CPF SA Shielding hack - RIP (Obsolete)

[vsvs24]

I don't see how there's any loss for CPF members who are 55+, working, and haven't yet met the Full Retirement Sum (or Basic Retirement Sum with property pledge/charge). The portion of compulsory contributions that currently flows into SA will instead flow into RA from early 2025. SA and RA interest rates are equal, and you only get additional liquidity once your RA is "adequately" funded.

There are other CPF-related enhancements announced in Budget 2024 that are unambiguous improvements even for those who've met the FRS (or BRS with property pledge/charge). These include the Earn and Save Bonus and the MediSave Bonus. Also the increase in the income cap from $4,000 to $8,000 when topping up a spouse's or sibling's SA, MA, or RA to qualify for tax relief is helpful. For example, a CPF member age 55+ who's met the FRS will have liquid OA dollars. Some of these dollars can be withdrawn (no SA to "block" OA withdrawals) then immediately redeposited as cash in a spouse's or sibling's SA, MA, or RA. If the spouse or sibling receives $8,000 or less of total global income (2025 cap) then the donor will qualify for tax relief of up to $8,000 in cash top ups. (There's an additional condition that the RA has to be below the FRS if the top up is directed there.)

Please have empathy and put yourself in the shoes of those not rich where funds need to be kept liquid.

 

[DevilPlate]

Please have empathy and put yourself in the shoes of those not rich where funds need to be kept liquid.

Thats why the more CPFB needs to closed this loophole so as to channel resources more efficiently to those in real needs.

 

[BBCWatcher]

I don't see how there's any loss for CPF members who are 55+, working, and haven't yet met the Full Retirement Sum (or Basic Retirement Sum with property pledge/charge). The portion of compulsory contributions that currently flows into SA will instead flow into RA from early 2025. SA and RA interest rates are equal, and you only get additional liquidity once your RA is "adequately" funded.

Please have empathy and put yourself in the shoes of those not rich where funds need to be kept liquid.

I added emphasis so you can try reading what I wrote again.

The Budget 2024 CPF rule changes have zero impact on the cohort I described. That cohort has just as much liquidity as before, and their CPF LIFE outcomes are identical. (Well, not quite: the government is often injecting more money into their accounts since that's part of Budget 2024, too. More free money is obviously good for CPF members who receive it. The MRSS is also getting a boost.)

Do you actually understand these 2025 rule changes: who they impact, and how?

 

[BBCWatcher]

Thats why the more CPFB needs to closed this loophole so as to channel resources more efficiently to those in real needs.

I know several posters in this forum, including me, have repeatedly written that "SA shielding" might not be available forever and that you shouldn't base your retirement plans on its continued existence. There were various solutions available to limit or block SA shielding. Ending SAs completely at age 55 was/is one of the available solutions.

In 2021 the CPF Board reported that 47% of active members age 55+ were able to set aside the Full Retirement Sum. If this number is similar today that means slightly more than half of CPF members age 55+ aren't impacted at all by these Budget 2024 rule changes, except that more of them will get more free money in their accounts. It's a minority of members age 55+ who might be affected.

 

[royalmix]

I added emphasis so you can try reading what I wrote again.

The Budget 2024 CPF rule changes have zero impact on the cohort I described. That cohort has just as much liquidity as before, and their CPF LIFE outcomes are identical. (Well, not quite: the government is often injecting more money into their accounts since that's part of Budget 2024, too. More free money is obviously good for CPF members who receive it. The MRSS is also getting a boost.)

Do you actually understand these 2025 rule changes: who they impact, and how?

She is most impacted, cos she shielded more than 200k of SA and withdrawn most of her OA after 55!

It cost her to shield SA at 55, and also cost her to later "shield" OA to withdraw and siam SA! From 2025, she is back to square 1!

 

[fr33d0m]

What is SA for? Retirement.but 55 ,, our retirement nest burnt and a new inflexible RA created which locked in our Retirement sum. If the gov is so caring about its people retirement needs, instead of SA close, OA should be closed and SA maintained so that 55 and above have two retirement nests, one flexible with no locked in of funds and the other with lifelong drawouts. At last, after 55 , instead of looking for a comfortable retiring , we are left with an oa which is losing money each day as long as interest does not cover inflatiion...uncaring act. OA should close, all funds should go to SA instead after FRS in RA is met!!!

does the government owe you a living?

the entitlement mentality is astonishing.

 

[fr33d0m]

I am correcting your assumption that only the rich benefits from SA after 55.

it is benefiting the rich much more than the havenots....

 

[twosix]

How is the G helping the poor with the saved interests?

 

[waxqube]

Like most people, you don't understand the implication of closing SA on population of CPF members above 55.

Brainwashed into thinking that the loss is for the 2% who shielded SA.

Just like my friend. Say she did not shield and not affected. Say only the rich affected no difference to her. But when I explained to her the implication then she realized it also affects her.

She turn 55 about 4 years ago. Not enough SA and OA to form RA with FRS and she was still servicing loan for her HDB. So she pledge her property and RA funded to BRS with all her SA and balance from OA.

Now she has fully paid up her loan. As she continued to work for 4 years after 55, her SA balance slowly built up to about $12000 now. But in future this $12000 in SA and subsequent CPF contribution will not earn 4% but 2.5%.

I also gave her the bad news that she is age 60 next year, there would be a cut on Employer CPF. Total CPF contribution cut from 32.5% to 23.5%.

https://www.cpf.gov.sg/employer/faq...ges-to-cpf-contribution-rates-from-1-jan-2025.

The other bad news I broke to her was on CPF allocation :

https://www.cpf.gov.sg/content/dam/...nts/CPFAllocationRatesfrom_1_January_2024.pdf

At her age now, 0.2741 of her employment CPF goes to SA earning 4%. Above age 60, 0.3636 of her employment was supposed to go to SA. So the interest she lose from closing SA is even more.

Her health has been deteriorating so she needs to set aside funds for outpatient medical expenses and in case she needs to stop work or get retrenched. So she does not wish to topup RA.

She is Just a ordinary person. Not rich. Did not shield SA. Don't even have enough in RA to form FRS. Every bit of extra interest from SA helps. But she was also affected by the closing of SA. The cut in employer CPF beyond 55 used to be mitigated by SA interest.

So stop saying only the rich benefits from SA after 55. Every CPF member who continues to work beyond 55 benefits.

The increase in ERS is an even bigger benefit to the rich. Lower and middle income need to worry about liquidity so dare not topup too much RA and have to accept OA at 2.5%. The rich can topup to the max ERS and earn 4%. The rich are also talking about top up SA for their babies so that their SA has a huge balance by 55.

Can you clarify how she is affected by the SA account closure? Given that she has not reached FRS, the liquidity is the same before and after as the money will now go to RA instead of SA which has the same interest rate and cannot be withdrawn anyway.

 

[sohguanh]

does the government owe you a living?

the entitlement mentality is astonishing.

Govt use our cpf monies to invest I repeat our monies! They do not owe us a living but they owe us a reason for the cpf changes that are implemented without even a parliamentary debate or going through ppl votes for consensus. They assume local Sporeans are all financial illiterates with their blanket policies.

 

[BBCWatcher]

How is the G helping the poor with the saved interests?

This Budget 2024 package includes more free money into the CPF accounts of Singaporeans (with some means testing).

I think it’s reasonable to assume the CPF Board’s total interest costs will fall in 2025. However, there are going to be some OA outflows. Those are the cheapest dollars for CPF. It’s possible the interest cost per dollar on deposit at CPF will rise.

 

[fr33d0m]

Govt use our cpf monies to invest I repeat our monies! They do not owe us a living but they owe us a reason for the cpf changes that are implemented without even a parliamentary debate or going through ppl votes for consensus. They assume local Sporeans are all financial illiterates with their blanket policies.

LOL.

SA never should continue beyond 55. The past generation enjoys more than they deserve. They can happily take out their money after fulfilling mandatory retirement requirements and do whatever they please with their money. The government gives them options, not taking options away.

 

[bruiser69]

Maybe GIC and Temasek have over the years accumulated insurmountable losses with our CPF monies such that it can no longer even pay the 1.58% extra interest to these 55yr+ old folks anymore.

Younger folks shouldn't begrudge those older folks the extra 1.58%, as one day we will also be 55yrs old and would have gotten (past tense) to enjoy the same SA 4.08% benefits mah!

 

[sglandscape]

Maybe GIC and Temasek have over the years accumulated insurmountable losses with our CPF monies such that it can no longer even pay the 1.58% extra interest to these 55yr+ old folks anymore.

Younger folks shouldn't begrudge those older folks the extra 1.58%, as one day we will also be 55yrs old and would have gotten (past tense) to enjoy the same SA 4.08% benefits mah!

The likelihood of this based on their current positions is 0%. For that to happen, they would have to make so much losses that they cannot even increase the SGD money supply to meet those obligations.

What's likely happening is CPF does not want be like a bank where SA is treated as demand deposit, and this would require them to do some form of liquidity management.

 

[sglandscape]

Govt use our cpf monies to invest I repeat our monies! They do not owe us a living but they owe us a reason for the cpf changes that are implemented without even a parliamentary debate or going through ppl votes for consensus. They assume local Sporeans are all financial illiterates with their blanket policies.

The without notice change also, especially for those who are relying on it for retirement planning is rather massively caught with their pants down. Now they have to take more risk to secure their retirement and match the 4% return.

 

[DevilPlate]

The without notice change also, especially for those who are relying on it for retirement planning is rather massively caught with their pants down. Now they have to take more risk to secure their retirement and match the 4% return.

They are ignorant or naive if they assume this loophole will be available forever.

 

[DevilPlate]

Maybe GIC and Temasek have over the years accumulated insurmountable losses with our CPF monies such that it can no longer even pay the 1.58% extra interest to these 55yr+ old folks anymore.

Younger folks shouldn't begrudge those older folks the extra 1.58%, as one day we will also be 55yrs old and would have gotten (past tense) to enjoy the same SA 4.08% benefits mah!

Baseless speculations….js goto their website and check la

 

[sohguanh]

LOL.

SA never should continue beyond 55. The past generation enjoys more than they deserve. They can happily take out their money after fulfilling mandatory retirement requirements and do whatever they please with their money. The government gives them options, not taking options away.

I talk A you talk B. 对牛弹琴. Ok you win.

 

[fr33d0m]

I talk A you talk B. 对牛弹琴. Ok you win.

I am glad that you surrender.

cheer for you.

 

[sohguanh]

I am glad that you surrender.

cheer for you.

Surrender not because I want but here got readers who take pleasure to report to get me banned. So I must post posts that suit their views. If it gives them great satisfaction so be it. I move on.