CPF Easy Info Thread. :)

[dork32]

monthly payout amount is the define by CPF

if in his account is $50000, it will have fix amount payout every month right?

I cannot request lesser right?

if it is in the ra, you cannot.

you can play a certain game. you can take the excess payout which you do not want and top it back to the ra. you can run tax and the ra is maintained

this is wat i meant that some of the cpf policies are crazy. they want to prevent you from exploiting the system to earn extra interest, yet they allow to go one round to achieve the same thing

 

[candy crush]

Ok, please correct me if I'm wrong. I haven't been following this line of the thread very closely. My read of the situation is that your dad is currently receiving his CPF Life payout into his bank account and spending it however he likes. He's not bothered about his HDB loan because his OA balance has all the while been taking care of the loan payment.

The problem of course, is that in 8-9 months, the OA is going to run out of money and your father will likely start defaulting on the loan. I'm not sure if your mother is in the picture, but her OA balance would help mitigate the issues. I'm just going to assume the worst and he's not getting any help except from you.

hey hi, my mum is a housewife, she gt some money in her OA, but not much, like 2 to 3k one, because my father dun like my mum to work

I think your best option is to simply to pay off most of the loan. From my rough calculations, you can pay off $27075 for an outstanding balance of $3165, leaving your dad with a monthly payment of ~$37.60/month which his remaining OA can slowly pay off all the way until end 2027.

wow, pay off $27075 one shot

This will also be least disruptive, since he can continue to do whatever he likes with the $395/month that he is getting. I don't think you really want to try a scheme to increase his monthly payout only to make him manually make a loan repayment to HDB every month. You could arrange GIRO perhaps, but that's assuming he doesn't spend everything before GIRO tries to make the deduction. There's also no point putting money into his OA because it's earning interest less than the loan interest.
actually if I pay off his HDB loan, he will receive $395 in cash? is it from his OA? so he can get monthly payout from RA and also his OA? so from my understanding both work the same right? RA and OA

Thanks for your reply, I reply u inline, thanks

 

[candy crush]

I could also be wrong. Though his RA is zero, he could have opted for CPF Life and receiving monthly payout of $395.

From the subsequent post, it is noted that the housing instalment is actually $359.

395 and 359

candy crush mentioned -

'but his monthly payout use to pay his housing loan

$395 per month

so basically is no payout, after deduct'


Does 'basically is no payout' means the father is using the monthly payout of 395 to pay the housing loan of 359? Or he wow the payout and let OA pays the housing loan?

Also noted that the father has SA balance, meaning he could still be working (on and off)? More money to wow

Okk the CPF Life thing I have to check


I think 395 is typo, shld be 359

no need to be so particular abt number la


and I also dk why every month his 359 come from, I need to check, shld be his OA, not CPF LIFE

 

[BBCWatcher]

wow, pay off $27075 one shot

This remark suggests to me it probably wouldn't be wise to pay off this 2.6% interest loan because it could leave the extended family too vulnerable to an emergency, forcing a sale of your father's home.

It find it pretty incredible that so many people seem hung up on CPF-related liquidity constraints when they don't stop to think about HDB- and property-related liquidity constraints. You're much better rewarded for accepting CPF-related liquidity constraints than you are for housing-related liquidity constraints (accelerating repayment on mortgages).

....So think about this. If $27K is a mere rounding error in terms of extended family finances -- equivalent to an average Tuesday night of bar hopping -- OK, who cares, do what you want. If it's a "Whoa, that's big!" reaction, then it sure doesn't seem like a good idea for cash flow and emergency reserve reasons.

....Wouldn't anyone like to investigate the Silver Housing Bonus? (Earlier I said "Silver Support Scheme," when I actually meant the SHB. Sorry about that.) The government just announced an even sweeter Silver Housing Bonus deal, boosting the bonus from $20K to $30K. We don't have complete information, but from your descriptions so far this is a textbook Silver Housing Bonus situation. The government is kicking in up to $30,000 of free money deposited into a Retirement Account with the SHB, which coincidentally is equivalent to paying off virtually the whole mortgage!

 

[BBCWatcher]

Another thing: we're only now just learning that this father has a wife? Right OK, so has anybody considered topping up her Retirement Account (with tax relief) -- a Retirement Account which might earn 6% interest! -- in order to provide her with some retirement income, income she could manage for the household if she is the more financially responsible member of the household?

 

[dork32]

....So think about this. If $27K is a mere rounding error in terms of extended family finances -- equivalent to an average Tuesday night of bar hopping -- OK, who cares, do what you want. If it's a "Whoa, that's big!" reaction, then it sure doesn't seem like a good idea for cash flow and emergency reserve reasons.

i know wat this feeling is like. many years ago, i reached my first 50k. i felt very rich. then i signed up for my part time masters. the uni is 25km from my workplace. i have 30 minutes to get there if i do not leave early. i bought a second hand car to solve the problem. only 25k. but when i looked at the bank account after i bought the car, i was very depressed. i suddenly felt poor again.

this is why i mentioned it is good to pay down the loan, at watever you are comfortable with and not the full 30k

 

[BBCWatcher]

i know wat this feeling is like. many years ago, i reached my first 50k. i felt very rich. then i signed up for my part time masters. the uni is 25km from my workplace. i have 30 minutes to get there if i do not leave early. i bought a second hand car to solve the problem. only 25k. but when i looked at the bank account after i bought the car, i was very depressed. i suddenly felt poor again.

And you were! You cut your liquid reserves in half, and that left you way more vulnerable to financially impactful emergencies.(*)

However, you traded that liquidity for a university degree. (Well, sort of, but let's oversimplify a bit.) Presumably that was a good trade, a calculated risk. Here, not necessarily. The maximum return is to save some loan interest, on a low cost (2.6%) mortgage, and then to end up with more HDB leasehold equity sooner -- highly illiquid leasehold equity, not a university degree that you can put to professional/career use. It could be a lower return than 2.6% (death and HPS payout scenarios). Is that the best available trade in these circumstances, lower liquidity (and less ability to cope with extended family emergencies) for a 2.6% return (at best)?

Well, we now learn there's a wife in the picture, possibly/probably with a 6% interest earning CPF Retirement Account, and with her own degree of financial prudence which may differ from the father's.

I can't totally rule out acceleration of HDB loan repayment as the next, best use of available dollars, but that's not saying much. It sure doesn't seem like the best choice available, especially after reading Candy Crush's reaction to the payoff or near payoff figure. This sure seems like doubling down on a "property rich/income poor" scenario, and with a big reduction in extended family liquidity which would make coping with emergencies even more difficult. But we keep getting more information in little pieces, so it's hard to say with 100% certainty.

(*) Maybe. You might have had the "Bank of Mom and Dad" backstop.

 

[dork32]

And you were! You cut your liquid reserves in half, and that left you way more vulnerable to financially impactful emergencies.(*)



.

this is wat i meant, i do not shoot bbc because you are bbc. i only shoot when it is not right.

you can see i agree with you here.

 

[tangent314]

hey hi, my mum is a housewife, she gt some money in her OA, but not much, like 2 to 3k one, because my father dun like my mum to work

Ok, Is she below 55, between 55-65, or above 65?
Any idea about RA, SA balance? If above 65, is she receiving monthly payout from RSS/CPF Life and what is the amount?

wow, pay off $27075 one shot

actually if I pay off his HDB loan, he will receive $395 in cash? is it from his OA? so he can get monthly payout from RA and also his OA? so from my understanding both work the same right? RA and OA

Ok, there's still quite some missing information. I've been led to believe that your father is paying the home loan of $359/month from his OA while receiving $395/month into his bank account from CPF Life, and it looks like the second half is wrong.

At some point, most likely at age 65, your dad was either put in the Retirement Sum Scheme or the CPF Life scheme. The RA balance of $0 seems to suggests that he was put in CPF Life, which means he is receiving a monthly amount of money straight into his bank account. You should try to find out how much this amount is.

Most probably, the house loan installments are paid from OA, although it is possible your dad may have arranged to pay it with cash instead. You need to check on this.

Again, I will emphasize that if your dad has been depending on OA to service the house loan, then the OA will be completely drained in 8-9 months and he will need to start using cash, and this will eat into his presumed monthly income from CPF Life.

 

[henrylbh]

Okk the CPF Life thing I have to check


I think 395 is typo, shld be 359

no need to be so particular abt number la


and I also dk why every month his 359 come from, I need to check, shld be his OA, not CPF LIFE

For sure, $359 is the housing installment based on the loan statement you provided.

Not that I am so particular about number, I am trying to understand what you trying to say when $395 is mentioned I now take it that it's a typo error.

But for sure $359 cannot be monthly payout from his OA as there is no such rule. Monthly payout (fixed) can only come from RA and/or CPF Life.

I would dare say that he can't even withdraw his OA except that it can be used to pay off housing installment directly from his CPF and not through his bank account.

If he did actually received $359 in his bank account and that's exactly or co-incidentally the same amount as housing installment, where does $359 comes from? Note - as said no such thing as monthly payout from OA, though I wouldn't rule it out completely.

 

[henrylbh]

....Wouldn't anyone like to investigate the Silver Housing Bonus? (Earlier I said "Silver Support Scheme," when I actually meant the SHB. Sorry about that.) The government just announced an even sweeter Silver Housing Bonus deal, boosting the bonus from $20K to $30K. We don't have complete information, but from your descriptions so far this is a textbook Silver Housing Bonus situation. The government is kicking in up to $30,000 of free money deposited into a Retirement Account with the SHB, which coincidentally is equivalent to paying off virtually the whole mortgage!

Earlier you mentioned about SSS, I reserved comments because you were just saying I am quite sure the father is not qualified for SSS.

But now that he said he has a mother who has little CPF and 'not allowed' to work, certainly the mother will automatically receive quarterly SSS depending on housing type.

Now SHB and just saying again.

 

[henrylbh]

the estimate is wrong because candy crush did not phrase his statement correctly

The estimate is wrong because you made assumption knowing that there is lack of info (to make any guess).

 

[dork32]

The estimate is wrong because you made assumption knowing that there is lack of info (to make any guess).

this is wat i meant. candy did not give enuf info. many of us, including me, were giving rubbish advice.

 

[dork32]

Earlier you mentioned about SSS, I reserved comments because you were just saying I am quite sure the father is not qualified for SSS.

But now that he said he has a mother who has little CPF and 'not allowed' to work, certainly the mother will automatically receive quarterly SSS depending on housing type.

Now SHB and just saying again.

i want to tank bbc for this. he introduce sss to me.

it is relevant to me. my mom owns a 4 room hdb by name only. i sell the hdb and get 30k free from garmen. i also free up some cash for myself to buy my next condo for my wife.

 

[dork32]

For sure, $359 is the housing installment based on the loan statement you provided.

Not that I am so particular about number, I am trying to understand what you trying to say when $395 is mentioned I now take it that it's a typo error.

But for sure $359 cannot be monthly payout from his OA as there is no such rule. Monthly payout (fixed) can only come from RA and/or CPF Life.

I would dare say that he can't even withdraw his OA except that it can be used to pay off housing installment directly from his CPF and not through his bank account.

If he did actually received $359 in his bank account and that's exactly or co-incidentally the same amount as housing installment, where does $359 comes from? Note - as said no such thing as monthly payout from OA, though I wouldn't rule it out completely.

this is wat i mean loh. he say payout. payout is a term used for rss or cpflife mah. so not wrong for me to make this assumption

 

[henrylbh]

Another thing: we're only now just learning that this father has a wife? Right OK, so has anybody considered topping up her Retirement Account (with tax relief) -- a Retirement Account which might earn 6% interest! -- in order to provide her with some retirement income, income she could manage for the household if she is the more financially responsible member of the household?

Like that the father would have more money to wow when mother is also getting monthly payout from her RA with topping up

 

[henrylbh]

this is wat i mean loh. he say payout. payout is a term used for rss or cpflife mah. so not wrong for me to make this assumption

But you made assumption that he is 50 or 60k in his RA when there is zero.

He certainly is not receiving payout from zero RA. Payout from CPF Life is possible and likely, if there is actually a payout. But he is not clear where the payout is from or whether there is a payout at all

 

[henrylbh]

i want to tank bbc for this. he introduce sss to me.

it is relevant to me. my mom owns a 4 room hdb by name only. i sell the hdb and get 30k free from garmen. i also free up some cash for myself to buy my next condo for my wife.

SSS needs no introduction or knowledge. It is automatically given to those who qualify.

Yes sell the 4rm and downgrade to a 3rm for SHB, not SSS.

Better still, go for 2rm if she qualify for SSS, unless she still need min of 2 bed rooms.

 

[BBCWatcher]

Yes, the Silver Housing Bonus, which was just improved (up to $30,000 in free money from the government versus the previous $20,000) is a really nice offer. I still think you have to compare the SHB to renting out spare rooms to see which is more attractive overall, but if you've got spare rooms and don't rent them out then the SHB is financially a no brainer, really. The government is literally paying you to "rightsize" your home, or to move to a more desirable location, or to adjust the remaining leasehold period, or some of each. Awesome, and congratulations to those able to grab this deal.

The new Matched Retirement Savings Scheme is starting next year (2021), and that'll be really nice, too. That's up to $3,000 in free money from the government at stake for those who qualify.

I think we're headed into a period of sustained lower interest rates given what's happening in sovereign debt markets, particularly in the United States(*), so these various CPF-related "tricks" seem more appealing than ever.

(*) U.S. government bond nominal interest rates hit a 150 year low this week, and that's only because nobody has gone back yet to compute U.S. Treasury interest rates prior to 1871. U.S. real return bonds (called TIPS) are at zero or negative yields across the board. Last I checked the 30 year TIPS is yielding a whopping 1 basis point, and it dipped into a negative yield earlier this week. Amazing.

On edit: U.S. TIPS are now negative yielding across the board, including the longest maturity (30 years). It's utterly astounding, and we may not have seen the lowest yields yet.

 

[dork32]

SSS needs no introduction or knowledge. It is automatically given to those who qualify.

Yes sell the 4rm and downgrade to a 3rm for SHB, not SSS.

Better still, go for 2rm if she qualify for SSS, unless she still need min of 2 bed rooms.

ok loh, i really dont know about this and what is the term they really use. i am also not aware of the schemes.

my mom does not need any rooms. she stays with me in our condo. i totally control the hdb though it is under her name. we are doing room rentals now but it is reaching mop.
mom is retired and surviving on pension. she would meet the watever income requirement because she is the only person registered in the hdb other than the tenants.
i would prefer to a 3room flat so that we can continue with our room rental.

how nice it is for me to be given the opportunity to game the system.