CPF SA Shielding hack - RIP (Obsolete)

[henrylbh]

Great... can always close n open cpfis for OA and transfer to cdp multiple times but with different banks, as long as got cpf money with min 20K - i can always close my cpfis to transfer to cdp without touching my shielded SA - correct!?

I don't consider as great because money taken out of OA cannot be returned to OA should interest stays low like not too long ag. Only good if I plan to shield OA and SA to prevent them from going into RA and even then I would not close my CPFIS-OA unless it has about the amount that I plan to encash. Even if I get an attractive T-bill with OA, I would be reluctant to close my CPFIA because I already have equities in CPFIA. If I close, it would take years to return the money to 3 accounts with VC.

 

[BBCWatcher]

If you are above 55 with RA at FRS, isn't it better to close CPFIS and move your equities to CDP ?

Then you no need to pay quarterly charges for CPFIS and can deal with corporate action directly. Eg rights issue the deadline given for direct CDP holding is much later than those that need to go through CPFIA.

One possible disadvantage is that you cannot put those particular dollars (including dividends) back into your CPF Ordinary Account. It's a one-way trip out. At some point in the future OA's floor interest rate (2.5%) might be attractive again. There are a couple other decent or better ways to get money into CPF, so this disadvantage only becomes relevant if you've exhausted those other ways.

You also lose the asset protection characteristics of CPF when your dollars exit.

 

[dork32]

No Dork32, the difference is not small, not currently. It's 15 basis points of difference in a current market environment where the most recent 6 month T-bill had a cut-off yield of 4.00%. This 15 basis point difference between COY and EIR is very, very important in current bidding conditions. And this fact should be obvious.

serious? 0.15% is a lot? how much do normal people shield? 200k? 0.15% for 6 months the difference $150. is that a lot of money for 6 months? we are not dealing with millions and millions. i say again it is not significant.

yes, many would like to optimize to the last cent. i have past that stage. yes 0.5% is important. it could be the difference between profit and loss. we are talking about cpf shielding here. minor decimal places are not that critical

 

[closeCPFIAopenCPFIA]

I don't consider as great because money taken out of OA cannot be returned to OA should interest stays low like not too long ag. Only good if I plan to shield OA and SA to prevent them from going into RA and even then I would not close my CPFIS-OA unless it has about the amount that I plan to encash. Even if I get an attractive T-bill with OA, I would be reluctant to close my CPFIA because I already have equities in CPFIA. If I close, it would take years to return the money to 3 accounts with VC.

It was not great becos u got too much oa and did the wrong way.
if u had 888K of oa equity, 999k of t bill maturing in 8 jun 2023, cpfia cash 0, cpf oa 777k. u only need 888 cash.
u wait until 8 jun 2023, watch for the 999k to appear in cpfia cash within 2 days. u transfer (999-0.888)k back to cpf oa.
U close cpfia, u pay all the charges for T bill (2.70?) and equity(expensive) to your cdp and uob, ur agent bank transfers (888-charges for 2.70+xxxx for equity) to your uob account.
Good luck. cpf closes loophole or u close faster.

 

[Nofear40]

One possible disadvantage is that you cannot put those particular dollars (including dividends) back into your CPF Ordinary Account. It's a one-way trip out. At some point in the future OA's floor interest rate (2.5%) might be attractive again. There are a couple other decent or better ways to get money into CPF, so this disadvantage only becomes relevant if you've exhausted those other ways.

You also lose the asset protection characteristics of CPF when your dollars exit.

Are you saying that once you are above 55, if you sell your OA investments, you will get cash instead?

 

[jywy2005]

Let say I have invested all my OA funds in T-bills and intend to do SA shielding, I would have only 20k and 40k left in both OA and SA account respectively. At 55 yo, will the balance go into my RA? Do I need to top up using cash if I want FRS?

 

[zoneguard]

Let say I have invested all my OA funds in T-bills and intend to do SA shielding, I would have only 20k and 40k left in both OA and SA account respectively. At 55 yo, will the balance go into my RA? Do I need to top up using cash if I want FRS?

Yes, RA will be funded up to 60K in that case and if you want it to reach FRS in order for subsequent SA/OA withdrawals, cash top-up is needed.

 

[BBCWatcher]

serious? 0.15% is a lot?

YES! The last 6 month T-bill had a cut-off yield of 4.00%, meaning partial allocation at 4.00% and a full allocation at 3.99% (or 3.85%). Big difference. The next T-bill could have a cut-off yield of 3.92% (for example). These particular 15 basis points matter a lot within the current bidding environment. They can easily mean getting a T-bill (at a still acceptable price for SA shielding) or not.

A 3.95% COY 6 month T-bill, for example, beats any bond unit trust-based shielding method. But if you didn't do your financial math reasonably accurately you wouldn't know that, and you'd avoid sub-4.00% COY T-bills. But we should know better: convert EIRs to COYs so you bid reasonably well.

When T-bill COYs fall below 3% (for example) none of this will matter. But these 15 basis points, right now? Huge for bidding intelligence.

how much do normal people shield? 200k? 0.15% for 6 months the difference $150. is that a lot of money for 6 months? we are not dealing with millions and millions. i say again it is not significant.

See above.

Let say I have invested all my OA funds in T-bills and intend to do SA shielding, I would have only 20k and 40k left in both OA and SA account respectively. At 55 yo, will the balance go into my RA?

Yes, in your example your RA would be funded at $60K on your 55th birthday: $40K from SA and $20K from OA. (In practice it wouldn't be exactly that because T-bills are in $1,000 face value increments, but you've got the basic idea.)

Do I need to top up using cash if I want FRS?

Maybe. You may have a couple other choices:

1. If you have a spouse then he/she can (usually) transfer his/her OA dollars into your new RA.

2. You can keep your SA shield in place, wait for your T-bill(s) to mature, transfer OA dollars to RA, then finally release your SA shield. This doesn't really work with the unit trust-based SA shielding method since you usually wouldn't want to wait that long, but it may work if your SA dollars are invested in a T-bill that has an acceptable yield and that matures after your OA-purchased T-bill(s) do(es).

 

[Nofear40]

If you are above 55 and RA have FRS, you can close your CPFIA account. The shares will be transferred to CDP at transfer fee of $10.80 per security.

Once it goes to CDP, dividends is paid to your bank account. When you sell brokers pay you in cash

So this is a way of withdrawing from OA first before SA…

 

[henrylbh]

Are you saying that once you are above 55, if you sell your OA investments, you will get cash instead?

Yes if you close your CPF investment account anytime after 55 and after meeting the required FRS amount.

 

[henrylbh]

YES! The last 6 month T-bill had a cut-off yield of 4.00%, meaning partial allocation at 4.00% and a full allocation at 3.99% (or 3.85%). Big difference. The next T-bill could have a cut-off yield of 3.92% (for example). These particular 15 basis points matter a lot within the current bidding environment. They can easily mean getting a T-bill (at a still acceptable price for SA shielding) or not.

I think you're wasting time trying to justify the significance of 15 bps only relating to T-bill or COY vs EIR. Dork32 already mentioned for every 100k the difference is $75 for 6 month. In the lasting bidding I was pondering whether to bid with 30k OA. When I did the calculations whether the COY is 4% or even 5% (different of 100 bps), I didn't bother to bid as the absolute amount is peanut. Fortunately, I didn't bid as COY was at 3.87% saving me time, transport and sweat.

 

[BBCWatcher]

Henry, you’re also very much missing the point. This is about SA shielding-related bidding. The stakes are much higher in that situation.

 

[dork32]

YES! The last 6 month T-bill had a cut-off yield of 4.00%, meaning partial allocation at 4.00% and a full allocation at 3.99% (or 3.85%). Big difference. The next T-bill could have a cut-off yield of 3.92% (for example). These particular 15 basis points matter a lot within the current bidding environment. They can easily mean getting a T-bill (at a still acceptable price for SA shielding) or not.

A 3.95% COY 6 month T-bill, for example, beats any bond unit trust-based shielding method. But if you didn't do your financial math reasonably accurately you wouldn't know that, and you'd avoid sub-4.00% COY T-bills. But we should know better: convert EIRs to COYs so you bid reasonably well.

When T-bill COYs fall below 3% (for example) none of this will matter. But these 15 basis points, right now? Huge for bidding intelligence.

all trash. it is $120 difference. if you feel that is bigger than bullock wheel, i have got nothng to say.

it is shielding, not investing. shielding there is a cost. most of us are ready to accept some losses when shielding.

people used to shield with unit trust. there may be a loss. does that mean that they dont shield? no they continue to shield.

and the nice thing about shielding using tbills is that you got a lot of time to do it. you probably have 13 attempts to get it in. so if i failed in the first attempt, i have 12 more tries. and if you wait for the last try before putting your money in, then that is your own fault.

 

[henrylbh]

Henry, you’re also very much missing the point. This is about SA shielding-related bidding. The stakes are much higher in that situation.

Whatever the missing point, 15 bps is insignificant in yield or amount whether SA or OA shielding unless I want and must count coins.

 

[henrylbh]

It was not great becos u got too much oa and did the wrong way.
if u had 888K of oa equity, 999k of t bill maturing in 8 jun 2023, cpfia cash 0, cpf oa 777k. u only need 888 cash.
u wait until 8 jun 2023, watch for the 999k to appear in cpfia cash within 2 days. u transfer (999-0.888)k back to cpf oa.
U close cpfia, u pay all the charges for T bill (2.70?) and equity(expensive) to your cdp and uob, ur agent bank transfers (888-charges for 2.70+xxxx for equity) to your uob account.
Good luck. cpf closes loophole or u close faster.

I do not see any loophole to be closed. And I don't think you understand I was trying to say.

In your case, you are trying to withdraw OA without touching SA. To start with, you have nothing in CPFIA.
So you bought a t-bill under CPFIS-OA expiring in less than 2 month and then closing CPFIA to encash the t-bill. This way it's fine and you made a little extra in closing CPFIA to get cash.

What I am saying is if a person already have CPF shares, he can close his CPFIA account and also get cash without touching his SA. But that would mean subsequent sale of CPF shares for cash cannot go back to CPF-OA, if the amount involved is more than what is needed to withdraw from OA. That's means he can't do what you are doing to protect SA by buying short term t-bills.

 

[henrylbh]

I got more than 6,000 of 1c coins. It doesn't hurt keeping posterity even if interest rate shoots up to 10%. I also have a single $10,000 note. It doesn't hurt when interest rates were like 0.005% to 1%. But now with interest rate of close to 4%, I am feeling the weight and need to get rid of the note Anybody willing to outbid my friend who wants to pay face value despite my advice against buying over from me

 

[closeCPFIAopenCPFIA]

I do not see any loophole to be closed. And I don't think you understand I was trying to say.

In your case, you are trying to withdraw OA without touching SA. To start with, you have nothing in CPFIA.
So you bought a t-bill under CPFIS-OA expiring in less than 2 month and then closing CPFIA to encash the t-bill. This way it's fine and you made a little extra in closing CPFIA to get cash.

What I am saying is if a person already have CPF shares, he can close his CPFIA account and also get cash without touching his SA. But that would mean subsequent sale of CPF shares for cash cannot go back to CPF-OA, if the amount involved is more than what is needed to withdraw from OA. That's means he can't do what you are doing to protect SA by buying short term t-bills.

\
OIC.
It means u suffer heavy losses if u sell shares now to bring monies back to oa.

 

[henrylbh]

\
OIC.
It means u suffer heavy losses if u sell shares now to bring monies back to oa.

Paper loss but annual dividend more than 6% (or $13,825 last year) on original cost. No reason to liquidate and return back to OA.

 

[closeCPFIAopenCPFIA]

Paper loss but annual dividend more than 6% (or $13,825 last year) on original cost. No reason to liquidate and return back to OA.

around 222k. not very large. can transfer to cdp by closing account on t bill maturity and moving not needed cpfia balance back to oa first.
222k can be easily deployed outside cpf.
222k into cpf does not take long.
37740x2 for vc into couple per year.
2700x2 to topup ma per year, couple
10300x2 to topup ra per year, couple

 

[henrylbh]

around 222k. not very large. can transfer to cdp by closing account on t bill maturity and moving not needed cpfia balance back to oa first.
222k can be easily deployed outside cpf.
222k into cpf does not take long.
37740x2 for vc into couple per year.
2700x2 to topup ma per year, couple
10300x2 to topup ra per year, couple

To close CPFIS just to take 0A before SA is too much if you need only additinal $2k per month.

Of course can deploy the excess elsewhere but there is no guarantee of CPF base rate when interest goes low down like not too long ago.

Of course can VC to CPF but it take many years if you can't VC 37,740 or transfer to spouse who is having similar issues and also can't top up due to SA and OA limits reached due to contributions from wages. I am still exploring how to efficiently take out OA before SA when the time comes due to change of CPF rules of not allowing interest to be withdrawn first. The change has really upset and injure all my retirement planning.