CPF Life Questions

[henrylbh]

1) No. All interest earned in SA will stay in SA. The FRS limit in the SA applies to top up limit. Your contribution can still flow into SA beyond FRS. For MA, once it reaches the BHS, then the interest will flow to OA (assuming SA above FRS).

2)
3)

4) MA will continue to earn interest. If your MA is at the BHS limit, then interest earned will flow into SA (or OA if your SA is above FRS)

5)

If MA reaches BHS, not only interest earned will overflow, any MC and VC meant for MA will overflow to OA.

 

[SKenny]

For 1). Not sure if I remember correctly. If SA account already reach the max. Over flow amount (including interest earned) will be transfered to OA on the following year.

Interest earned in SA, stay in SA regardless of the balance in SA.

Ditto for contribution into SA.

 

[hwmook]

Interest earned in SA, stay in SA regardless of the balance in SA.

Ditto for contribution into SA.

Contributions for SA will still go into SA even if FRS is reached.

 

[kelhot2001]

OK, I think I got most of my answer I need and thanks everyone

 

[iMac]

OK, I think I got most of my answer I need and thanks everyone

Good that you got your answer....For me the more I read...The more i get confuse d with CPF policy

 

[SKenny]

Good that you got your answer....For me the more I read...The more i get confuse d with CPF policy

That is the purpose of a thread like this.

Just ask your question here. Plenty of experts (and quasi-experts like me) here who will be willing to help.

 

[Tp101s]

Is there a “fixed expiry year” from the first CPFLife payout? I recall someone mention CPFLife don’t necessarily “payout for life”...

 

[buaytuckchek]

Interest earned in SA, stay in SA regardless of the balance in SA.

Ditto for contribution into SA.

Just want to clarify... especially no.6:

When SA hits FRS:
1) Interest in SA remains in SA
2) Interest beyond BHS overflowed from MA goes to OA
3) RSTU to SA no longer possible (no more tax relief using RSTU)
4) OA to SA transfer no longer possible
5) Contributions (from employment) continue to go into SA beyond FRS
6) VC (all three), amount beyond BHS overflows from MA to OA. What about amount beyond FRS in SA? Stays in SA?

 

[BBCWatcher]

Is there a “fixed expiry year” from the first CPFLife payout? I recall someone mention CPFLife don’t necessarily “payout for life”...

No, CPF LIFE pays for life, truly. There are two exceptions:

1. If you have some really, really tiny amount of money in your Retirement Account — $10, let’s suppose — then choose CPF LIFE, CPF is naturally going to struggle to make that $10 stretch across the rest of your life. But as long as the RA balance is non-trivial, some level of monthly payouts is viable.

2. If there’s some grave national existential crisis that seriously impairs or destroys the government’s ability to function. In that event CPF won’t be the only government agency that stops operating. The Singapore dollar itself would no longer exist as a functioning currency.

The amount of the monthly payout might wobble a bit if there are unexpectedly high or low lifespans (the longevity risk pool is materially different than the actuaries forecast) or if general global financial conditions are tremendously stressed (it’d have to be worse than the Asian Financial Crisis and the Global Financial Crisis, since CPF sailed right through those). But there will be a payout, for life.

 

[BBCWatcher]

When SA hits FRS:
1) Interest in SA remains in SA

Yes, except perhaps when it moves into your Retirement Account when your RA is formed on your 55th birthday. Bonus interest also stays within SA (and then RA).

2) Interest beyond BHS overflowed from MA goes to OA

Yes.

3) RSTU to SA no longer possible (no more tax relief using RSTU)

Correct. However, CPF-related tax relief might still be possible if you can top up your own MediSave Account (if your MA is below the Basic Healthcare Sum and you can squeeze in a top up within the CPF Annual Limit and you otherwise qualify for tax relief) and/or top up a qualified family member’s SA or RA.

4) OA to SA transfer no longer possible

Correct, and moreover all OA to SA transfers must be completed before your 55th birthday.

5) Contributions (from employment) continue to go into SA beyond FRS

Yes, you’re doing great!

6) VC (all three), amount beyond BHS overflows from MA to OA. What about amount beyond FRS in SA? Stays in SA?

Stays in SA, correct. Perfect score!

 

[AtomAnt111]

Need my info regarding the BRS scheme at 55.

Understand the FRS sum will be deducted for creating the RA account at 55. If I opt for the HDB pledging any time from 55 to <65 yrs, I will have to withdraw the 50% FRS into my personal account eg POSB..
How do I opt to put the cash back into CPF OA for better interest returns? Any limits?

 

[Guojing88]

Need my info regarding the BRS scheme at 55.

Understand the FRS sum will be deducted for creating the RA account at 55. If I opt for the HDB pledging any time from 55 to <65 yrs, I will have to withdraw the 50% FRS into my personal account eg POSB..
How do I opt to put the cash back into CPF OA for better interest returns? Any limits?

You don't have to withdraw anything from your CPF, even at 55.

 

[BBCWatcher]

How do I opt to put the cash back into CPF OA for better interest returns? Any limits?

You don't have to withdraw anything from your CPF, even at 55.

That’s correct. I fail to understand why you’d withdraw funds from your Retirement Account only to try to put them back into a much lower yielding CPF account. Just leave the funds in your Retirement Account earning 4% interest, and you can defer a withdrawal decision until as late as just before your 70th birthday. (Age 70 is the maximum age to start CPF LIFE payouts.)

AtomAnt111, is the idea here that you really, really hate the high interest contributions to your own future lifetime retirement income and/or to your CPF nominees’ inheritances — hate them so much that you’re willing to pass up 150 basis points of compounded interest for a decade or more?

 

[AtomAnt111]

The interest earned on yr RA Account doesn't go to yr beneficiaries.. only the principal minus the total monthly CPF life payouts that one has gotten from CPF Life. The interests earned will go to the pool to support those who will exceed the breakeven age which I believe must be more than 85 yrs old. Someone did the Maths - breakeven is 90+

That’s correct. I fail to understand why you’d withdraw funds from your Retirement Account only to try to put them back into a much lower yielding CPF account. Just leave the funds in your Retirement Account earning 4% interest, and you can defer a withdrawal decision until as late as just before your 70th birthday. (Age 70 is the maximum age to start CPF LIFE payouts.)

AtomAnt111, is the idea here that you really, really hate the high interest contributions to your own future lifetime retirement income and/or to your CPF nominees’ inheritances — hate them so much that you’re willing to pass up 150 basis points of compounded interest for a decade or more?

 

[AtomAnt111]

For my case, $176K (FRS) will be deducted for the RA account, regardless of my intention to pledge the HDB. Once upon confirming the HDB pledge (between 55 - <65), the 50% of the FRS will be released to yr personal bank account- it will not be credited into Yr CPF OA which I would prefer.

You don't have to withdraw anything from your CPF, even at 55.

 

[BBCWatcher]

The interest earned on yr RA Account doesn't go to yr beneficiaries....

OK, I think you're confused, misinformed, or both.

First of all, can we agree that your CPF nominee(s) receive all remaining funds in your Retirement Account (and other CPF subaccounts) if you were to die before starting CPF LIFE payouts, which could be as late as age 70 -- including all interest? Assuming you understand that part, let's continue....

only the principal minus the total monthly CPF life payouts that one has gotten from CPF Life. The interests earned will go to the pool to support those who will exceed the breakeven age which I believe must be more than 85 yrs old. Someone did the Maths - breakeven is 90+

Let's assume you choose the CPF LIFE Basic Plan. That's not a recommendation, but I'm using that plan as an example since it's quite easy to explain. Let's choose some "worst case" assumptions:

1. You start payouts at age 65.

2. CPF deducts 20% (the maximum possible) of your Retirement Account at age 65 and places it in the CPF Lifelong Income Fund as longevity insurance for age 90+.

3. You die at precisely the age that minimizes the net effective yield on your Retirement Account -- the "worst" time from a pure investment point of view.

OK, got all that? And what do you and your nominees end up with? You still end up earning 3.X% interest. (The exact X is a little hard to calculate, but it's well above zero.)

Yes, you could withdraw Retirement Account funds if you want to, if you fear the absolute worst case interest rate result for you and your nominees. But you'd be trading 3.X% interest for 2.5% interest, even if you could do that. That would not be smart.

For my case, $176K (FRS) will be deducted for the RA account, regardless of my intention to pledge the HDB.

With the CPF LIFE Escalating Plan and Standard Plan, yes. With the CPF LIFE Basic Plan, no. (Again, not a recommendation, just a point of fact.)

Once upon confirming the HDB pledge (between 55 - <65), the 50% of the FRS will be released to yr personal bank account- it will not be credited into Yr CPF OA which I would prefer.

You may prefer that, but that's not an option I'm afraid. Or at least it's no more of an option than it is for any other cash.

 

[Merg91]

With $264k in ERS this year, a total sum of $385k is expected 10 years later.

My question is :

If one expires @ 65, the beneficiaries should receive $385k.

If he expires 70 but never started on CPF Life.
I expect the beneficiaries to receive $385k+ 5 years of interest.

Am I wrong?

Don't tell me the beneficiaries only get back only $264k after 10-15 years just because he expires before he has a chance to start withdrawing CPF Life.

 

[BBCWatcher]

With $264k in ERS this year, a total sum of $385k is expected 10 years later.
My question is :
If one expires @ 65, the beneficiaries should receive $385k.
If he expires 70 but never started on CPF Life.
I expect the beneficiaries to receive $385k+ 5 years of interest.
Am I wrong?

You are correct. Or another, perhaps simpler way to think of it is $264K plus 15 years of attractive interest (including bonus interest), compounded.

Don't tell me the beneficiaries only get back only $264k after 10-15 years just because he expires before he has a chance to start withdrawing CPF Life.

No, that's not how it works.

 

[Merg91]

Thanks.
This fake atomic ant gave me a shock.

If he is right, everyone should be in BRS unless forced to. It is basically refund the deposit without any interest. A gamble quite many would lose.

 

[AtomAnt111]

Do read up on the post below.. Especially the portion on the bequest liability upon passing on..

https://www.google.com/amp/s/sg.fin...news/long-does-beat-break-even-235802141.html