CPF SA Shielding hack - RIP (Obsolete)

[BBCWatcher]

To be clear, in your case I wouldn't wait to place your "real" unit trust buy order any later than after the close of business on the last trading day of the month preceding your 55th birthday month. The rehearsal is mainly to confirm that the timeline and process are as you expect.

 

[Nefalrin]

It is risky to do CPF SA shield hack near your 55 birthday.

I was wondering if FRS is $200,000 and you have ...

$200,000 in OA and $200,000 in SA

At age 53 January,
1) Buy T bills using CPF SA with $200,000
2) CPF OA now $200,000 and SA now $0
3) Quickly transfer $200,000 from CPF OA to CPF SA.
4) CPF OA now is $0 and CPF SA now is $200,000
5) Sell T bills and CPF SA will now be $400,000
6) wait until age 55 birthday, CPF RA will form with $200,000 and CPF SA $200,000 and CPF OA $0

Will this method above work ?

Do CPF board keep a record of your total SA to know you have hit FRS even after you do investment using SA ?

_

 

[dgeralds]

I did a trial a few months back on poems. But there is no service charge.

poems they still charge you 0.3%. some people say fsm totally no charges

 

[BBCWatcher]

It is risky to do CPF SA shield hack near your 55 birthday.

Why do you believe it's risky?

I was wondering if FRS is $200,000 and you have ...
$200,000 in OA and $200,000 in SA
At age 53 January,
1) Buy T bills using CPF SA with $200,000
2) CPF OA now $200,000 and SA now $0

No. SA will be a little above $40,000 since you must leave at least $40,000 behind, and due to the fact you can only buy T-Bills in $1,000 face value increments you won't get down to exactly $40,000.

3) Quickly transfer $200,000 from CPF OA to CPF SA.

Sorry, not allowed. Once your SA reaches the Full Retirement Sum, inclusive of CPF Investment Scheme (SA), you cannot make OA to SA transfers. (Wouldn't that be nice, though?)

4) CPF OA now is $0 and CPF SA now is $200,000
5) Sell T bills and CPF SA will now be $400,000
6) wait until age 55 birthday, CPF RA will form with $200,000 and CPF SA $200,000 and CPF OA $0

Will this method above work ?

No, I'm afraid not. It'll also be horrifically expensive because of the loss of Special Account interest on the T-Bill (~8 months of SA interest lost on a 6 month T-Bill purchased at original issue and held to maturity). And you still presumably have compulsory contributions streaming in. If you raise the shield months or even years before your 55th birthday, you won't be shielding the compulsory contributions that land in SA thereafter.

The low volatility Singapore dollar bond unit trust purchased and then disposed of quickly via a zero fee platform is really the best way to shield. You can run a "dress rehearsal" a month or two before your 55th birthday at whatever the unit trust minimum is (S$1,000 typically, evidently).

Do CPF board keep a record of your total SA to know you have hit FRS even after you do investment using SA ?

Yes.

 

[Nefalrin]

Why do you believe it's risky?


No. SA will be a little above $40,000 since you must leave at least $40,000 behind, and due to the fact you can only buy T-Bills in $1,000 face value increments you won't get down to exactly $40,000.


Sorry, not allowed. Once your SA reaches the Full Retirement Sum, inclusive of CPF Investment Scheme (SA), you cannot make OA to SA transfers. (Wouldn't that be nice, though?)


No, I'm afraid not. It'll also be horrifically expensive because of the loss of Special Account interest on the T-Bill (~8 months of SA interest lost on a 6 month T-Bill purchased at original issue and held to maturity). And you still presumably have compulsory contributions streaming in. If you raise the shield months or even years before your 55th birthday, you won't be shielding the compulsory contributions that land in SA thereafter.

The low volatility Singapore dollar bond unit trust purchased and then disposed of quickly via a zero fee platform is really the best way to shield. You can run a "dress rehearsal" a month or two before your 55th birthday at whatever the unit trust minimum is (S$1,000 typically, evidently).


Yes.

If my FRS at age 55 is $300,000
And my OA is $60,000 and SA is $400,000 before age 55

How do you suggest the best way to shield it ?

 

[zoneguard]

If my FRS at age 55 is $300,000
And my OA is $60,000 and SA is $400,000 before age 55

How do you suggest the best way to shield it ?

The whole point of shielding is to form RA from OA at much as possible. Then the rest take from SA.

You can max shield 60K in SA since OA has 60K.
1st 40K in SA cannot be shielded. So max SA shield is 360K.

So RA of 300K will be formed from:
1. From SA first (after shield of 60K), take 240K.
2. From OA take everything: 60K.

After RA formed, release shield back to SA (assuming no capital loss) so SA left with 160K and OA zero.

I think this is correct, but let's see what others say.

 

[Okenba]

The whole point of shielding is to form RA from OA at much as possible. Then the rest take from SA.

You can max shield 60K in SA since OA has 60K.
1st 40K in SA cannot be shielded. So max SA shield is 360K.

So RA of 300K will be formed from:
1. From SA first (after shield of 60K), take 240K.
2. From OA take everything: 60K.

After RA formed, release shield back to SA (assuming no capital loss) so SA left with 160K and OA zero.

I think this is correct, but let's see what others say.

Risk-free 4% hard to find.
Some may feel that they would rather use cash than SA to fund RA.
Also, if your spouse has money in their OA, they can also transfer that over to top-up your RA.

I would not touch SA unless I really had to.

 

[dork32]

I did a trial a few months back on poems. But there is no service charge.

someone else posted this. not me

 

[dork32]

I would not touch SA unless I really had to.

this is what i want to drive at. if you dont touch your sa, then your oa is really trapped. since it is trapped, might as well as pump all into ra (ers) for higher interest

 

[Okenba]

this is what i want to drive at. if you dont touch your sa, then your oa is really trapped. since it is trapped, might as well as pump all into ra (ers) for higher interest

When you shield SA, you can also choose to withdraw OA after putting in however much you think you need into RA.
Not much point leaving anything in OA.

 

[zoneguard]

When you shield SA, you can also choose to withdraw OA after putting in however much you think you need into RA.
Not much point leaving anything in OA.

After risk-free 4%, next best option is risk-free 2.5% in this low interest climate. So I will suggest to leave the balance in OA.
After all, once FRS is met in RA, OP can withdraw from OA if he wants anytime after 55.

Unless OP has something that has better than 2.5% low risk returns.

 

[polyglob]

this is what i want to drive at. if you dont touch your sa, then your oa is really trapped. since it is trapped, might as well as pump all into ra (ers) for higher interest

This is a good point.

 

[dork32]

When you shield SA, you can also choose to withdraw OA after putting in however much you think you need into RA.
Not much point leaving anything in OA.

2.5% at oa is still better than any deposits in the market now.

for me i will still keep money in oa to pay for my property loan

 

[madtari]

It depends on your risk appitite as well... If I'm 55 this year, I will surely empty my OA with the SA shield in place, return all SA, then use the withdrew OA for investment. Can easily get 5% total returns pa (capital gain plus dividends received) with a 10yr time frame.

2.5% at oa is still better than any deposits in the market now.

for me i will still keep money in oa to pay for my property loan

 

[henrylbh]

Risk-free 4% hard to find.
Some may feel that they would rather use cash than SA to fund RA.
Also, if your spouse has money in their OA, they can also transfer that over to top-up your RA.

I would not touch SA unless I really had to.

Must find a way to fund RA fully with cash instead of 40k from SA and 20k from OA.

 

[Tiger9119]

Must find a way to fund RA fully with cash instead of 40k from SA and 20k from OA.

I thought can fund RA with cash?

This morning I received a reply from CPF:

Under the Retirement Sum Topping-Up (RSTU) Scheme, you can use cash/ CPF to top up your Retirement Account (RA) up to your topping-up limit. The topping-up limit is the difference between the current Enhanced Retirement Sum (ERS) of $271,500 and the RA balance#.

 

[Nefalrin]

Why do you believe it's risky?


No. SA will be a little above $40,000 since you must leave at least $40,000 behind, and due to the fact you can only buy T-Bills in $1,000 face value increments you won't get down to exactly $40,000.


Sorry, not allowed. Once your SA reaches the Full Retirement Sum, inclusive of CPF Investment Scheme (SA), you cannot make OA to SA transfers. (Wouldn't that be nice, though?)


No, I'm afraid not. It'll also be horrifically expensive because of the loss of Special Account interest on the T-Bill (~8 months of SA interest lost on a 6 month T-Bill purchased at original issue and held to maturity). And you still presumably have compulsory contributions streaming in. If you raise the shield months or even years before your 55th birthday, you won't be shielding the compulsory contributions that land in SA thereafter.

The low volatility Singapore dollar bond unit trust purchased and then disposed of quickly via a zero fee platform is really the best way to shield. You can run a "dress rehearsal" a month or two before your 55th birthday at whatever the unit trust minimum is (S$1,000 typically, evidently).


Yes.

Another question.

What if your CPF SA shield hack calculations went wrong and at your birthday less than the FRS amount is being transferred to CPF RA ?

And then after liquidate the T bills, can transfer SA to RA to meet the FRS to make up the mistake ? What to do in this case ?

What I am afraid to do the hack just before 55th birthday there is a risk because there might be an unforseen calculation cock up ...

 

[dork32]

It depends on your risk appitite as well... If I'm 55 this year, I will surely empty my OA with the SA shield in place, return all SA, then use the withdrew OA for investment. Can easily get 5% total returns pa (capital gain plus dividends received) with a 10yr time frame.

if you can get 5% why waste time in sa and ra. go for brs. take everything out and go the 5%. it is better than sa 4%

sa is meant for people that are happy with 4%

oa is meant for people that are happy with 2.5%

 

[dork32]

Another question.

What if your CPF SA shield hack calculations went wrong and at your birthday less than the FRS amount is being transferred to CPF RA ?

more money will be transferred from sa to ra if you try to withdraw?

 

[dork32]

What I am afraid to do the hack just before 55th birthday there is a risk because there might be an unforseen calculation cock up ...

cock up, max you lose half a year's interest if you are with tbills