CPF Questions (minimum sum)

[lcp2000]

Glad that you try to clarify my queries with CPF.

Likely part of the answers may still be opaque especially on the period of AMP from top-ups after CPF Life is chosen. They will say you need to apply for APM and they will tell you the amount at the time when you want to start payout.

Under min sum scheme, we would be able to estimate the monthly payout ourselves when we commence draw down as the RA amount is spread over a finite period of about 20 years or remaining period of 20 years from payout eligibility age..

This depend how much fund available in RA.
Let say for my mum case (Minimum Sum Scheme), she can start to receive payout $297.00 (around this amount) even though the RA only have $7000.00.
She chose not to and wait for more interest accumulated.

 

[henrylbh]

This depend how much fund available in RA.
Let say for my mum case (Minimum Sum Scheme), she can start to receive payout $297.00 (around this amount) even though the RA only have $7000.00.
She chose not to and wait for more interest accumulated.

Under min sum scheme the monthly payout is calculated to spread the RA amount over 20 years or until the RA is exhausted, but the min payout is $297. That why you mum is getting the min payout as her 7k is not enough to spread over 20 years. Even if she delays drawdown to 80 yo, she will still get $297 as the amount is too little spread over 5 years

 

[RM2SSG]

Thanks for this discussion.

I learnt that one can continue to top up beyond the preset ERS that was set when one reached 55 years old. Since ERS is adjusted yearly, there is always a gap to top up more.

Looking forward to the answer on the treatment of how this additional top up will be paid out as AMP and over what time frame.

 

[lcp2000]

If everyone lives longer than expected, the monthly payout will be adjusted down as some must lose for some to gain. No two ways about it.

When you buy flexi flat, the min lease must last till you are 95. If you live beyond 95, it up to ah gong to decide.

If you want order food by pressing button, might as well hire a maid who you can press and bathe for you and much more and you can change maid every year to revitalise yourself

For your 1st point, I agree with you to some extent. I don't really agree some may gain and some may loose.
I believe CPF Board will use our fund for investment.
This depend on the performance, if the performance is good , I don't think CPF board can't afford to pay us more. Of course if the performance is bad , CPF will pay us less. However, I am more toward to believe CPF Board will have smoothing method so that we can have constant pay out.

Hire maid is too expensive but pressing button is free or so much cheaper since it is build-in function. Haha.

 

[henrylbh]

For your 1st point, I agree with you to some extent. I don't really agree some may gain and some may loose.
I believe CPF Board will use our fund for investment.
This depend on the performance, if the performance is good , I don't think CPF board can't afford to pay us more. Of course if the performance is bad , CPF will pay us less. However, I am more toward to believe CPF Board will have smoothing method so that we can have constant pay out.

Hire maid is too expensive but pressing button is free or so much cheaper since it is build-in function. Haha.

CPF don't invest our fund. CPF fund is lent to government paying interest similar to the interest that CPF is paying us. Whatever CPF makes from selling or renting premises or that little investments they have etc, CPF members have no share.

In general, under CPF Life, members' money is placed in a pool from which members are paid and collectively they can't get more than what's in the pool. That means when some take more than what they put into the pool, some must end up taking less from the pool. CPF is our money and you can't expect the government to top up the pool. If more live longer than expected, the payout from the pool has to be reduced. Same when interest on the pool of money is reduced. That why the payout is an estimate that may change according to members' longevity and interest rate.

 

[henrylbh]

use oa to buy second property.

Interest in second property has been dampened by ABSD and other cooling measures. There is also SSD if it were to be disposed within 4 years for whatever reasons.

 

[dork32]

OK, private it means. Bad returns for private property now and too much up front investment.

Other than that, anymore use for OA?

it may improve. once your oa has gone to the sa, it cannot reversed. should you want to buy another property in the future, you will have to look for other funds.

 

[lcp2000]

CPF don't invest our fund. CPF fund is lent to government paying interest similar to the interest that CPF is paying us. Whatever CPF makes from selling or renting premises or that little investments they have etc, CPF members have no share.

In general, under CPF Life, members' money is placed in a pool from which members are paid and collectively they can't get more than what's in the pool. That means when some take more than what they put into the pool, some must end up taking less from the pool. CPF is our money and you can't expect the government to top up the pool. If more live longer than expected, the payout from the pool has to be reduced. Same when interest on the pool of money is reduced. That why the payout is an estimate that may change according to members' longevity and interest rate.

I thought Government will invest the Long Life fund to earn at least 5-7% returned.
Then 5-7% returned will be our payout

Just taking one example

Assume at the age of 55 , CPF Member placed $270,000.00 in RA.
If member choose to withdraw at age 70 ,

RA - 504,996.82

Based on this amount, if CPF can gain 6-7% returned each year, this should be enough for the monthly payout.

6-7% should not be difficult achieved by Finance Expert.

 

[windwaver]

it may improve. once your oa has gone to the sa, it cannot reversed. should you want to buy another property in the future, you will have to look for other funds.

Agree but then SA can only go to a max of 161K anyway for now.

 

[Trazora]

Agree but then SA can only go to a max of 161K anyway for now.

The FRS amount will increase each year to cater for inflation. eg If age 55 in 2020, then FRS is $181k

 

[dork32]

Agree but then SA can only go to a max of 161K anyway for now.

wrong, my sa now is way more than 161k. i have never done any topup or transfer to sa.

 

[henrylbh]

wrong, my sa now is way more than 161k. i have never done any topup or transfer to sa.

He is referring to transfer from OA to SA. Of course there is a current limit of 161k for transfer and top-ups.

Whoever got 161k or the previous 155k, will see their SA outgrowing the increasing annual SA limit over the years as interest on SA alone, not counting mandatory contribution to SA, is more than enough to cover any increase in SA ceiling.

 

[jjonghae]

I want to transfer my parent's OA sum to SA. But he is above 55. Am I not able to do so?

 

[henrylbh]

I want to transfer my parent's OA sum to SA. But he is above 55. Am I not able to do so?

From 55, no transfer from OA to SA is allowed. Can only transfer to RA if it is still below prevailing FRS/ERS.

 

[lcp2000]

Glad that you try to clarify my queries with CPF.

Likely part of the answers may still be opaque especially on the period of AMP from top-ups after CPF Life is chosen. They will say you need to apply for APM and they will tell you the amount at the time when you want to start payout.

Under min sum scheme, we would be able to estimate the monthly payout ourselves when we commence draw down as the RA amount is spread over a finite period of about 20 years or remaining period of 20 years from payout eligibility age..

Here is the reply from CPF

Under the current policy and assuming the member were to join CPF LIFE Standard Plan, all his RA savings will be used to commit towards the LIFE plan.

Different from the LIFE Standard plan, assuming the member to join CPF LIFE Basic Plan, about 10% of his RA savings will be used to commit towards the LIFE plan. The actual percentage will depend on his age and gender. We will inform him on the amount deducted when the policy is issued. The rest of his RA savings will remain in your RA.

The annuity premiums for the LIFE plan will depend on the RA savings the member set aside by age 65.

For any new monies, contributions, top-ups in the RA after 65, the AMP will be paid to him during the Annual Payout Review until the RA savings are exhausted. He can request to opt out from receiving the AMP by submitting an e-Concierge request or letter. If he decides to start the AMP, he can submit a request via these two methods as well.

Savings in CPF LIFE, like savings in the RA, are invested in a portfolio of risk-free special Singapore Government Bonds that pay fixed coupon rates over a long period of time. In this way, CPF LIFE members can rely on a steady stream of income for life.

 

[5star_pundit]

At 55 if cannot meet the min sum one still can withdraw $5000

 

[henrylbh]

Here is the reply from CPF

Under the current policy and assuming the member were to join CPF LIFE Standard Plan, all his RA savings will be used to commit towards the LIFE plan.

Different from the LIFE Standard plan, assuming the member to join CPF LIFE Basic Plan, about 10% of his RA savings will be used to commit towards the LIFE plan. The actual percentage will depend on his age and gender. We will inform him on the amount deducted when the policy is issued. The rest of his RA savings will remain in your RA.

The annuity premiums for the LIFE plan will depend on the RA savings the member set aside by age 65.

For any new monies, contributions, top-ups in the RA after 65, the AMP will be paid to him during the Annual Payout Review until the RA savings are exhausted. He can request to opt out from receiving the AMP by submitting an e-Concierge request or letter. If he decides to start the AMP, he can submit a request via these two methods as well.

As expected, the answer still avoid the period over which new monies, contributions and top-ups in RA after 65 will be spread over - until the RA savings are exhausted.

 

[elnewbie]

Most of us peasants after age 65 probably won't think about topping up. If at all, we may be thinking of how to extract more money from CPF after age 65.

As expected, the answer still avoid the period over which new monies, contributions and top-ups in RA after 65 will be spread over - until the RA savings are exhausted.

 

[henrylbh]

Most of us peasants after age 65 probably won't think about topping up. If at all, we may be thinking of how to extract more money from CPF after age 65.

It's not about topping up but to understand the system better and how best to go along with it.

Even though I give my father monthly cash allowance, I still top up his RA when is already 80 plus. But he is getting 6% on first 30k and 5% on next 30k and balance at 4%. His monthly CPF payout is 1,611 and that goes back to me His only benefit is when he outlive me

 

[nethdale]

This thread provides insightful inform on the MS of CPF. Being a simple and married person, can help to re-confirm my understanding in the following:

(1) I will opt for BRS and pledge my flat when I turn 55, whatever balance in OA + SA can be withdrawn?
(2) If I sell my flat before I turn 65, does the proceed go back to OA?
(3) Would there be any difference if I sell my flat after 65?

Thanks in advance.