CPF Retirement Sum Scheme

[maple96]

Recently, my brother in law who is 68yo and under old RSS, was also given an amount to last 28 years when he started his payout.

This seems to be the default CPF option ie giving the minimum payout to last the maximum duration.

This is similar to recent case mentioned here :
https://forums.hardwarezone.com.sg/118895656-post1.html

What surprises me most is CPF's answer, that "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely" ...

Would appreciate if experts can explain or provide some insight .. thanks

My understanding is that for those on RSS, the payout amount shld last at least 20 years from the Payout Eligibility Age for that cohort ..

CPFB explained in their FB page, your RA (principle) will be paid over 20 years, the extra 8 years is for payout of interest earned on RA. Wow that is not bad, interest earned on RA can last u another 8 years wor!

 

[tmkedmw]

CPFB explained in their FB page, your RA (principle) will be paid over 20 years, the extra 8 years is for payout of interest earned on RA. Wow that is not bad, interest earned on RA can last u another 8 years wor!

I was once told by cpf that the monthly payout amount to be paid out to deplete RA over 20 years already factor your RA interests earned during the 20 years. Oh well...

 

[iMac]

Look like there are many version of RSS.

Not surprise that CPFB staff also not 100% sure of the policies.

 

[oceanicmanta]

CPFB explained in their FB page, your RA (principle) will be paid over 20 years, the extra 8 years is for payout of interest earned on RA. Wow that is not bad, interest earned on RA can last u another 8 years wor!

that's a more useful explanation for the extension ... compared to the cookie cutter replies from CPFB previously

it's just the extra interests 2% + 1% (excluding the base 4%) on RA balance that is extending the duration

that said ... I am not sure if this was there all along, or was changed some time along the way ... sigh

 

[maple96]

that's a more useful explanation for the extension ... compared to the cookie cutter replies from CPFB previously

it's just the extra interests 2% + 1% (excluding the base 4%) on RA balance that is extending the duration

that said ... I am not sure if this was there all along, or was changed some time along the way ... sigh

First time I read this CPF FAQ:

Q Why does my CPF Retirement Sum Scheme payouts last up to age 95?

A Under the Retirement Sum Scheme (RSS), your monthly payouts from your CPF Retirement Account (RA) can last up to 20 years. The RA balance earns 4% interest p.a.

To benefit members, extra interest of 2% p.a. is paid on the first $30,000 and 1% p.a. on the next $30,000 of your savings.

The extra interest is provided by the Government to help members lengthen the duration of their payouts, so that it lasts them longer. This is because around 1 in 3 Singaporeans aged 65 today are expected to live to age 90 and beyond.

You can start your payouts anytime between the ages of 65 and 70.

In general, top-ups to CPF accounts will result in an increase in monthly payouts. Top-ups beyond the Full Retirement Sum will result in an extension of the payout duration. However, members can request to increase their monthly payouts instead.

Members with serious medical conditions can also apply for earlier withdrawal of their CPF. More details can be found here.

(I will check this in future, I have interest )

 

[foozgarden]

Of course the Standard plan gives higher returns.

You are living quite long.

Take Basic for an example. You are drawing the payouts from RA, lower amount and return is at least 4%. You will deplete RA and Premiums at age 93.

If you live till 96 under Standard Plan, of course the return is much higher.

if standard plan give higher return, then why is most pple here saying the older RSS is better?

i am just comparing old RSS vs Std plan (for the same amount of RA balance and same payout age @70 for 26years)

 

[foozgarden]

Did you make sure birth date is exactly 70 years ago from today?
Because otherwise the money you put in will be allowed to accumulate compounding interest until the age of 70 before being paid out.

i start from my parent birthday , coz thats where RSS will start to pay out.

 

[Mecisteus]

if standard plan give higher return, then why is most pple here saying the older RSS is better?

i am just comparing old RSS vs Std plan (for the same amount of RA balance and same payout age @70 for 26years)

You probably don't understand the Maths.

Old RSS has no insurance component.

The people who prefer the old RSS are those that don't believe in longevity insurance.

Under old RSS, if you die early you get back remaining interests and money NOT paid.

Under Standard plan and if you die early, you won't get back the interests.

In short, if you know you are going to live till 120, choose Standard. Better still Escalating.

If you don't like the insurance and you don't wish others to take care of you, choose old RSS.

 

[rrr2015]

is there a quick to estimate max monthly payout I can request with say $x in RA for RSS?

 

[BBCWatcher]

Under old RSS, if you die early you get back remaining interests and money NOT paid.

No, you don’t get anything. You’re dead. Your nominees might get something.

If you don't like the insurance and you don't wish others to take care of you, choose old RSS.

That’s quite backwards. If you want to run the risk of being a burden on your children, your grandchildren, charities, and/or taxpayers — and taxpayers will assume as little burden as possible, which will be pretty miserable for you — then choose something that isn’t longevity insurance.

 

[Mecisteus]

That’s quite backwards. If you want to run the risk of being a burden on your children, your grandchildren, charities, and/or taxpayers — and taxpayers will assume as little burden as possible, which will be pretty miserable for you — then choose something that isn’t longevity insurance.

There is nothing backwards. It is backwards because you think that longevity insurance is important. Just like how you think DII is important.

To me, these are not necessary and they are not value for money.

Every couple would at least have a HDB flat. The minimum is this old couple can rent out some rooms to supplement their retirement.

As I said, this is the minimum retirement planning. To add on, some retirees may have other sources of income.

 

[foozgarden]

You probably don't understand the Maths.

Old RSS has no insurance component.

The people who prefer the old RSS are those that don't believe in longevity insurance.

Under old RSS, if you die early you get back remaining interests and money NOT paid.

Under Standard plan and if you die early, you won't get back the interests.

In short, if you know you are going to live till 120, choose Standard. Better still Escalating.

If you don't like the insurance and you don't wish others to take care of you, choose old RSS.

Old RSS is better because it gives higher payout per month (than CPF Life Standard) over 20 years. If your calculation shows that CPF Life Standard gives you higher payout p.m. than old RSS, then I am very sure your calculation is wrong!

If you take 26 years payout, then CPF Life Standard may have slightly higher XIRR but then the monthly payout you receive will still be lower, meaning when you are younger and can enjoy but you don't get more money to enjoy, when old can't enjoy get more money also useless right?

thansk for your replies.
and thats where i am trying to figure where my maths is wrong.
using the xirr formula in excel.
the RA balance is deducted ffromt the beginning.
and the monthly amount is your cashflow. for 26 years.
so not sure where i got it wrong?

cpf life standard is higher by 50 compared to old RSS

 

[Mecisteus]

thansk for your replies.
and thats where i am trying to figure where my maths is wrong.
using the xirr formula in excel.
the RA balance is deducted ffromt the beginning.
and the monthly amount is your cashflow. for 26 years.
so not sure where i got it wrong?

cpf life standard is higher by 50 compared to old RSS

I'm not sure what numbers you used.

I tried to calculate Standard, starting payout at 70 years and for 26 years.

I'm getting about 5% pa. This number will go up if you live longer.

The number will go down if you live till 85.

 

[Newmaxi]

You may want to share your Excel spreadsheet for some here to take a look (when they are free to do so).
The old RSS must surely give higher payout p.m. than all current CPF Life plans by virtue that it only pays over 20 years and there is no need to pay for annuity insurance premiums.
Don't forget that for the old RSS scheme, as your RA balance reduces, they are still earning 4% p.a. interest every year.

RSS payout has been adjusted last year and it pay for 30 years till age 95.

 

[Toni90]

There is nothing backwards. It is backwards because you think that longevity insurance is important. Just like how you think DII is important.

To me, these are not necessary and they are not value for money.

Every couple would at least have a HDB flat. The minimum is this old couple can rent out some rooms to supplement their retirement.

As I said, this is the minimum retirement planning. To add on, some retirees may have other sources of income.

You mean gov should set up a national retirement plan which requires elders to rent out their rooms for surviving.

 

[henrylbh]

I was once told by cpf that the monthly payout amount to be paid out to deplete RA over 20 years already factor your RA interests earned during the 20 years. Oh well...

For RSS, yes the payouts would deplete RA in about 20 years based on 4% interest rate. I have satisfied myself on that with my own calculation.

But with the introduction of additional interest and the D bonus and V bonus and extra additional interest in later years, the original payouts would stretch beyond 20 years by about 2 years or so depending on whether the affected cohorts opted for the V bonus and then further defer their eligible payout date.

 

[henrylbh]

RSS payout has been adjusted last year and it pay for 30 years till age 95.

Where is the info from?

 

[henrylbh]

First time I read this CPF FAQ:

Q Why does my CPF Retirement Sum Scheme payouts last up to age 95?

A Under the Retirement Sum Scheme (RSS), your monthly payouts from your CPF Retirement Account (RA) can last up to 20 years. The RA balance earns 4% interest p.a.

To benefit members, extra interest of 2% p.a. is paid on the first $30,000 and 1% p.a. on the next $30,000 of your savings.

The extra interest is provided by the Government to help members lengthen the duration of their payouts, so that it lasts them longer. This is because around 1 in 3 Singaporeans aged 65 today are expected to live to age 90 and beyond.

You can start your payouts anytime between the ages of 65 and 70.

In general, top-ups to CPF accounts will result in an increase in monthly payouts. Top-ups beyond the Full Retirement Sum will result in an extension of the payout duration. However, members can request to increase their monthly payouts instead.

Members with serious medical conditions can also apply for earlier withdrawal of their CPF. More details can be found here.

(I will check this in future, I have interest )

The last cohort under RSS is those born before 1958. The min sum was $139k and the payout is $1,240 at age 65, calculated to exhaust RA in about 20 years or around age 85. Without calculation, I doubt the extra interest would stretch the same payout to about age 95 (by another 10 years ). My guess is about 2 years or thereabout.

 

[Battery Operator]

The last cohort under RSS is those born before 1958. The min sum was $139k and the payout is $1,240 at age 65, calculated to exhaust RA in about 20 years or around age 85. Without calculation, I doubt the extra interest would stretch the same payout to about age 95 (by another 10 years ). My guess is about 2 years or thereabout.

I am one of those born in 1957 (last cohort on RSS). Yes, the MS was $139k but I subsequently top it up to ERS when the option was available a few years later. Do you think CPF will stretch my payout from 65 to 95, citing the 'extra interest' that was given out as bonuses? I am still on RSS.

 

[maple96]

I am one of those born in 1957 (last cohort on RSS). Yes, the MS was $139k but I subsequently top it up to ERS when the option was available a few years later. Do you think CPF will stretch my payout from 65 to 95, citing the 'extra interest' that was given out as bonuses? I am still on RSS.

How I interprete the rules : If u start payout at 65, plus 20 years = 85, plus up to 5 years for the interest payout = 90. If u start payout 70, then it will be up to 95.

Only those who qualify can use the CPF RSS calculator. Login with singpass and use the calculator to check for yourself, then share with us.