CPF Life Questions

[maple96]

Maple96 believes CPF Life is a scam with forfeited interest once one expire.
And your family get skinned.

Is that true?

Is it true?

1. You obviously failed your english and comprehension skills
2. You cannot differentiate facts from fiction
3. You like to create and spread falsehoods
4. You have no basis or proof of your statements or allegations
5. It is you own believe but u fictionalise it as others.

Have u read someone was just issued with a legal letter to take down falsehoods or allegations against PM on facebook? Do u want to delete your scam post?

Your language and standard of english/comprehension belong to edmw, not here. Stop spreading falsehoods and trolling here!

 

[ocs_woodlands]

ASSUMING I am only interested in cpf as a yield instrument and have done all I can to beef up my SA to the highest possible balance curently, am I correct to say that doing the following will maximise my yield from CPF?

1) I can dump in ERS amount of 264k into RA @ 55
2) let RA grow by 4% till I am 70 yo
3) at 70, pledge my property and give BRS amount into CPF Life.
4) the original 264k + compounded 4% for 15 years MINUS BRS amount will remain in RA and continue to accumulate 4% and I can withdraw it anytime.

Is the above correct ?

 

[justwakeup]

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+

If the interest goes to the so-called pool, I treat this as a social responsibility. It is a pity that many don't share this view

I am just a medium income earner, but I will be happy that I have contributed to the people of this nation upon my demise. Many people say they pity so many old aged person still working in kopitiam, yet not willing to contribute more, but rather waste time become keyboard warrior kpkb.

 

[angtc11]

If the interest goes to the so-called pool, I treat this as a social responsibility. It is a pity that many don't share this view

I am just a medium income earner, but I will be happy that I have contributed to the people of this nation upon my demise. Many people say they pity so many old aged person still working in kopitiam, yet not willing to contribute more, but rather waste time become keyboard warrior kpkb.

When you contribute, you should be aware where the money goes to. As it stands, with the cpf life breakeven age so high, your contribution will essentially sit in the fund (benefiting the fund managers?).

Also, are you sure you are contributing to the old people working in Kopitiam? Their problem is that their cpf balance is too low. Are they getting higher disbursement per dollar of cpf life premium compared to higher balance people like you?

 

[henrylbh]

Just run the numbers, Henry. It’s very, very clear then. Reduce CPF LIFE if you want, then compensate with self-insurance for longevity (as you must) in the form of more, bond-heavier, retained wealth. And that’s just not a financially attractive trade, under reasonable or even fairly unreasonable assumptions.

Practically everyone wins is what that's blocking you. Not boasting if I say I run more numbers than in your life

I am not contending that CPFL is about longevity. And not everyone would like to take a bet on CPFL or even buy annuity plans. CPFL is for those who can't manage CPF retirement sum. For it to be viable, some must lose for some to gain …. and generally the rich outlive the poor? Poor subsidising rich

 

[henrylbh]

When you contribute, you should be aware where the money goes to. As it stands, with the cpf life breakeven age so high, your contribution will essentially sit in the fund (benefiting the fund managers?).

Also, are you sure you are contributing to the old people working in Kopitiam? Their problem is that their cpf balance is too low. Are they getting higher disbursement per dollar of cpf life premium compared to higher balance people like you?

He is still not awake.

 

[justwakeup]

When you contribute, you should be aware where the money goes to. As it stands, with the cpf life breakeven age so high, your contribution will essentially sit in the fund (benefiting the fund managers?).

Also, are you sure you are contributing to the old people working in Kopitiam? Their problem is that their cpf balance is too low. Are they getting higher disbursement per dollar of cpf life premium compared to higher balance people like you?

You do not seem to believe the money goes to where it should be, which I think is an entirely different question. I do not understand what do you mean by fund manager. You may have a point that more cpf money should be for more needy people, but I am not sure (certainly not knowledgeable enough ) to understand if the system will be sustainable.

What i know is that if no one is contributing to that “pool”, the poor uncles will be in a more dire state. Well, unless government subsidies, but where the money comes from? I couldn’t think of anything other than tax . From charity? From a society that kpkb virtually everything? From children? But birth rate has been super low until we cannot replace ourselves...

 

[henrylbh]

ASSUMING I am only interested in cpf as a yield instrument and have done all I can to beef up my SA to the highest possible balance curently, am I correct to say that doing the following will maximise my yield from CPF?

1) I can dump in ERS amount of 264k into RA @ 55
2) let RA grow by 4% till I am 70 yo
3) at 70, pledge my property and give BRS amount into CPF Life.
4) the original 264k + compounded 4% for 15 years MINUS BRS amount will remain in RA and continue to accumulate 4% and I can withdraw it anytime.

Is the above correct ?

If dump 264k in RA, can only withdraw 88k with sufficient property charge/pledge. The rest with all interest will be part of CPFL.

 

[henrylbh]

What i know is that if no one is contributing to that “pool”, the poor uncles will be in a more dire state.

justwakeup needs to sleep more. Otherwise cannot think

Contributing to the pool serves those who outlives others. Nothing to do with helping the poor. Anyway poor usually goes before the rich

 

[ocs_woodlands]

If dump 264k in RA, can only withdraw 88k with sufficient property charge/pledge. The rest with all interest will be part of CPFL.

so my 3) and 4) is wrong?

3) at 70, pledge my property and give BRS amount into CPF Life.
4) the original 264k + compounded 4% for 15 years MINUS BRS amount will remain in RA and continue to accumulate 4% and I can withdraw it anytime.

it should be?
3) at 70, pledge my property and can only get back 88k amount and the remainder ie the 176k and the accumulated interest by the 264k from 55yo to 70yo will go into CPF Life.
4) Zero dollars will remain in RA since the 88k is withdrawn.

Is the above correct?

 

[henrylbh]

When you contribute, you should be aware where the money goes to. As it stands, with the cpf life breakeven age so high, your contribution will essentially sit in the fund (benefiting the fund managers?).

The government is managing CPFL. There is no cost to members. Whatever in the member's accounts or in the pool earns the declared interest. The government does not take a cut from the pool. Only issue will be over or under estimation of life payouts or annuity premiums that would invariably affect each cohorts differently.

 

[angtc11]

You do not seem to believe the money goes to where it should be, which I think is an entirely different question. I do not understand what do you mean by fund manager. You may have a point that more cpf money should be for more needy people, but I am not sure (certainly not knowledgeable enough ) to understand if the system will be sustainable.

What i know is that if no one is contributing to that “pool”, the poor uncles will be in a more dire state. Well, unless government subsidies, but where the money comes from? I couldn’t think of anything other than tax . From charity? From a society that kpkb virtually everything? From children? But birth rate has been super low until we cannot replace ourselves...

The money goes into the 'pool' or the 'fund', that I have no doubt. What I have doubt is how does that help the poor. The uncle working at Kopitiam in his old age has insufficient funds for retirement. However each dollar he puts into cpf life receives the same amount of annuity as your dollar. Ie: you are not providing him with a better/earlier retirement. He still gets a low cpf life annuity because of the low amount he puts in. He still needs to work if he cannot survive with cpf life. In fact with cpf life, he will get lesser disbursement than MSS and probably have to work harder toeearn the difference....

 

[BBCWatcher]

I am not contending that CPFL is about longevity.

That's exactly what it is: longevity insurance.

And not everyone would like to take a bet on CPFL or even buy annuity plans.

It's financially irrational under reasonable (or fairly unreasonable) assumptions about the costs of self-insurance for longevity in the form of more and more bond-heavy retained wealth versus CPF LIFE at minimum required participation or higher. It's just not possible to beat CPF LIFE with that particular trade, not with reasonable (or fairly unreasonable) assumptions. You need a much bigger ~2% yielding bond portfolio to 100% self-insure, purchased with fewer after-tax dollars, and that recipe is just flat out much more expensive than letting CPF LIFE do the heaviest longevity insurance lifting.

Of course, there are plenty of people who are, or who wish to be, financially irrational.

 

[angtc11]

The government is managing CPFL. There is no cost to members. Whatever in the member's accounts or in the pool earns the declared interest. The government does not take a cut from the pool. Only issue will be over or under estimation of life payouts or annuity premiums that would invariably affect each cohorts differently.

I am not referring to them taking a cut. They get an easier job if they have a system running surpluses yearly, no stress job.
You are assuming that they will work on a net neutral basis and adjust the annuity to align with mortality rates. I am not so confident in this.

 

[henrylbh]

so my 3) and 4) is wrong?

3) at 70, pledge my property and give BRS amount into CPF Life.
4) the original 264k + compounded 4% for 15 years MINUS BRS amount will remain in RA and continue to accumulate 4% and I can withdraw it anytime.

it should be?
3) at 70, pledge my property and can only get back 88k amount and the remainder ie the 176k and the accumulated interest by the 264k from 55yo to 70yo will go into CPF Life.
4) Zero dollars will remain in RA since the 88k is withdrawn.

Is the above correct?

I don't think you can choose what to remain in RA (after withdrawing excess of BRS with sufficient property pledge/charge) when you join CPFL.

If you choose Basic Plan, about 10% to 20% will be deducted from RA as annuity premium. Whatever remains in RA, you cannot suka suka withdraw. It will be paid over time till about 90. If you choose other plan, all RA will be deducted as annuity premium, meaning RA is kosong.

 

[henrylbh]

I am not referring to them taking a cut. They get an easier job if they have a system running surpluses yearly, no stress job.
You are assuming that they will work on a net neutral basis and adjust the annuity to align with mortality rates. I am not so confident in this.

If the system is running surpluses yearly, then members are screwed.

 

[ocs_woodlands]

I don't think you can choose what to remain in RA (after withdrawing excess of BRS with sufficient property pledge/charge) when you join CPFL.

If you choose Basic Plan, about 10% to 20% will be deducted from RA as annuity premium. Whatever remains in RA, you cannot suka suka withdraw. It will be paid over time till about 90. If you choose other plan, all RA will be deducted as annuity premium, meaning RA is kosong.

OK definitely Basic plan is the way to go (for me).

I was looking for ANOTHER way to earn 4% besides SA that is withdrawable in ANY WAY I wish post 55.

So can I safely say that RA does not fit my purpose since there is only ONE way the money can come out as and when I want it (between ages 65 to 70). That way is to withdraw the BRS amount after doing the property pledge...

 

[angtc11]

If the system is running surpluses yearly, then members are screwed.

That's what I predict will happen since the breakeven age is 90+. Personally I am not so confident our median lifespan will increase so much

 

[BBCWatcher]

The money goes into the 'pool' or the 'fund', that I have no doubt. What I have doubt is how does that help the poor. The uncle working at Kopitiam in his old age has insufficient funds for retirement. However each dollar he puts into cpf life receives the same amount of annuity as your dollar.

No, that's not correct in at least two ways. He qualifies for more free money deposited into his CPF account(s) -- the government is topping up some accounts, especially among the poorest Singaporeans -- and more (or all) of his premium dollars earn bonus interest.

In fact with cpf life, he will get lesser disbursement than MSS and probably have to work harder toeearn the difference....

That's not correct either. Under the old Retirement Sum Scheme there wasn't as much bonus interest (almost none actually), and there weren't free money deposits to any significant degree. Also, contribution rates were somewhat lower -- including especially employer contributions -- which didn't help your sample individual. And your sample individual ran a significant risk of outliving his CPF distributions, which of course meant/means he'd have to try to figure out how to work really, really extra hard at age 88, or at age 92, instead of working until (say) age 73 then easing up. Neither scenario is terrific, but destitution at age 88+ is worse.

 

[henrylbh]

OK definitely Basic plan is the way to go (for me).

I was looking for ANOTHER way to earn 4% besides SA that is withdrawable in ANY WAY I wish post 55.

So can I safely say that RA does not fit my purpose since there is only ONE way the money can come out as and when I want it (between ages 65 to 70). That way is to withdraw the BRS amount after doing the property pledge...

I think the only way is to beef up your SA before and after RA is formed. But after 55, the rate of contribution to SA declines.