CPF RSS Payout Issue

[wutawa]

CPF calculates payout to last till 90 years old (revised policy) because of complains it last till 95 in the past. Method of calculation is what they are discussing here. Payout will continue to stream out until RA balance is zero. Tho 90 years is the revised policy, movements in CPF accounts can affect when the final zero balance occur, possible after 90 or before 90 if balance is small.

Thanks for the clarification. Otherwise no point mrss after 90yo.

 

[henrylbh]

according to Son, there was a CPF Letter in 2023 informing Mom of the $435 monthly payout to last around 7 years, and payout would begin Feb 2024

and the same info was reflected in Mom's CPF Dashboard which he screenshot before making 10k top up.

correction: the RA at 31 Mar was $22.1k

based on initial Excel workings, $22.1k & $435 monthly would have lasted 60 months (starting Feb24, without top up), depleting on 61st month ( double checking my Excel, will post for comments )

Since the RA balance is now $22.1 as at Mar 2024, the payout of $435 would last about 5 years but cannot be 7 years despite what the CPF Letter mentioned. Did the CPF letter mention the RA balance and the date before payout starts in Feb 2024? Even if you factored the interest from date of RA balance to Jan 2024, the payout wouldn't last more than 5 years.

It appears the old lady never drawn down her RA as it was not compulsory for those born before 1948.

But from Jun 2023 draw down becomes compulsory starting from their coming birthday. So the old lady coming birthday must be Feb 2024. And as I mentioned earlier payout is calculated to last RA about 5 years and another 5 years from any subsequent topping up.

Just to share. My father exhausted his payout of $297 for several years before I did a top-up of $6k in 2007. There was no payout despite the top-up and his RA grew to $7,658 with interest. Then, I realised the benefit even without tax relief and topped up his RA with $30k in cash in 2013 and asked for re-commencement of payout.

CPF started payout at $297 based on his last payout that were years ago. I wrote in to ask for higher payout and his payout was immediately adjusted to $660 to exhausted the RA in about 5 years.

In the years following I kept topping up his RA amounting to about $160k in cash with no tax reliefs and each time I asked for the highest payout possible and the adjusted payout would last about 5 years from the last topping up month. His last payout before passing off was $2,204. That time, the RA balance would be refunded to the Giver, without interest, upon death of the Recipient and nomination has no effect. He passed off in 2018 and the accrued interest from Jan 2018 went to his nominee.

 

[henrylbh]

Extra interest!

Interest in MA remains in MA and any overflow goes to RA. But not in the old lady's case as she has little CPF in all 4 accounts. Her MA is likely to be the same of her OA and SA i.e. almost zero except for unused gov top-to.

 

[henrylbh]

What happen to Ra balance after 90yo? Stuck?

Why say stuck?

I topped up my father's RA bringing his RA balance to $117k when he was 90yrs 7mths. His monthly payout of $2,204 was calculated to deplete his RA in 5 years i.e. when he will be 95 years 7mths. And if I top up his RA at age 95, he will receive payout till age 100

 

[SBC]

What happen to Ra balance after 90yo? Stuck?

Is designed to be fully paid out by 90 yo birthday.

 

[henrylbh]

Is designed to be fully paid out by 90 yo birthday.

If that is the case, when I top up my father's RA by $30k bringing RA to $117k when he was 90yrs 7mths, the payout based on what's in the RA should be immediately in full instead of $2204 per month. This case showed that there was something amiss in your understanding or the info you gathered was not complete. If not fake news, it's misleading to keep circulating

The 90 years rule apply to those whose RA based on prevailing payout calculated at then 4% to last up to 20 years and with introduction of extra and additional interest would stretch their payout beyond 90 years or more in some cases depending on their RA and subsequent topping ups.

 

[SBC]

Our CPF system is indeed complex.

 

[henrylbh]

Our CPF system is indeed complex.

I don't see it as complex. It is more a case of too much variables and flexibilities with loopholes than complex. Only old cohorts can enjoy, if they care to know more, while they last.

Like last time, deceased's money can be left in CPF forever, then changed to 7 years and now almost immediate payout with no chance for beneficiaries to earn interest and hold until needed.

Like last time, you can top up a parent's RA and upon his death, the top up will return to you and nomination has no effect. But now your top-up will go to the nominee/s or to the estate.

 

[royalmix]

Interest in MA remains in MA

You are right, that is one of the key difference between RSS and CPF Life!

Under CPF Life, all extra interest goes to RA if you are on Basic Plan. But if you are on CPF Life Standard and Escalating Plan, all extra interest will go into the CPF Life Pool! MA will overflow into OA if you already meet FRS.

At last, I found something I like about CPF Life Basic Plan - all extra interest goes to RA which I can stream out as mthly payout!

 

[henrylbh]

You are right, that is one of the key difference between RSS and CPF Life!

Under CPF Life, all extra interest goes to RA if you are on Basic Plan. But if you are on CPF Life Standard and Escalating Plan, all extra interest will go into the CPF Life Pool! MA will overflow into OA if you already meet FRS.

At last, I found something I like about CPF Life Basic Plan - all extra interest goes to RA which I can stream out as mthly payout!

Does it matter much? Payout from RA is determined at the commencement of payout and the payout inclusive of interest is calculated to last to just before age 90 out. Thereafter, payout is taken from the pool.

 

[royalmix]

Does it matter much? Payout from RA is determined at the commencement of payout and the payout inclusive of interest is calculated to last to just before age 90 out. Thereafter, payout is taken from the pool.

Of course it matters as it is my choice Plan and if you understand how CPF Life Basic Plan works!

 

[henrylbh]

Of course it matters as it is my choice Plan and if you understand how CPF Life Basic Plan works!

Of course I understand what they are saying but it lacks transparency and there is no way to calculate the RA payout yourself. Firstly the premium deduction is not known (10% to 20%) until the time one starts payout. Next month's cohort may have different numbers and no one will ever know. Even after knowing the actual premium deduction, it not easy to calculate the payout ourself. The dubious part is payout starts to decline when combined CPF balance falls below 60k and hence the interest earned gets lesser and that is factored into the payout! Finally the CPF balance would be zero and it would be fair to assume the payout would stop declining and the payout before that would the fixed payout thereafter? Under the RSS, payout is amortised evenly when RA balance starts to fall below 60k. RA under basic plan should be similarly fixed throughout the period. Next we have to guess the payout after age 90 will be deducted firstly from the premium. Any unused premium will be refunded to the member as his bequest. I remember clearly that earlier Life Estimator shows that at age 92 there is still some bequest. Still there is no way to work out any number to ensure there is no error on their part.

 

[royalmix]

Of course I understand what they are saying but it lacks transparency and there is no way to calculate the RA payout yourself. Firstly the premium deduction is not known (10% to 20%) until the time one starts payout. Next month's cohort may have different numbers and no one will ever know. Even after knowing the actual premium deduction, it not easy to calculate the payout ourself. The dubious part is payout starts to decline when combined CPF balance falls below 60k and hence the interest earned gets lesser and that is factored into the payout! Finally the CPF balance would be zero and it would be fair to assume the payout would stop declining and the payout before that would the fixed payout thereafter? Under the RSS, payout is amortised evenly when RA balance starts to fall below 60k. RA under basic plan should be similarly fixed throughout the period. Next we have to guess the payout after age 90 will be deducted firstly from the premium. Any unused premium will be refunded to the member as his bequest. I remember clearly that earlier Life Estimator shows that at age 92 there is still some bequest. Still there is no way to work out any number to ensure there is no error on their part.

Your long essay, in particular the bold sentence, double confirms you dun understand how CPF Life Basic Plan works. And you asked this question "Does it matter much?" but still cannot provide the answer in one sentence!

Nevermind, dun hijack this thread, this is about RSS!

 

[royalmix]

You are right, that is one of the key difference between RSS and CPF Life!

Under CPF Life, all extra interest goes to RA if you are on Basic Plan. But if you are on CPF Life Standard and Escalating Plan, all extra interest will go into the CPF Life Pool! MA will overflow into OA if you already meet FRS.

At last, I found something I like about CPF Life Basic Plan - all extra interest goes to RA which I can stream out as mthly payout!

FROM CPFB WEBSITE:

If you are 55 years old and above, you will earn an extra interest of 2% per annum on the first $30,000 and 1% per annum on the next $30,000 of your combined CPF balances (capped at $20,000 for OA). The extra interest earned on your Retirement Account (RA), SA and MA balances will go to the respective accounts, while the extra interest earned on your OA balances will go into your RA to enhance your retirement savings. If you have joined the CPF LIFE scheme, the extra interest earned will be paid into your RA or accumulated with the interest earned on the CPF LIFE premiums of all CPF LIFE members.

Question:

What/how do you interpret the statement in bold above?

 

[a4973]

FROM CPFB WEBSITE:

If you are 55 years old and above, you will earn an extra interest of 2% per annum on the first $30,000 and 1% per annum on the next $30,000 of your combined CPF balances (capped at $20,000 for OA). The extra interest earned on your Retirement Account (RA), SA and MA balances will go to the respective accounts, while the extra interest earned on your OA balances will go into your RA to enhance your retirement savings. If you have joined the CPF LIFE scheme, the extra interest earned will be paid into your RA or accumulated with the interest earned on the CPF LIFE premiums of all CPF LIFE members.

Question:

What/how do you interpret the statement in bold above?

Let me try.
If on Basic Plan the Extra Interest goes into RA.
If on Standard or Escalating Plans Extra Interest goes to the CPF Life pool.

 

[royalmix]

Let me try.
If on Basic Plan the Extra Interest goes into RA.
If on Standard or Escalating Plans Extra Interest goes to the CPF Life pool.

Thanks for sharing.

I will transfer the question to this thread which is more appropriate. I post here so as to close an open issue here. Now pls go to this thread to discuss:

https://forums.hardwarezone.com.sg/threads/all-about-cpf-life-what-are-the-risk-of-cpf-life.6028913/

 

[oceanicmanta]

Update :

The reply from CPF Officer now says that ....

1) though DashBoard screenshot showed $435 for 7 years but actually, based on the RA of $22.1k at that time, the $435 will only last 4 years

2) the family may have performed the RSS Calculator computation after doing the 10k top up ( which was clearly not the case and $435 payout was on the same screen )

I am flabbergasted.

 

[wutawa]

Update :

The reply from CPF Officer now says that ....

1) though DashBoard screenshot showed $435 for 7 years but actually, based on the RA of $22.1k at that time, the $435 will only last 4 years

2) the family may have performed the RSS Calculator computation after doing the 10k top up ( which was clearly not the case and $435 payout was on the same screen )

I am flabbergasted.

according to Son, there was a CPF Letter in 2023 informing Mom of the $435 monthly payout to last around 7 years, and payout would begin Feb 2024

and the same info was reflected in Mom's CPF Dashboard which he screenshot before making 10k top up.

correction: the RA at 31 Mar was $22.1k

based on initial Excel workings, $22.1k & $435 monthly would have lasted 60 months (starting Feb24, without top up), depleting on 61st month ( double checking my Excel, will post for comments )

cannot trust cpf dashboad, calculator, letter and officer. pt 1 should be correct. pt 2 is rubbish.

 

[oceanicmanta]

cannot trust cpf dashboad, calculator, letter and officer. pt 1 should be correct. pt 2 is rubbish.

such a reply took 3 weeks ,,, wonder how many people vetted it

the first reply also contained typo n obvious error eg) 31 Apr ??

it s a joke

 

[reddevil0728]

such a reply took 3 weeks ,,, wonder how many people vetted it

the first reply also contained typo n obvious error eg) 31 Apr ??

it s a joke

it doesn't look like a copy and paste. so the error might be cause of poster?