CPF Queries..

[henrylbh]

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?

RA is created on the birthday itself in most cases.

 

[alwaysbehind]

I hv some questions.

1. was told that after 55yrs, there will be no more OA, SA.
just simply OA and RA, didn't know that SA still continue.

2. If at 55yrs, set aside RA full amount of ERS 279k, means commit to ERS or still able to choose BRS later?

3. Assuming can choose BRS later, means will hv 4 accounts OA, SA, RA and BRS? any cash withdrawal will start from RA first?

 

[kelhot2001]

I hv some questions.

1. was told that after 55yrs, there will be no more OA, SA.
just simply OA and RA, didn't know that SA still continue.

2. If at 55yrs, set aside RA full amount of ERS 279k, means commit to ERS or still able to choose BRS later?

3. Assuming can choose BRS later, means will hv 4 accounts OA, SA, RA and BRS? any cash withdrawal will start from RA first?

1)After 55, you still have OA & SA, in addtion is the RA which is create at 55

2)Doing ERS at 55 now is possible, but even if you do BRS later, the topup amount and interest accured cannot be taken out.

3) Not sure, I dont have so much money LOL

My method was to do FRS at 55 after shielding, and then BRS at 65
After the first payout, you can topup your RA to ERS (without incurring the LIF premium ) and do a monthly drawout (this additional monthly drawout will last to your 90 age

 

[BBCWatcher]

I hv some questions.

1. was told that after 55yrs, there will be no more OA, SA.
just simply OA and RA, didn't know that SA still continue.

Are you asking if your understanding is correct, that individuals age 55 and over can have Special Account balances, even big and still growing ones? Yes, they can and often do.

2. If at 55yrs, set aside RA full amount of ERS 279k, means commit to ERS or still able to choose BRS later?

Top up dollars (and interest on those dollars) are distributed via monthly payouts when you decide to start those payouts (which can be at age 65, age 70, or any time in between). If you top up your Retirement Account to the Enhanced Retirement Sum then your monthly payout amount will certainly be substantially more than it would be at the BRS level.

However, it's a bit unclear whether you can top up to the ERS (on your 55th birthday for example), make a property pledge just before payout start, and then receive monthly payouts that are above the BRS level but below the ERS level -- at or about the FRS level, for example. The published rules suggest that particular combination is possible (ERS top up, ~FRS level payout), but if you're concerned you should ask CPF directly.

Note that previous voluntary top ups are also paid out monthly in annuity form. If, for example, your Retirement Account is formed and funded on your 55th birthday to the Full Retirement Sum, and if 30% of that RA is attributable to previous voluntary top ups, and and if you then top up your RA to the ERS (hopefully within the same calendar month your RA is created so that you can immediately start collecting interest), your future monthly annuity should be somewhere at least in between the FRS and ERS level when you make a property pledge. But again, ask CPF directly for the specific numbers in your specific situation.

3. Assuming can choose BRS later, means will hv 4 accounts OA, SA, RA and BRS? any cash withdrawal will start from RA first?

There's no "BRS account." (Your fourth account is your MediSave Account, actually.)

When you make a property pledge you're doing so with the intention to withdraw funds from your RA, yes. If you do this, you can do it as early as your 55th birthday or much later. Unless you need the funds immediately, it's generally wise to wait -- and (I would advise) not to make a property pledge at all, assuming you're not in financial distress. As I've illustrated in calculations posted previously, RA and SA savings are quite attractive primarily because of their above market interest rate (4% floor rate currently). That's something to savor and enjoy as long as you can, if you can.

 

[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.

to the more learned on this thread, could this work?
it seems to be triggering an SA to RA creation earlier than the 55th BD then filling up the recently emptied SA using OA funds.

 

[BBCWatcher]

My method was to do FRS at 55 after shielding, and then BRS at 65

You can do this, but you lose attractive interest from age 65 to age 70. If you can afford to wait, you should.

We've been over this many times, but that's clearly the winning strategy (defer to age 70) if you're looking to exploit CPF and its attractive interest maximally.

After the first payout, you can topup your RA to ERS (without incurring the LIF premium ) and do a monthly drawout (this additional monthly drawout will last to your 90 age

You can, but there's a loss here, too: the loss of attractive interest from age 55 to age 70 on the amount between the FRS and the ERS. Unless you think you can reliably beat 4%/year (compounded annually, and yield adjusted for the Lifelong Income Fund if you wish) in the 15 year period from age 55 to age 70. I wouldn't take that bet; that's a more than sufficiently attractive adjusted yield to take.

CPF sets limits, and you should understand why those limits exist. One limit is the age 70 latest payout starting age, and another limit is the Enhanced Retirement Sum. The limits are enforced precisely because the government doesn't want to provide unlimited above market interest. Wouldn't it be nice to buy unlimited high 3.X% or 4.0% yielding interest bonds from the Singapore government when its 30 year SGS is yielding 2.X%? But you're not allowed to do that, precisely because it's a generous offer. That's why these limits exist.

Which is not to say that you should allocate every penny of your wealth to CPF. Nobody is arguing that. (Well, with a few exceptions. "My mother is 60, she has no retirement savings whatsoever, and what should I do to help her?" is an exception. The correct answer: Slam lots of cash into your mother's CPF RA. If she's destined to have only one pool of wealth, that's the one to have.)

Kelhot2001, you've explained quite clearly that you're trying to minimize the dollar amount allocated to the CPF Lifelong Income Fund. It's a goal to be sure, but it's not a yield/profit maximizing goal. If you're looking to maximize financial returns from CPF, you'd follow a different approach -- assuming again you can afford to maximize financial returns. (If you're broke at age 66 for example, OK, you cannot.)

 

[lovesleeping1981]

Don’t anyhow answer threads regarding cpf. Later labelled as fake news.

 

[alwaysbehind]

thanks kelhot, BBC.

I'm currently using myself and wife OA to fund our mortgage loan.
I'm same as TS, 2 more yrs to go for 55.

my cpf stands at 350K OA, 245K SA, 57K MA.

Just did a tenure extension with bank to stretch our loan in order to minimise monthly repayment from OA. So that I can do shielding in SA.
Also, will ask wife to use her OA mainly for repayment so that I can hv more compounding interest. When hers exhausted, I will then top-up for her by withdrawing OA and same time can relief income tax?
I don't feel comfortable to partial pay my property yet as is still new and not meet MOP yet in case got retrench.

 

[BBCWatcher]

I'm currently using myself and wife OA to fund our mortgage loan.
I'm same as TS, 2 more yrs to go for 55.
my cpf stands at 350K OA, 245K SA, 57K MA.

That's a very reasonable thing to do (using OA to service your mortgage at regular, non-accelerated pace). OA earns 2.5% interest, and if you're a responsible saver, prudently investing for the long term, then 2.5% interest should be beatable. "Non-accelerated" because your mortgage is 2.X% or even possibly 1.x%, and you wouldn't want to lose the free money you're generating on your OA (2.5% beats those rates).

You also have the future option to repay some or all of the OA you used, plus accrued interest. And that's an attractive savings account, really: 2.5% interest is quite good nowadays. (From age 55 your CPF SA and OA dollars, in that order, can be withdrawn in any amount.)

Just did a tenure extension with bank to stretch our loan in order to minimise monthly repayment from OA. So that I can do shielding in SA.

Nice. Clever.

Also, will ask wife to use her OA mainly for repayment so that I can hv more compounding interest. When hers exhausted, I will then top-up for her by withdrawing OA and same time can relief income tax?

No, it doesn't work that way. She's earning the same 2.5% you are. (I assume her CPF balances are big enough so that she's earning the maximum CPF bonus interest.) There's no particular need or advantage in draining her or your OA first. There's also no tax relief in making an OA repayment.

If you can, try to manage the mortgage servicing between your two OAs such that you're both well positioned to do SA "shielding." A couple ought to have approximately balanced CPF outcomes, if possible. Your $350K OA (which continues to grow as you work, I assume) is really rather hefty and should handle the next 2 years of mortgage servicing just fine, one would think. (Unless this is a particularly hefty monthly mortgage payment?) Plus fund the majority of a new Retirement Account in 2 years via SA "shielding."

If your wife hasn't yet hit the Full Retirement Sum in her Special Account, then take a look at whether there are any SA top up opportunities (for tax relief), followed by some amount of transfer from her OA to her SA. That approach could make sense.

 

[tangent314]

to the more learned on this thread, could this work?
it seems to be triggering an SA to RA creation earlier than the 55th BD then filling up the recently emptied SA using OA funds.

It may or may not work.. I sure as hell won't risk it if I'm not sure.

For the example displayed, it looks like the birthday happens on a Monday, that's why the transfer was done on the Friday before. If you put in the request to transfer OA to SA during the weekend... it's questionable it will be done in time

That's already assuming the system hasn't already blocked you from doing the transfer once the RA is created, which is the logical thing for it to do.

So seriously, don't count on it to work until someone has reported a success story.

 

[kelhot2001]

You can do this, but you lose attractive interest from age 65 to age 70. If you can afford to wait, you should.

We've been over this many times, but that's clearly the winning strategy (defer to age 70) if you're looking to exploit CPF and its attractive interest maximally.

You can, but there's a loss here, too: the loss of attractive interest from age 55 to age 70 on the amount between the FRS and the ERS. Unless you think you can reliably beat 4%/year (compounded annually, and yield adjusted for the Lifelong Income Fund if you wish) in the 15 year period from age 55 to age 70. I wouldn't take that bet; that's a more than sufficiently attractive adjusted yield to take.

CPF sets limits, and you should understand why those limits exist. One limit is the age 70 latest payout starting age, and another limit is the Enhanced Retirement Sum. The limits are enforced precisely because the government doesn't want to provide unlimited above market interest. Wouldn't it be nice to buy unlimited high 3.X% or 4.0% yielding interest bonds from the Singapore government when its 30 year SGS is yielding 2.X%? But you're not allowed to do that, precisely because it's a generous offer. That's why these limits exist.

Which is not to say that you should allocate every penny of your wealth to CPF. Nobody is arguing that. (Well, with a few exceptions. "My mother is 60, she has no retirement savings whatsoever, and what should I do to help her?" is an exception. The correct answer: Slam lots of cash into your mother's CPF RA. If she's destined to have only one pool of wealth, that's the one to have.)

Kelhot2001, you've explained quite clearly that you're trying to minimize the dollar amount allocated to the CPF Lifelong Income Fund. It's a goal to be sure, but it's not a yield/profit maximizing goal. If you're looking to maximize financial returns from CPF, you'd follow a different approach -- assuming again you can afford to maximize financial returns. (If you're broke at age 66 for example, OK, you cannot.)

Yes, we have been through this many time. As mention, unless you are able to predict your death age, your interest gain or losses is still a question mark, no matter with which plan (Basic, standard or escalating). If you die at the wrong age with the wrong plan, whatever interest earn is gone. Dork32 have show the calculation, Henry post it in the other thread.

Another scenario that work, with effective SA shielding, you still can do the top-up after age 65, this can be done without incurring the life premium which still last you to age 90. This method will guarantee you a full 4% instead of CPF life, wouldnt that look better than to guess will I die before 90 or I will live past 90

Again statistic have shown for the pass 10 years, 75% die before 90 while 25% still alive. You have to wonder are you the majority or the minority

 

[alwaysbehind]

No, it doesn't work that way. She's earning the same 2.5% you are. (I assume her CPF balances are big enough so that she's earning the maximum CPF bonus interest.) There's no particular need or advantage in draining her or your OA first. There's also no tax relief in making an OA repayment.

If you can, try to manage the mortgage servicing between your two OAs such that you're both well positioned to do SA "shielding." A couple ought to have approximately balanced CPF outcomes, if possible. Your $350K OA (which continues to grow as you work, I assume) is really rather hefty and should handle the next 2 years of mortgage servicing just fine, one would think. (Unless this is a particularly hefty monthly mortgage payment?) Plus fund the majority of a new Retirement Account in 2 years via SA "shielding."

If your wife hasn't yet hit the Full Retirement Sum in her Special Account, then take a look at whether there are any SA top up opportunities (for tax relief), followed by some amount of transfer from her OA to her SA. That approach could make sense.

got it, maybe we should split the repayment.

our monthly repayment after deducted from ours and employment contributions, still need a top up of 1.2k. Her earning is not as much compared to mine, and her SA is negligible. But her OA is around 180K, so if
monthly deduct 1.2k from her 180k alone, think easily cover another 10yrs+.

but for mine case, let says 350k-150k(after CPFIS-SA shielding assuming 190K to set aside for FRS in 2yrs later) = 200k OA, intend to withdraw and do leverage investment outside.

 

[BBCWatcher]

As mention, unless you are able to predict your death age, your interest gain or losses is still a question mark, no matter with which plan (Basic, standard or escalating). If you die at the wrong age with the wrong plan, whatever interest earn is gone. Dork32 have show the calculation, Henry post it in the other thread.

Leave the plan selection out of it. You've already decided you want the Basic Plan because you, personally, don't assign any value to longevity insurance. OK then.

Now you move onto whether the effective interest on the Basic Plan is attractive or not relative to other choices when you're (a) deciding whether to add funds to your RA (top up to the ERS for example), (b) when you're deciding to make a property pledge/withdrawal from your RA; (c) when you're deciding what age you should start payouts. Those are the three knobs you can twist. And the answer is...it's attractive, always. Yes, how attractive varies depending on how long you live, but it's ~3.2%/year effective interest or better. As the bond leg of your total portfolio, and assuming you're not in financial distress, that's a genuinely good deal.

One way that effective yield would be better (on a RA top up from FRS to ERS for example) is if you defer payouts to age 70 and die at age 69. Then your CPF nominee collects the full 4.0% accrued interest. But the very worst you and/or your nominee can ever do appears to be ~3.2%, with the above assumptions.

....But you've already said you don't care about the yield, really, even if it is attractive. You value the cash in hand (liquidity) much more than the yield, because you prefer entertaining yourself at Marina Bay Sands or similar. And CPF mostly won't stop you from fulfilling your dreams.

Her earning is not as much compared to mine, and her SA is negligible. But her OA is around 180K, so if monthly deduct 1.2k from her 180k alone, think easily cover another 10yrs+.

OK, but "her SA is negligible" is a problem. That's 4% interest and even possibly some bonus interest that's not being collected. You and she should fix that problem. (If her SA+MA is less than $40,000, then she's not collecting all the bonus interest she could be collecting.)

Between the two of you you've got tons of OA dollars with ample mortgage defense. I'd seriously consider whether she can get some tax relief for a SA top up and then also transfer some of her OA into her SA. They're her decisions to make, but based on the information you've shared the decisions I'm suggesting look like smart ones.

For perspective, what's the total outstanding mortgage balance? How much do you still owe, in total?

but for mine case, let says 350k-150k(after CPFIS-SA shielding assuming 190K to set aside for FRS in 2yrs later) = 200k OA, intend to withdraw and do leverage investment outside.

I don't like the sound of "leverage investment." You're already significantly leveraged: you have a mortgage.

 

[alwaysbehind]

OK, but "her SA is negligible" is a problem. That's 4% interest and even possibly some bonus interest that's not being collected. You and she should fix that problem. (If her SA+MA is less than $40,000, then she's not collecting all the bonus interest she could be collecting.)

Between the two of you you've got tons of OA dollars with ample mortgage defense. I'd seriously consider whether she can get some tax relief for a SA top up and then also transfer some of her OA into her SA. They're her decisions to make, but based on the information you've shared the decisions I'm suggesting look like smart ones.

For perspective, what's the total outstanding mortgage balance? How much do you still owe, in total?


I don't like the sound of "leverage investment." You're already significantly leveraged: you have a mortgage.

what I'm looking at is 10yrs ahead whether can i do a full redemption.
currently my outstanding is 950K with a repayment of almost 6k monthly. After extend tenure, reduced to 4.2k.
950k in 10 years will hv balance of 600k which is on-par with what I hv in OA and SA.
If I never extend tenure, there will be a depleting of 2.8k monthly from our principal which cpf interest won't be able to cover and will be exhausted in 10yrs+. Now with 1.2k top-up from our principal, maybe I should split each $600 and our interest earned should cover the top-up and principal will slowly grow.

 

[kelhot2001]

Leave the plan selection out of it. You've already decided you want the Basic Plan because you, personally, don't assign any value to longevity insurance. OK then.

Now you move onto whether the effective interest on the Basic Plan is attractive or not relative to other choices when you're (a) deciding whether to add funds to your RA (top up to the ERS for example), (b) when you're deciding to make a property pledge/withdrawal from your RA; (c) when you're deciding what age you should start payouts. Those are the three knobs you can twist. And the answer is...it's attractive, always. Yes, how attractive varies depending on how long you live, but it's ~3.2%/year effective interest or better. As the bond leg of your total portfolio, and assuming you're not in financial distress, that's a genuinely good deal.

One way that effective yield would be better (on a RA top up from FRS to ERS for example) is if you defer payouts to age 70 and die at age 69. Then your CPF nominee collects the full 4.0% accrued interest. But the very worst you and/or your nominee can ever do appears to be ~3.2%, with the above assumptions.

....But you've already said you don't care about the yield, really, even if it is attractive. You value the cash in hand (liquidity) much more than the yield, because you prefer entertaining yourself at Marina Bay Sands or similar. And CPF mostly won't stop you from fulfilling your dreams.

Whether to 65 or 70 or from FRS to ERS, they are correlated, by increasing the sum, the minimum bet increases. Unless CPF is saying 10-20% of RA based on age 55, then it will be a different ball game.

That is why the questions always come to the forum, Can I do ERS at 55 and then to BRS at 65. Why did CPF life denied the option to withdraw ERS to BRS or the topup ?

If you are born after 1987 or whoever that is, I wouldn't question that because prior to that, we are promise the amount goes in to CPF, plus interest come back to you at retirement.

While the yield is attractive, the odds are not (things you learn in MBS, lol)
Do you not agree 75% will have to pay into LIF while 25% benefit on it. Do you know are you the 75% or the 25%?

I would always see it this way, if CPF life practise the old way where are monies go into your own RA account while the rules of CPF life apply and upon death, these monies go into LIF fund. For those who are ok with that, they are fine with CPF life, while those who dont agree, we see a different way

 

[dgeralds]

Thank you again tangent314.

I am familiar with buying / selling of shares online but not with unit trusts or bonds. So appreciate if you could answer the following:

To purchase Nikko AM Shenton Short Term Bond Fund S$:

1. Should i open an investment account CPFIS-SA? I already have an investment account CPFIS-OA with UOB.
2. Then I should open a trading account with POEMS.
3. Is buying Nikko AM Shenton Short Term Bond Fund S$ using POEMS is like buying any shares online or should I go through a broker in POEMS?
4. What is the code for Nikko AM Shenton Short Term Bond Fund S$?
5. Is there charges involved to buy/sell Nikko AM Shenton Short Term Bond Fund S$ through POEMS (similar to charges involved in buying / selling shares)?
6. After buying Nikko AM Shenton Short Term Bond Fund S$, will this be reflected in CDP account or in CPFIS-SA account in UOB?

Thank you.

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.

 

[tangent314]

Thank you again tangent314.

I am familiar with buying / selling of shares online but not with unit trusts or bonds. So appreciate if you could answer the following:

To purchase Nikko AM Shenton Short Term Bond Fund S$:

1. Should i open an investment account CPFIS-SA? I already have an investment account CPFIS-OA with UOB.
2. Then I should open a trading account with POEMS.
3. Is buying Nikko AM Shenton Short Term Bond Fund S$ using POEMS is like buying any shares online or should I go through a broker in POEMS?
4. What is the code for Nikko AM Shenton Short Term Bond Fund S$?
5. Is there charges involved to buy/sell Nikko AM Shenton Short Term Bond Fund S$ through POEMS (similar to charges involved in buying / selling shares)?
6. After buying Nikko AM Shenton Short Term Bond Fund S$, will this be reflected in CDP account or in CPFIS-SA account in UOB?

Thank you.

Disclaimer: I haven't actually done any CPFIS-SA investment through POEMS, so what follows is stuff I've figured out from poking around

1. You don't need to open any CPFIS-SA account AFAIK. There's an account setting somewhere to link to CDP, SRS, CPFISOA and CPFISSA accounts, and the CPFISSA account number is linked by NRIC.
2. Not a bad idea, I'm using POEMS too. DollarDex should work but I'm not familiar with that and can't help
3. Buying Unit Trust is different. There is a price that is updated every day, you just have to tell the platform how much $ worth you want to buy. Upon settlement it will go to your linked account and take the money.
4. UTs don't necessarily have codes. Easiest way to find it is to just filter by investment type - CPFISSA, there's only a few that qualify and only one of them is Nikko AM
5. Through Poems or DollarDex there are no charges for buying or selling UTs
6. CDP doesn't take care of UTs. Your UTs will be held by Poems.

I highly recommend opening a POEMS account and trying it out with a small sum just to get a feel of it. Since there's no sales or redemption charges, you're not really going to lose anything significant.

 

[dgeralds]

Hi tangent314

I have already opened poems account.

I selected investment type CPFSAIA but there isn none with name Nikko

I selected investment type CPFOAIA, there is one by the name "Nikko AM Shenton Thrift Fd"

I selected investment type "ALL" there are 3 starting with Nikko (i) "Nikko AM Shenton Thrift Fd" (ii) "Nikko AM Shenton Horizon Singapore Dividend Equity Fd (S$)" and (iii) "Nikko AM Horizon Singapore Fixed Incone Enhanced Fd SGD"

Appreciate if you let me know which of the above is Nikko AM Shenton Short Term Bond Fund S$ that can be purchased using monies from CPF SA?

Thank you.

Disclaimer: I haven't actually done any CPFIS-SA investment through POEMS, so what follows is stuff I've figured out from poking around

1. You don't need to open any CPFIS-SA account AFAIK. There's an account setting somewhere to link to CDP, SRS, CPFISOA and CPFISSA accounts, and the CPFISSA account number is linked by NRIC.
2. Not a bad idea, I'm using POEMS too. DollarDex should work but I'm not familiar with that and can't help
3. Buying Unit Trust is different. There is a price that is updated every day, you just have to tell the platform how much $ worth you want to buy. Upon settlement it will go to your linked account and take the money.
4. UTs don't necessarily have codes. Easiest way to find it is to just filter by investment type - CPFISSA, there's only a few that qualify and only one of them is Nikko AM
5. Through Poems or DollarDex there are no charges for buying or selling UTs
6. CDP doesn't take care of UTs. Your UTs will be held by Poems.

I highly recommend opening a POEMS account and trying it out with a small sum just to get a feel of it. Since there's no sales or redemption charges, you're not really going to lose anything significant.

 

[tangent314]

Not sure why you can't see the correct UT

 

[dgeralds]

Hi tangent314

I found it. Thank you very much for your help. I appreciate it.

Not sure why you can't see the correct UT