CPF Queries..

[dgeralds]

In 2 years will be reaching 55 years old. Current CPF balances are:
OA $29K
SA $234K
MA $57K

HDB Accrued Interest $108K
Private property Accrued Interest $8K

Still paying for Private property (that has been rented out) from CPF.


My questions:

1. Can I pay back (by cash) my accrued interests $116K to CPF before I turn 55 so as to continue to get a safe 2.5% interest. Will this money go to OA?
1.(b) After 55, can I withdraw the money any time from OA any amount as and when I require them?
1.(c) Will the accrued interest show $0 in my CPF website after 55 years old?
1.(d) If I pay back the accrued interest, will the accrued interest amount show $0 in my CPF website?

2. I plan to join Enhanced Retirement Sum (ERS) at 55. ERS is currently set at $264K but I have only $234K in SA. Since my SA is less than $264K, can I top up (SA/RA at 55) the difference by cash or OA?

Appreciate your reply and any suggestions on how to maximize or grow money for retirement. Thank you.

 

[kelhot2001]

In 2 years will be reaching 55 years old. Current CPF balances are:
OA $29K
SA $234K
MA $57K

HDB Accrued Interest $108K
Private property Accrued Interest $8K

Still paying for Private property (that has been rented out) from CPF.


My questions:

1. Can I pay back (by cash) my accrued interests $116K to CPF before I turn 55 so as to continue to get a safe 2.5% interest. Will this money go to OA?
1.(b) After 55, can I withdraw the money any time from OA any amount as and when I require them?
1.(c) Say if I don't pay the accrued interest, will the accrued interest show $0 after 55 years old?

2. I plan to join Enhanced Retirement Sum (ERS) at 55. ERS is currently set at $264K but I have only $234K in SA. Since my SA is less than $264K, can I top up (SA/RA at 55) the difference by cash or OA?

Appreciate your reply and any suggestions on how to maximize or grow money for retirement. Thank you.

Let me try to see if I can get it correct

1a) Yes,in a way
1b) Yes, as long as you do FRS in your RA at 55
1c) Not sure what it meant

2) Can be either way

Depending how you see CPF life, not sure your views on CPF life, while I alwasy use RSS to see it as a disadvantage. If you understand the risk you are taking, why not, you even top-up your RA during 55-80 to the prevailing rate of the ERS if you want to

 

[dgeralds]

Thank you for your reply. Have amended 1(c) and added 1(d) in my query for clarity.

Let me try to see if I can get it correct

1a) Yes,in a way
1b) Yes, as long as you do FRS in your RA at 55
1c) Not sure what it meant

2) Can be either way

Depending how you see CPF life, not sure your views on CPF life, while I alwasy use RSS to see it as a disadvantage. If you understand the risk you are taking, why not, you even top-up your RA during 55-80 to the prevailing rate of the ERS if you want to

 

[romeo88]

You can redeem housing loan (and acrrued interest) before and after 55. Up till like 2 years ago, accrued interst must be redeemed in one lump sum but now you can redeem accrued interest partially.

For withdrawal after (55), the sequnce of withdrawal is SA accrued interest, OA accrued interest, new contribution, SA (balance) and then OA (balance). So do take note once in, last to come out. I fell into this trap too but no harm for me.

Property accrued interest should keep compounding even after 55.

It's better to keep your spare cash to top up to ERS than to redeem property loan (principle and accrued interest) if you have to choose.

Next assignment for you - you do have to plan ahead whether to keep RA as BRS, FRS or ERS and what plan to choose at 65-70. Welcome to the mysteries of CPF LIFE and there are plethora of threads (and arguments) on this platform.

In 2 years will be reaching 55 years old. Current CPF balances are:
OA $29K
SA $234K
MA $57K

HDB Accrued Interest $108K
Private property Accrued Interest $8K

Still paying for Private property (that has been rented out) from CPF.


My questions:

1. Can I pay back (by cash) my accrued interests $116K to CPF before I turn 55 so as to continue to get a safe 2.5% interest. Will this money go to OA?
1.(b) After 55, can I withdraw the money any time from OA any amount as and when I require them?
1.(c) Say if I don't pay the accrued interest, will the accrued interest show $0 after 55 years old?

2. I plan to join Enhanced Retirement Sum (ERS) at 55. ERS is currently set at $264K but I have only $234K in SA. Since my SA is less than $264K, can I top up (SA/RA at 55) the difference by cash or OA?

Appreciate your reply and any suggestions on how to maximize or grow money for retirement. Thank you.

 

[BBCWatcher]

You may wish to consider repaying at least some OA, plus accrued interest, followed by SA "shielding" across your 55th birthday. That would mean that your new Retirement Account would be funded primarily with OA dollars rather than (at present) exclusively SA dollars.

How much should you repay before your 55th birthday? Well, at least the Full Retirement Sum minus your current OA balance minus $40,000 would be ideal. That's the ideal amount to support SA "shielding." For example, if you're celebrating your 55th birthday later this year (2019) then the repayment amount would be $176,000 (2019 FRS) minus $29,000 (your current OA balance) minus $40,000 (the minimum amount you cannot "shield"). That's equal to $107,000.

You can do more if you wish, and 2.5% interest certainly isn't bad, but that'd be the ideal minimum repayment before your 55th birthday if you're going to use SA "shielding."

 

[tangent314]

In 2 years will be reaching 55 years old. Current CPF balances are:
OA $29K
SA $234K
MA $57K

HDB Accrued Interest $108K
Private property Accrued Interest $8K

Still paying for Private property (that has been rented out) from CPF.

My questions:

1. Can I pay back (by cash) my accrued interests $116K to CPF before I turn 55 so as to continue to get a safe 2.5% interest. Will this money go to OA?
1.(b) After 55, can I withdraw the money any time from OA any amount as and when I require them?
1.(c) Will the accrued interest show $0 in my CPF website after 55 years old?
1.(d) If I pay back the accrued interest, will the accrued interest amount show $0 in my CPF website?

2. I plan to join Enhanced Retirement Sum (ERS) at 55. ERS is currently set at $264K but I have only $234K in SA. Since my SA is less than $264K, can I top up (SA/RA at 55) the difference by cash or OA?

1 (a) repaid accrued interest goes into OA.
(b) You can withdraw anything from OA/SA. Money after earned interest is withdrawn, your money is withdrawn from SA first before OA, so you cannot directly withdraw from OA while bypassing SA.
(c) Only if fully repaid. Accrued interest doesn't automatically drop to 0 when you reach 55
(d) Yes.

This should be your plan.

Now: Repay accrued interest
OA $145K
SA $234K
MA $57K
HDB Accrued Interest $0
Private property Accrued Interest $0

1-2 months before 55th birthday, setup your SA shielding. Assuming ERS is $279k, you need to have $279k in OA + SA and the rest shielded. For example if the above amounts remain correct just before 55, then you want to shield 145+234-279 = $100k, so you have:
OA $145k
SA $134k
CPFIS-SA $100k

At age 55, $134k will be removed from SA and $52k will be removed from OA to form RA:
OA $93k
SA $0k
CPFIS-SA $100k
RA $186k

Now you apply to top up your RA to ERS with your CPF funds, and get:
OA $0
SA $0
CPFIS-SA $100k
RA $279k

Then you lower your SA shield and get:
OA $0
SA $100k
RA $279k

This just an example illustration - numbers will vary a bit depending on interest earned, further contributions, mortgage servicing, MA overflow


If you really want to maximize your SA and have lots of cash to top up your RA to ERS, then follow this variant:

Before age 55, shield all but $40k of your SA:
OA $145k
SA $40k
CPFIS-SA $194k

At age 55, your OA and SA will be all transferred to RA
OA $0k
SA $0k
CPFIS-SA $194k
RA $185k

Top up your RA to ERS with $94k cash (+any remaining OA if any)
OA $0
SA $0
CPFIS-SA $194k
RA $279k

Then you lower your SA shield and get:
OA $0
SA $194k
RA $279k

 

[dork32]

1 (a) repaid accrued interest goes into OA.
(b) You can withdraw anything from OA/SA. Money after earned interest is withdrawn, your money is withdrawn from SA first before OA, so you cannot directly withdraw from OA while bypassing SA.
(c) Only if fully repaid. Accrued interest doesn't automatically drop to 0 when you reach 55
(d) Yes.

This should be your plan.

Now: Repay accrued interest
OA $145K
SA $234K
MA $57K
HDB Accrued Interest $0
Private property Accrued Interest $0

1-2 months before 55th birthday, setup your SA shielding. Assuming ERS is $279k, you need to have $279k in OA + SA and the rest shielded. For example if the above amounts remain correct just before 55, then you want to shield 145+234-279 = $100k, so you have:
OA $145k
SA $134k
CPFIS-SA $100k

At age 55, $134k will be removed from SA and $52k will be removed from OA to form RA:
OA $93k
SA $0k
CPFIS-SA $100k
RA $186k

Now you apply to top up your RA to ERS with your CPF funds, and get:
OA $0
SA $0
CPFIS-SA $100k
RA $279k

Then you lower your SA shield and get:
OA $0
SA $100k
RA $279k

This just an example illustration - numbers will vary a bit depending on interest earned, further contributions, mortgage servicing, MA overflow

tangent is right on qs 1c.

cpf is very funny. they like to go one big round.

so if you sell your property at 55. you still have to put money into your cpf for the amount withdrawn. you can then withdraw it the next day. you will get the money in two weeks.

but if you do not need the money and hope to roll it at 2.5%. then what they are doing is good.

 

[dgeralds]

Thank you very much tangent314.

If I understand correctly "SA shielding" means open CPFIS-SA and invest the amount in SA. Past 55 years of age, sell the investment in CPFIS-SA so that the fund goes into SA to earn higher interest.

Now the question is on what, where and how to invest the SA money (after opening CPFIS-SA), such that I don't loose the capital. Any advice or pointers will be greatly appreciated.

Thank you.

1 (a) repaid accrued interest goes into OA.
(b) You can withdraw anything from OA/SA. Money after earned interest is withdrawn, your money is withdrawn from SA first before OA, so you cannot directly withdraw from OA while bypassing SA.
(c) Only if fully repaid. Accrued interest doesn't automatically drop to 0 when you reach 55
(d) Yes.

This should be your plan.

Now: Repay accrued interest
OA $145K
SA $234K
MA $57K
HDB Accrued Interest $0
Private property Accrued Interest $0

1-2 months before 55th birthday, setup your SA shielding. Assuming ERS is $279k, you need to have $279k in OA + SA and the rest shielded. For example if the above amounts remain correct just before 55, then you want to shield 145+234-279 = $100k, so you have:
OA $145k
SA $134k
CPFIS-SA $100k

At age 55, $134k will be removed from SA and $52k will be removed from OA to form RA:
OA $93k
SA $0k
CPFIS-SA $100k
RA $186k

Now you apply to top up your RA to ERS with your CPF funds, and get:
OA $0
SA $0
CPFIS-SA $100k
RA $279k

Then you lower your SA shield and get:
OA $0
SA $100k
RA $279k

This just an example illustration - numbers will vary a bit depending on interest earned, further contributions, mortgage servicing, MA overflow


If you really want to maximize your SA and have lots of cash to top up your RA to ERS, then follow this variant:

Before age 55, shield all but $40k of your SA:
OA $145k
SA $40k
CPFIS-SA $194k

At age 55, your OA and SA will be all transferred to RA
OA $0k
SA $0k
CPFIS-SA $194k
RA $185k

Top up your RA to ERS with $94k cash (+any remaining OA if any)
OA $0
SA $0
CPFIS-SA $194k
RA $279k

Then you lower your SA shield and get:
OA $0
SA $194k
RA $279k

 

[JuniorLion]

Thank you very much tangent314.

If I understand correctly "SA shielding" means open CPFIS-SA and invest the amount in SA. Past 55 years of age, sell the investment in CPFIS-SA so that the fund goes into SA to earn higher interest.

Now the question is on what, where and how to invest the SA money (after opening CPFIS-SA), such that I don't loose the capital. Any advice or pointers will be greatly appreciated.

Thank you.

There's no such thing as 100% capital protected.

 

[The_Davis]

I have this in my watch list - UOB United sgd fund cl A

 

[Mecisteus]

Can consider the following fund to shield.

NIKKO AM SHENTON SHORT TERM BOND SGD

 

[henrylbh]

My questions:

1. Can I pay back (by cash) my accrued interests $116K to CPF before I turn 55 so as to continue to get a safe 2.5% interest. Will this money go to OA?
1.(b) After 55, can I withdraw the money any time from OA any amount as and when I require them?
1.(c) Will the accrued interest show $0 in my CPF website after 55 years old?
1.(d) If I pay back the accrued interest, will the accrued interest amount show $0 in my CPF website?

2. I plan to join Enhanced Retirement Sum (ERS) at 55. ERS is currently set at $264K but I have only $234K in SA. Since my SA is less than $264K, can I top up (SA/RA at 55) the difference by cash or OA?

Appreciate your reply and any suggestions on how to maximize or grow money for retirement. Thank you.

1 - you pay principal amount used before accrued interest.

1(b) - After meeting FRS at 55, whatever you have in OA, including housing refund can withdrawn after withdrawing/clearing SA first.

1(c) & 1(d) - Accrued interest will never be zero unless you refund principal amount used plus accrued interest in full.

2 - can top RA (not SA) to meet ERS with cash or by transfer from SA followed by OA.

Suggestions - nil cause you rich enough

 

[tangent314]

Now the question is on what, where and how to invest the SA money (after opening CPFIS-SA), such that I don't loose the capital. Any advice or pointers will be greatly appreciated.

If you want absolute capital guarantee then an almost maturing T-Bill should be the way to go. Theoretically. In practice this is a PITA to get done because you have to find the right people in the right bank that knows how to get this done for you, and so far we've never heard of anyone attempting this successfully.

The preferred way of doing this is to use POEMS or DollarDex platform to purchase the unit trust: Nikko AM Shenton Short Term Bond Fund S$. As a short term bond fund the volatilty is as low as it gets and it also has the lowest management fee of all the CPFISSA approved funds.

 

[Mecisteus]

Yup, lowest risk rating, 0 sales charge, no platform fee, lowest expense ratio and lowest volatility. These are the criteria good enough for a fund to do shielding.

 

[BBCWatcher]

Yup, lowest risk rating, 0 sales charge, no platform fee, lowest expense ratio and lowest volatility. These are the criteria good enough for a fund to do shielding.

Right, and if you lose (for example) 0.5% because the unit trust's share price falls a bit over the few days or couple weeks you hold it, you still come out ahead within just a few months because your SA dollars earn 1.5 percentage points per year more interest than OA dollars. You don't shield SA dollars only to withdraw them the next day. You're doing this precisely because you want to keep more dollars parked in SA for at least a few more years.

 

[gamesweplay]

No need to shield near 55, if your OA +SA is not more than FRS sum x2.
i.e. currently 352K.
Just apply for a small sum of withdrawal few months from 55, like $100.
RA will be created 2 days before 55.
FRS of 176k is transferred from SA then OA, to RA
Transfer OA to SA to reach FRS 176k limit.

Good luck and hope loophole is not closed soon.

 

[henrylbh]

No need to shield near 55, if your OA +SA is not more than FRS sum x2.
i.e. currently 352K.
Just apply for a small sum of withdrawal few months from 55, like $100.
RA will be created 2 days before 55.
FRS of 176k is transferred from SA then OA, to RA
Transfer OA to SA to reach FRS 176k limit.

Good luck and hope loophole is not closed soon.

Doubt that will work. Once SA reached FRS no transfer/top-up to SA allowed even if SA was cleared to RA 2 or 3 days before 55.

Just off topic. See statement. The statement showed RA was created on 2 Dec when that person 55th birthday is on 5 Dec.

Can anyone enlighten how the interest on OA and SA is calculated? I can only get interest on MA correct and the total transfer to RA correct i.e. MSS.

For eg, no way I could get the interest of $308.99 on balance of $2,741.08 in SA.

 

[gamesweplay]

It works for me for the non-shielding.



The oa int is 876.15=639.01+237.14.
876.15 is round(38230.51*0.025/12,2)*11.

SA int is 308.99=100.54+208.45
100.54 is ROUND(2741.08*0.04/12,2)*11.
208.45 is ROUND((20000+2741.08)/60000*50,2)*11, extra int from oa +sa.

 

[a4973]

No need to shield near 55, if your OA +SA is not more than FRS sum x2.
i.e. currently 352K.
Just apply for a small sum of withdrawal few months from 55, like $100.
RA will be created 2 days before 55.
FRS of 176k is transferred from SA then OA, to RA
Transfer OA to SA to reach FRS 176k limit.

Good luck and hope loophole is not closed soon.

hi guys
referring to the quoted, may i know what is this step for ?
"Just apply for a small sum of withdrawal few months from 55, like $100.

 

[a4973]

To create the RA?

dont think so as RA will be created just before 55th BD regardless of whether an application for withdrawal is made or not. at least that's what i know so far.
unless that is meant to jumpstart the RA creation process before actual 55th BD?