CPF SA Shielding hack - RIP (Obsolete)

[vsvs24]

Yesterday go CNY house visit, already got 2 young nephews working as Financial Advisor telling me their company is getting ready to push out various ILP for "55 yr old uncle and aunty".

Anyone of you heard of the 20/80 investment? (eg you come out cash $200K and borrow $800K from Bank for the Financial Advisor to do investment (total $1 million) on your behalf)

You never read newspaper reports of people sueing their banks for mismanaging their funds and losing big chunks of money ?

 

[BBCWatcher]

I also expect a lot of people to withdraw because their reasoning is cannot trust CPF as can change rules anytime. Some may say better withdraw now in case later govt change the withdrawal rules.

People who think this way could already make that argument and justify their actions to themselves. "Nothing new here" in that respect.

Of course it's not very sensible thinking because literally every other vehicle they could pick involves the potential for rule changes, typically more likely and more consequential.

 

[PhantomOpera]

Difficult. Estate tax always come with gift tax to plug this type of loophole.

Even if one were to give away his ppty, the recipient still gotta pay buyer stamp duty with ppty valued at market rate, am I right?

Is there any way to escape stamp duty? Assuming giver is still alive.

 

[jeffong]

What happen to the plan for the garmen to introduce some kind of low cost garmen managed fund that people can subscribe to using CPF monies.. Can't remember if this was part of Forward SG or another earlier initiative. Reckon this would be a good time to implement it if there is truly an intention to do so.

 

[NTTDoCoMo]

Yesterday go CNY house visit, already got 2 young nephews working as Financial Advisor telling me their company is getting ready to push out various ILP for "55 yr old uncle and aunty".

Anyone of you heard of the 20/80 investment? (eg you come out cash $200K and borrow $800K from Bank for the Financial Advisor to do investment (total $1 million) on your behalf)

Sound similar to the below Threads from the search?

https://forums.hardwarezone.com.sg/threads/bank-financing-to-invest.6967555/

https://forums.hardwarezone.com.sg/threads/help-lost-significant-money-from-insurance.6990053/

 

[highsulphur]

So can I top up to Ers at 55 but elect to use frs equivalent for cpf life at 65 and withdraw from balance one lump sum?

 

[Guojing88]

I think it's a safe bet more funds will end up in RA. Some fortunate people will take advantage of the new, higher ERS (like my household). For other people the same withdrawal rules apply (RA at FRS, or at BRS with property pledge/charge), so I don't see how their RAs go down.

Yes, I see it as the opportunity cost of putting ERS into your RA, at 55, is now lower with the closure of SA.

Thus, its easier to make the decision to do that.

 

[Guojing88]

So can I top up to Ers at 55 but elect to use frs equivalent for cpf life at 65 and withdraw from balance one lump sum?

You can withdraw 20% of your RA at 65, that rule has not changed as of now, so yes.

80% of your ERS RA at 65 might or might not be FRS equivalent.

 

[NTTDoCoMo]

You can withdraw 20% of your RA at 65, that rule has not changed as of now, so yes.

80% of your RA at 65 might or might not be FRS equivalent.

Just to confirm 20% exclude the below?

"withdraw excludes interest earned, any government grants received and top-ups to your retirement savings. It also depends on your RA balance at the point of withdrawal."

https://www.cpf.gov.sg/member/faq/retirement-income/retirement-withdrawals/conditions-to-withdraw-part-of-ra-savings-using-my-property

 

[PhantomOpera]

You can withdraw 20% of your RA at 65, that rule has not changed as of now, so yes.

80% of your ERS RA at 65 might or might not be FRS equivalent.

There’s a risk of policy change. Later the govt announced that henceforth all monies in RA cannot be withdrawn and all to be used for CPF life payouts. Then is gg liao

 

[Guojing88]

Just to confirm 20% exclude the below?

"withdraw excludes interest earned, any government grants received and top-ups to your retirement savings. It also depends on your RA balance at the point of withdrawal."

https://www.cpf.gov.sg/member/faq/retirement-income/retirement-withdrawals/conditions-to-withdraw-part-of-ra-savings-using-my-property

My understanding is that, once you set aside at least the FRS in your RA, that rule won't apply to withdrawals.

 

[Guojing88]

There’s a risk of policy change. Later the govt announced that henceforth all monies in RA cannot be withdrawn and all to be used for CPF life payouts. Then is gg liao

Yes, of course there is policy risk.

 

[BBCWatcher]

What happen to the plan for the garmen to introduce some kind of low cost garmen managed fund that people can subscribe to using CPF monies.. Can't remember if this was part of Forward SG or another earlier initiative. Reckon this would be a good time to implement it if there is truly an intention to do so.

The CPF Advisory Panel recommended implementation of what they call the "CPF Lifetime Retirement Investment Scheme" (LRIS). Their LRIS recommendation was publicly announced on August 3, 2016. As of today (February 18, 2024) the CPF Board and rest of government have not acted on this Panel recommendation. Details are available here.

 

[gold_eagle36]

The CPF Advisory Panel recommended implementation of what they call the "CPF Lifetime Retirement Investment Scheme" (LRIS). Their LRIS recommendation was publicly announced on August 3, 2016. As of today (February 18, 2024) the CPF Board and rest of government have not acted on this Panel recommendation. Details are available here.

Investment = risk. Fund cost is separate. It would be difficult to educate people on the risk as nobody likes to see losses, especially yield hungry , conservative peeps who like to park FD T bill instead of investing their long term buckets in equities.

 

[BBCWatcher]

Yes, I see it as the opportunity cost of putting ERS into your RA, at 55, is now lower with the closure of SA.
Thus, its easier to make the decision to do that.

I agree. From early 2025 there will be only 2 ways to get 4+% interest from CPF from age 55 onward: MA and RA. If you were deciding between SA (retention) and RA then SA often won.

However, a big change is how compulsory contributions will be handled from age 55 onward for those who haven't met the Full Retirement Sum (or Basic Retirement Sum with property pledge/charge). That'll result in more dollars flowing into RA sooner.

 

[QinWei]

it is logical for SA to be closed long time ago!
in the very first place, why do we still need an SA account when we are abt to progress into retirement phase??

It s a stoopid concept to begin with .........
So closing it , is logical


The Retiremt account should rightfully be still earning at at least 4% for us , isnt it?
raised some more: https://www.businesstimes.com.sg/si... interest rate for savings,, from Jan 1, 2024.

CPF interest rates for Special, MediSave and Retirement accounts raised to 4.08%​

what exactly is the issue when greed is NOT encouraged?

anyway, since 2022, Member of Parliament Melvin Yong (PAP-Radin Mas) asked the Manpower Ministry about “Special Account shielding” where members prevent their savings from being transferred to the Retirement Account.
https://www.channelnewsasia.com/singapore/budget-2024-retirement-account-special-account-cpf-4128816
though at that time, the Manpower Ministry said only 2 per cent of CPF members did that. It also said it would monitor the trend and take action if necessary.

u r the 2% or the planned to shield category? maybe can learn from the SimplyGo incident, go make some simple noise and then Govt might retract it.......
i m not the 2% for sure........ Greed doesnt help sometimes



in less than few days , this thread hit more than 100 pages:
https://forums.hardwarezone.com.sg/...cpf-changes-closing-special-accounts.7001153/

 

[BBCWatcher]

Investment = risk. Fund cost is separate. It would be difficult to educate people on the risk as nobody likes to see losses, especially yield hungry , conservative peeps who like to park FD T bill instead of investing their long term buckets in equities.

The CPF Investment Scheme already exists. Nobody is forced to use it. The big outstanding problems are that the CPF Investment Scheme is too complicated for many investors and (probably still) too expensive for every member. The CPF Advisory Panel recommends the LRIS to address both of those big problems. Participation in the CPF LRIS would also be voluntary and subject to the same basic framework as the CPF Investment Scheme (which would continue).

 

[QinWei]

ought to close down this titled Obsolete thread soon!

and focus here if you still need to chat on this topic:

in less than few days , this thread hit more than 100 pages: https://forums.hardwarezone.com.sg/...cial-accounts.7001153/page-101#post-151350826

 

[s0crates]

What happen to the plan for the garmen to introduce some kind of low cost garmen managed fund that people can subscribe to using CPF monies.. Can't remember if this was part of Forward SG or another earlier initiative. Reckon this would be a good time to implement it if there is truly an intention to do so.

Don't bother. It's been more than 7 years already. There is already a low cost index solution with endowus just that they charge a recurring fee for their services.

If cpf doesn't want to be seen directly responsible for recommending an investment solution that their own advisory board endorses, then the minimum is that they get people to look at platforms like endowus. But of course, they don't want to be seen as siding any commercial entity.

Basically they are not doing the difficult things. Poor cpf members who don't know better.

 

[RedsYWNA]

I wonder if the gahment's intent is to channel more money into RA, but has the opposite effect of people withdrawing funds, would they change the rules again?

Frankly my plan to do SA shielding has been foiled, so my rudimentary plan now is to withdraw all the excess. I'm sure I can do better than 2.5%.

Actually govt tries to be too clever to save the 1% spread vs LT bond rates, but may have the inadvertent effect of lowering its investible amounts when many old folks pull money away from SA.