of the $40k RSTU] at 55, and FRS for the cohort is at $200k. are u considered to have reached FRS?

Yes.

Max tax relief on voluntary contribution to MA is 7k.

No, that's not correct. There's no separate tax relief limit for MA top ups. If you're able to deposit $37,740 (the whole CPF Annual Limit) into your own MediSave Account, all $37,740 is eligible for tax relief.

 

[BBCWatcher]

You can only top up to prevailing FRS in SA less what's you have in SA at the time of topping up.

Also less whatever you've moved into the CPF Investment Scheme (SA).

If you're not sure of the amount, just log onto CPF's Web site and check your account details. There's a readout available that'll tell you exactly how much top up room (if any) you have below the current Full Retirement Sum.

 

[henrylbh]

No, that's not correct. There's no separate tax relief limit for MA top ups. If you're able to deposit $37,740 (the whole CPF Annual Limit) into your own MediSave Account, all $37,740 is eligible for tax relief.

Yes not correct to say limit is 7k.

Max relief is 37,740 less MC.

 

[henrylbh]

My OA is slightly over 100k now.

Hope to grow by at least 18k by end of next year.

Say for what How much OA used for housing?

I have used 78,660 for housing

 

[Bizaxx]

Thank you all for your advice. Appreciate it

 

[Daffy7]

Hi all, seeking some advice over here.

My annual income for this year is around 120k. Planning to top up 7k to my SA and reduce my tax. Wondering if there is a better way other than using NETS? Can i use credit card or flashpay or cashcard to gain some points/rebates? Thanks in advance.

 

[BBCWatcher]

Planning to top up 7k to my SA and reduce my tax. Wondering if there is a better way other than using NETS? Can i use credit card or flashpay or cashcard to gain some points/rebates?

If you have a Diners Club card issued in Singapore you can use it to make CPF top ups. There are no points, rebates, or miles earned when you do that, but you don’t have to pay for the top up until your Diners Club bill is due.

That’s it as far as direct card-related benefits go.

 

[lifeafter41]

Say for what How much OA used for housing?

I have used 78,660 for housing

Henry, if you only used 79k for housing, your OA and SA must be thick thick....lol

 

[henrylbh]

Henry, if you only used 79k for housing, your OA and SA must be thick thick....lol

I have >180k of OA in equities

 

[quiliner]

Qn1: For a senior citizen who's already getting payouts from CPF Life (& not paying for house), if for some reason there's some balance in his OA &/or SA account, is it best to empty those 2 accounts' into his RA?

Qn2: As long as a person is on CPF Life, the payout is till death? Is there any decision a person may alter that will put an expiry date(& not due to death) on the payout? Example: what if the person ran out of RA?

Qn3: Supposedly to get the highest payout from CPF Life, one has to fulfil his cohort's ERS & choose the "Standard" plan. Based on current year's figure, it is an ERS of $264K & a payout of $2,110. But does it mean if a person's RA is >$264K, he will not get more than $2,110?

 

[SBC]

I have >180k of OA in equities

Power lah, Henry!

 

[Syaman]

Hi quiliner, I will try to answer to the best of my ability

Qn 1 - Whatever money in CPF SA or OA that is left over and above BRS/FRS/ERS after the RA has been formed can be withdrawn as and when you need. In other words, you can basically treat CPF as a high interest savings account for that money! Up to you whether to empty (withdraw) them.

Qn 2 - No, CPF LIFE payouts are for as along as you live - even if the total amount of payouts received exceed the RA. This is the advantage of CPF LIFE over the previous CPF Retirement Sum Scheme; in the latter, you only receive payouts until your RA is depleted.

Qn 3 - The ERS is actually the maximum amount you can set aside for CPF LIFE to have the greatest CPF LIFE payouts. Any additional amount remaining in SA and OA you can choose to leave there to continue to gain interest and grow, or withdraw any amount you want, any time.

Qn1: For a senior citizen who's already getting payouts from CPF Life (& not paying for house), if for some reason there's some balance in his OA &/or SA account, is it best to empty those 2 accounts' into his RA?

Qn2: As long as a person is on CPF Life, the payout is till death? Is there any decision a person may alter that will put an expiry date(& not due to death) on the payout? Example: what if the person ran out of RA?

Qn3: Supposedly to get the highest payout from CPF Life, one has to fulfil his cohort's ERS & choose the "Standard" plan. Based on current year's figure, it is an ERS of $264K & a payout of $2,110. But does it mean if a person's RA is >$264K, he will not get more than $2,110?

 

[BBCWatcher]

I believe the point of Q1 is whether it makes sense to shift SA+OA funds into RA in order to earn higher interest (RA interest is higher than OA interest), and then to benefit from that higher interest in the form of higher CPF LIFE monthly payouts. The short answer is yes, that maneuver can often make a lot of sense, particularly when there are a lot of OA dollars relative to SA dollars, enough "headroom" to make the top up, and enough wealth/income to "bridge" at least to age 65 (the earliest CPF LIFE payout start age).

With respect to Q3, starting on a member's 55th birthday (when his/her Retirement Account is formed) it's possible to top up that new RA to the Enhanced Retirement Sum (ERS). It's then possible to make additional top ups every time the ERS is raised (every January 1st presumably), and only principal is counted for purposes of determining the maximum top up amount. A member who does this, who tops up to the ERS on his/her 55th birthday then every January thereafter as the ERS increases, will receive a higher CPF LIFE monthly payout than listed in CPF's sample ERS-level payout illustrations. Also, CPF illustrates projected payout amounts when starting payouts from age 65, but that's not actually the default. The default is that payouts will start at age 70, and those age 70 payouts amounts are substantially higher than CPF's age 65 illustrations.

Finally, one comment about the "highest payout." Yes, the CPF LIFE Standard Plan provides the highest nominal payout amounts initially. The CPF LIFE Escalating Plan provides progressively increasing monthly payouts designed to maintain steady purchasing power in the face of ~2%/year inflation. Members who simply live long enough (or longer) will see the highest nominal payout amounts from the Escalating Plan.

 

[andyhtc]

It is not easy to understand CPF rules. It is also not easy to build up CPF as CPF is commonly used to fund the rapidly increasing expensive properties, children's education and medical treatments. Jobs are also a lot less stable.

We might be seeing more people with insufficient CPF for retirement as the true inflation on essential items such as food is also quite high (hidden from official statistics via smaller packaging or poorer quality of substituents).

Currently, non-food items are still kept affordable due to cheap China imports but I think the rosy scenario for the past 10 years may be over soon.