CPF related calculation questions

[THEMIKOS]

Apologies if this has been covered before but i wasn't able to find for the answers even after using the search function. Anyway here goes:

How does one calculate the OA, SA and MA amounts when one reaches 55 years old?
I understand that the first 20k on OA and 40k of SA (total first 60k) yields an extra 1% on top of the existing rates.
The rates at the moment are: OA - 2.5%, SA - 4% and MA - 4%

I tried using the compound interest calculator to calculate but the amount differs greatly from the estimated end amount from using the CPF STARTER app as found in the apple store.

I was thinking perhaps there's a limit to how much the SA can generate interest as i had read in some posts that there is a cap to SA. Not being sure, i have decided to write in to ask for your expert views/opinions. Please help. Thank you.

 

[BBCWatcher]

I think you're asking about how bonus interest is calculated.

Below age 55, bonus interest of 1% is paid on the first $60,000 of combined CPF balances (OA+MA+SA), of which up to $20,000 can be from OA. The bonus interest is credited to the member's SA.

Example: OA=$40,000, SA=$10,000, MA=$5,000. The total amount eligible for bonus interest is $35,000 ($20,000 from OA + $10,000 + $5,000), which is below the $60,000 max. Thus the bonus interest would be 1% of $35,000 = $350.

For those age 55 and up, there's another 1% bonus interest paid on the first $30,000 of combined balances, again up to $20,000 of which can be from OA. Both types of bonus interest are paid into the Retirement Account.

For those below age 55, up to $600 of bonus interest is available per year. For those age 55 or older, up to $900 of bonus interest is available per year.

There are no limits to the number of years bonus interest is paid, except for the member's lifespan.

 

[THEMIKOS]

I think you're asking about how bonus interest is calculated.

Below age 55, bonus interest of 1% is paid on the first $60,000 of combined CPF balances (OA+MA+SA), of which up to $20,000 can be from OA. The bonus interest is credited to the member's SA.

Example: OA=$40,000, SA=$10,000, MA=$5,000. The total amount eligible for bonus interest is $35,000 ($20,000 from OA + $10,000 + $5,000), which is below the $60,000 max. Thus the bonus interest would be 1% of $35,000 = $350.

For those age 55 and up, there's another 1% bonus interest paid on the first $30,000 of combined balances, again up to $20,000 of which can be from OA. Both types of bonus interest are paid into the Retirement Account.

For those below age 55, up to $600 of bonus interest is available per year. For those age 55 or older, up to $900 of bonus interest is available per year.

There are no limits to the number of years bonus interest is paid, except for the member's lifespan.

Thank you for the reply. I understand the bonus interest better now but that was not what i was asking about. I was just wondering how come my calculated interest on SA differs from the CPF app that i mentioned. Perhaps it would be better to put some figures in?

Lets say for a SA account that has 100k in it now (lets assume i am 35 years old), with a monthly contribuition of $834 into the SA itself, my calculation is that in 20 years time i should have $523549 (223389 interest,principal amount 300160 put in over the years) based on a flat rate of (annual compound interest) of 4% (lets not include the bonus interest for easier calculations).
But when i use the CPF app, i get a sum of only $456323 and thats a significant difference. So i was wondering if there was a cap somewhere or if the app is not to be relied upon or if my calculation is wrong.

 

[nekoarc]

Lets say for a SA account that has 100k in it now (lets assume i am 35 years old), with a monthly contribuition of $834 into the SA itself, my calculation is that in 20 years time i should have $523549 (223389 interest,principal amount 300160 put in over the years) based on a flat rate of (annual compound interest) of 4% (lets not include the bonus interest for easier calculations).
But when i use the CPF app, i get a sum of only $456323 and thats a significant difference. So i was wondering if there was a cap somewhere or if the app is not to be relied upon or if my calculation is wrong.

Have you checked out the Ordinary Wage Ceiling and Additional Wage Ceiling?

In order to contribute 834/mo to SA at age 35, without bonuses, one would need to earn 11914 OW monthly, which is beyond the 6000 CPF Ordinary Wage Ceiling.

Anything beyond 6k OW salary does not attract CPF contributions from both you and your employer (i.e. you don't get extra 17% income to ur CPF). Garment doesn't want to make rich people cost the company too much.

 

[THEMIKOS]

Have you checked out the Ordinary Wage Ceiling and Additional Wage Ceiling?

In order to contribute 834/mo to SA at age 35, without bonuses, one would need to earn 11914 OW monthly, which is beyond the 6000 CPF Ordinary Wage Ceiling.

Anything beyond 6k OW salary does not attract CPF contributions from both you and your employer (i.e. you don't get extra 17% income to ur CPF). Garment doesn't want to make rich people cost the company too much.

No la.. where got earn so much? Earning about half of that only. And yes i saw my spf statement, $834 goes into the SA itself. Its probably because my MA is maxed out at 54500, and so all the excess flows to my SA.

 

[nekoarc]

Ah, was just plugging in the numbers and it looked correct with the cap. You're right, the numbers do look odd... There are no other weird caps beyond that though.

As you get to the 45-50 band and 50-55 band, the SA contribution should actually increase.

 

[maple96]

No la.. where got earn so much? Earning about half of that only. And yes i saw my spf statement, $834 goes into the SA itself. Its probably because my MA is maxed out at 54500, and so all the excess flows to my SA.

First get your formula right.

If MA is max, MA contributions plus year end interest will go into SA. If SA is max (=FRS), MA contributions plus year end interest will flow into OA, SA contributions still remain in SA.

U have 2 more variables to factor in, yearly increase in MA ceiling (BHS) and Yearly increase in SA ceiling (FRS)

Goodluck playing the calculator.

 

[kehyi4]

As you said MA max at $54,500 (2018), SA probably has a limit as well. I believe this limit is the enhanced retirement sum (ERS); ie 3 x Basic retirement sum (BRS)...

Assuming your SA reached ERS ($346,500) on the 13th year, due to the increased contributions, at the end of 20 years your account will have $455,970. This amount seems closer to the amount from the CPF calculator.

ERS is only applicable to RA. For MA overflow before 55yo, the SA limit is FRS

Evidence:

 

[jacky5297]

Does someone has a excel for cpf sum calculation when you are at your retirement age (62 years old now?).

Couldn’t find a useful one online so far...

 

[henrylbh]

Apologies if this has been covered before but i wasn't able to find for the answers even after using the search function. Anyway here goes:

How does one calculate the OA, SA and MA amounts when one reaches 55 years old?
I understand that the first 20k on OA and 40k of SA (total first 60k) yields an extra 1% on top of the existing rates.
The rates at the moment are: OA - 2.5%, SA - 4% and MA - 4%

I tried using the compound interest calculator to calculate but the amount differs greatly from the estimated end amount from using the CPF STARTER app as found in the apple store.

I was thinking perhaps there's a limit to how much the SA can generate interest as i had read in some posts that there is a cap to SA. Not being sure, i have decided to write in to ask for your expert views/opinions. Please help. Thank you.

Before 55, first 20k in OA earns extra interest, but the extra interest will be credited to SA. If OA is less than 20k, SA less amount in OA will earn the extra interest. If OA + SA is less than 60k, MA earns the extra interest. The extra interest earned in MA will also be credited to SA, if MA meets BHS.

There is no cap to SA, except that cash top-ups or/and transfers from other CPF accounts are allowed once SA reaches limit of FRS.

 

[henrylbh]

I think you're asking about how bonus interest is calculated.

Your long explanation give no clue on how he can do his calculations

 

[THEMIKOS]

Thanks guys for all your replies.
@shadowrains, ur explanation seems more logical with respect to the cpf app. So that would mean there is a cap to the SA. I guess i would have to do more reading/search online etc to debunk this idea of having a SA cap. If i do find one soon, will update here.

 

[THEMIKOS]

Henrylbh, yeah i read that SA has no caps but the cpf app just somehow doesnt add up the calculation. @shadowrains calculation with the cap comes close so will update here if i do find any "cap" to sa becoz like u, i believe SA has no cap as well. Just dunno how come cannot get close to the cpf app figures. I did try NOT compounding the interest but just a flat interest and i got similar figures to the app (which doesnt make sense)

 

[dork32]

Henrylbh, yeah i read that SA has no caps but the cpf app just somehow doesnt add up the calculation. @shadowrains calculation with the cap comes close so will update here if i do find any "cap" to sa becoz like u, i believe SA has no cap as well. Just dunno how come cannot get close to the cpf app figures. I did try NOT compounding the interest but just a flat interest and i got similar figures to the app (which doesnt make sense)

you are only partially correct.
yes sa will not jam at a certain number like ma.
once it reaches its "cap", your ma will not go into the sa but oa. so your contribution to sa will go down rapidly.

 

[dork32]

i believe SA has no cap as well.

you should not just believe in yourself. you should go get the real facts.

 

[maple96]

you should just believe in yourself. you should go get the real facts.

I already posted the cpf rules, and someone else even posted a picture of the cpf rules, still he choose to believe in himself

 

[dork32]

I already posted the cpf rules, and someone else even posted a picture of the cpf rules, still he choose to believe in himself

nevermind lah. you also shoot me before for getting my facts wrong. we are humans, every now and then we do make some mistake.

 

[maple96]

I tried finding information on overflowing SA but I can't. The evidence you gave is for overflowing MA, which is confirmed. Yes you can only top up your SA to FRS but it doesn't say when your SA reaches FRS it will overflow to OA (ie contribution from employment). Waiting for rich people to confirm SA limit

Anyway the calculation is pretty rough with lots of assumptions.

If u are talking about SA salary contribution, it will always go to SA, no ceiling or limits. Even VC continues to go OA/SA, only MA ceiling will affect where MA contributions will be posted.

We are talking about if SA hits FRS and MA also hit BHS, where the MA contributions and interest will flow = the diagram clearly show u it wll go to OA

I already posted this earlier.

 

[maple96]

THEMIKOS is talking about SA, since his MA hit max already. With employment contribution of $834/month into the SA itself.

Pls read thru all his posts thoroughly and slowly, and read the picture posted from CPF website.

Picture clearly show SA = FRS!

THEMIKOs clarified his 834 includes overflow from MA! I end here, let others explain to u.

 

[shadowrains]

Pls read thru all his posts thoroughly and slowly, and read the picture posted from CPF website.

Picture clearly show SA = FRS!

THEMIKOs clarified his 834 includes overflow from MA! I end here, let others explain to u.

ok you win