CPF SA Shielding hack - RIP (Obsolete)

[BBCWatcher]

If you have nothing more to add, don't just say and say out of ordinary course. Of course, anyone without or less than FRS at 55 can still shield.

If SA and OA collectively unable to meet FRS, how much SA can that person have of any value, not to say a lot of value?

SA shielding worked quite well for those who could reach the Basic Retirement Sum (with a property pledge or charge; and with $40K from SA and the remainder from OA from self, from family members' OAs, and/or cash) and who had a decent or better quantity of SA dollars above $40,000. "SA shielding" wasn't just a game for FRS-level CPF members. Tens of thousands of shielded SA dollars was achievable for these sub-FRS members.

For example, if you were turning 55 this year and had $70,000 in your Special Account and $10,000 in your Ordinary Account then you could shield $30,000 of SA. You'd then have $50,000 in your new Retirement Account ($40K from SA and $10K from OA). Then you could close the gap at least to the Basic Retirement Sum ($52,900 more in 2024) using any combination of qualified family members' OA transfers and/or cash — and a property pledge or charge, of course.

Moreover, it wasn't strictly necessary to meet the BRS right away. Meeting the BRS is required to "unlock" the $30K of SA in the example above.

 

[RedsYWNA]

Why not hold both?

I did consider VCSH to limit duration risk (instead of 10 year treasuries), but the exchange rate risk makes me a bit more uneasy, compared to MBH....

 

[micheritan]

SA has been around since beginning for 55yo n above, it is part of retirement planning accounts for retirees complementing the RA account which is a locked account. SA offers every 55 yo and above a safe ,risk free higher returns if they are averse to risks investing in non guaranteed pte instruments on their own. Now many of these people are forced to go through high risky instruments, low returnz and challenges next year..our OA is losing money with inflation still above 3%. Wolves in sheeps clothings no doubt will have started lurking and planning for a bountiful catch, luring with sweets to unsuspecting, unsavvy merdeka gen n young seniors OA investors suddenly with flush deep pockets... Expect 2025 to be the starting year of abundance for cpf scammers!!!! LW scratch head.. bang head agst wall! Where all OA money gone, lining scammer pockets!!!!

 

[henrylbh]

SA shielding worked quite well for those who could reach the Basic Retirement Sum (with a property pledge or charge; and with $40K from SA and the remainder from OA from self, from family members' OAs, and/or cash) and who had a decent or better quantity of SA dollars above $40,000. "SA shielding" wasn't just a game for FRS-level CPF members. Tens of thousands of shielded SA dollars was achievable for these sub-FRS members.

For example, if you were turning 55 this year and had $70,000 in your Special Account and $10,000 in your Ordinary Account then you could shield $30,000 of SA. You'd then have $50,000 in your new Retirement Account ($40K from SA and $10K from OA). Then you could close the gap at least to the Basic Retirement Sum ($52,900 more in 2024) using any combination of qualified family members' OA transfers and/or cash — and a property pledge or charge, of course.

Moreover, it wasn't strictly necessary to meet the BRS right away. Meeting the BRS is required to "unlock" the $30K of SA in the example above.

I give up on your crabs. How much can he gain if he shields and unshield 30k or even 100k, assuming he has the eligible fund, next month? The amount unshielded will end up in RA the same month, if he has not meet FRS or BRS with adequate pledge.

 

[henrylbh]

SA has been around since beginning for 55yo n above, it is part of retirement planning accounts for retirees complementing the RA account which is a locked account. SA offers every 55 yo and above a safe ,risk free higher returns if they are averse to risks investing in non guaranteed pte instruments on their own. Now many of these people are forced to go through high risky instruments, low returnz and challenges next year..our OA is losing money with inflation still above 3%. Wolves in sheeps clothings no doubt will have started lurking and planning for a bountiful catch, luring with sweets to unsuspecting, unsavvy merdeka gen n young seniors OA investors suddenly with flush deep pockets... Expect 2025 to be the starting year of abundance for cpf scammers!!!! LW scratch head.. bang head agst wall! Where all OA money gone, lining scammer pockets!!!!

You are assuming those who FRS and even ERS in RA with bountiful SA especially those who heck SA that will be transferred to OA next year, are stupid in handling their CPF fund.

CPFB only take care that members have adequate CPF for retirement and anything above FRS (or ERS as members above 55 are allowed to transfer SA to RA) will be left to members to look after themselves. So rightly, member should not expect more from CPF and rightly CPF should close SA at 55 and for those below 55, SA should be renamed RA with FRS as the limit and excess overflow to OA.

 

[henrylbh]

Lots of folks and "thought leaders" from the press.

https://www.todayonline.com/singapore/budget-2024-cpf-special-account-shielding-hack-experts-2364316

All these bloggers saying it make sense from policy stand point, without highlighting how it hurts people and government trust, that to me is making excuses for government.

I no bloggers and the closure of SA at 55 affect my retirement plan by more than 195k over the period of retirement drawings from CPF SA and OA. Yet I think it's only right that SA be closed at 55 and I am not making excuses for government. I would add on to say that SA should be renamed RA for those below 55 and the cap should be the prevailing FRS or ERS. Also, all profit from sale of properties using CPF should be returned to CPF less proportion of cash used. Net rental income derived from such property financed with CPF should also go into CPF. The idea is similar to those using CPF for investments.

 

[snowcrabramyeon]

Seriously, what relevance is my opinion on this?

I don't think it is a loophole. How cpf SA and CPF LIFE function based on current policy is poorly thought out, if they even spend time thinking about it.

Your opinion is relevant because it helps readers assess how much credibility to assign to what you write on this topic. This is especially since most fair minded people would agree that CPF SA shielding is a loophole and would be closed sooner or later; on the other hand, you have now stated you don't think so. Enough said.

 

[micheritan]

Gov on one hand just acting to ensure retirees have good retirement money thru cpf life but now expose us to risky investment by closing SA and moving all to negative return OA . The cpf life allowance not even adequately form part of retirement planning if all money is locked dead. OA is neg.returns n in if inflation bcomes worse...only SA truly forms a flexible retirement savings for immediate amd urgent use for retirees. OA shud close instead. SA shud be maintain for retirees. retirees shud not even be force to do sa shield or oa shield to begin with. I m superly deeply affected being a just retiree who now in deep depression.

 

[BBCWatcher]

I give up on your crabs. How much can he gain if he shields and unshield 30k or even 100k, assuming he has the eligible fund, next month?

That’s why I wrote in the past tense!

If you’re arguing that “SA shielding” was only a relatively rich person’s game, no, that’s not correct. A SA above $40,000 at age 55 and the ability to reach the BRS (eventually at least) were all you really needed. Yes, SA shielding is no longer a viable technique — or at least very soon won’t be. It’s still perhaps viable for members turning 55 early this year with fewer SA dollars to shield because they could still have enough interest recovery months left in 2024.

The amount unshielded will end up in RA the same month, if he has not meet FRS or BRS with adequate pledge.

In early 2025.

 

[s0crates]

Your opinion is relevant because it helps readers assess how much credibility to assign to what you write on this topic. This is especially since most fair minded people would agree that CPF SA shielding is a loophole and would be closed sooner or later; on the other hand, you have now stated you don't think so. Enough said.

Right, so people with a different perspective is less credible. Got it.

I don't think anyone would call the Special Account being around after 55 a loophole back when cpf life is formed. Lol. Don't need to buy a specific narrative just because it is one of the many that sounds logical. Our politicians can spin beautiful stories, I can too.

 

[s0crates]

I no bloggers and the closure of SA at 55 affect my retirement plan by more than 195k over the period of retirement drawings from CPF SA and OA. Yet I think it's only right that SA be closed at 55 and I am not making excuses for government. I would add on to say that SA should be renamed RA for those below 55 and the cap should be the prevailing FRS or ERS. Also, all profit from sale of properties using CPF should be returned to CPF less proportion of cash used. Net rental income derived from such property financed with CPF should also go into CPF. The idea is similar to those using CPF for investments.

Those points you stated are logical and what should be implemented, except maybe having all profits returned to CPF.

There are a hell lot of other loopholes out there and if the politicians want to go on yapping about loopholes, they might as well take the opportunity to close all of them now.

You covered quite a few of them.

Such as allowing parents to top up newborn cpf up to FRS. How is that even fair and equitable??? Rich get richer? This is worse than keep SA around.

How about PRs then. If they stayed here for a short period of time, they could also easily top up their CPF, gotten some tax relief/great interest from cpf, and when they relinquish their pr/citizenship, they should have the cpf money returned to them in cash after income tax and with the interest deducted. Give them a nominal 0.05%p.a. for all I care, but it's not fair for them to earn retirement money interest rate and potentially game our cpf system.

VC3A should be banned for elders who have already hit FRS. CPF is not meant as a bank account, nope not even the 2.5%. We don't want rich elders to frivolously withdr myaw from their RA/OA and in the end have the opportunity to put it back as an when, although it is limited by 37740 a year.

OA from housing, like you point out, any share of profits should proportionally go back to CPF. That's fair and logical.

SA should not be allowed to grow and compound beyond ERS. In fact, if you hit FRS already, you have to decide whether the money remains in SA/RA for good, or if you rather have it in OA. That's a good way to be consistent.

Hell younger members who hit FRS should already be allowed to withdraw their cpf monies out. Why not?

 

[henrylbh]

That’s why I wrote in the past tense!

If you’re arguing that “SA shielding” was only a relatively rich person’s game, no, that’s not correct. A SA above $40,000 at age 55 and the ability to reach the BRS (eventually at least) were all you really needed. Yes, SA shielding is no longer a viable technique — or at least very soon won’t be. It’s still perhaps viable for members turning 55 early this year with fewer SA dollars to shield because they could still have enough interest recovery months left in 2024.

In early 2025.

More crabs. Who is arguing that SA shielding is for relatively rich or whatever you said or tried to explain earlier.

 

[BBCWatcher]

Who is arguing that SA shielding is for relatively rich or whatever you said or tried to explain earlier.

You did. Others have asserted the same. But if (see that word?) you didn't or have changed your mind, OK then.

 

[chong18]

Without SA interest or shielding, my projected retirement income will be depleted earlier and at around age 90 I will have nothing left except for CPF life payouts which obviously is not enough even at ERS level. I'm single and will definitely need to be in a nursing home at that age. Can last abit longer if there is SA. Too bad, hope I don't live so long.

 

[henrylbh]

Those points you stated are logical and what should be implemented, except maybe having all profits returned to CPF.

There are a hell lot of other loopholes out there and if the politicians want to go on yapping about loopholes, they might as well take the opportunity to close all of them now.

You covered quite a few of them.

Such as allowing parents to top up newborn cpf up to FRS. How is that even fair and equitable??? Rich get richer? This is worse than keep SA around.

Agree that no topping up of CPF of new born that make no sense for purpose of retirement.

How about PRs then. If they stayed here for a short period of time, they could also easily top up their CPF, gotten some tax relief/great interest from cpf, and when they relinquish their pr/citizenship, they should have the cpf money returned to them in cash after income tax and with the interest deducted. Give them a nominal 0.05%p.a. for all I care, but it's not fair for them to earn retirement money interest rate and potentially game our cpf system.

My opinion is there shouldn't be any CPF for PRs. However as a concession they can make voluntary contribution to CPF or SRS for tax deductions.

VC3A should be banned for elders who have already hit FRS. CPF is not meant as a bank account, nope not even the 2.5%. We don't want rich elders to frivolously withdr myaw from their RA/OA and in the end have the opportunity to put it back as an when, although it is limited by 37740 a year.

Agree CPF should not be treated as a bank for people with excess money to park, protect and withdraw as they like once they have FRS. They can park in ERS and no more if they are above 55. Any excess can only go to OA as a concession. There are many elderly and some young can leave lots of money in ordinary savings account generating 0.05% interest. My father was one of them who refused to save in banks that pays more 20x what POSB paid.

OA from housing, like you point out, any share of profits should proportionally go back to CPF. That's fair and logical.

This should be implemented immediately as one of the cooling measures. Read of some who sold, squandered and then homeless and broke,

SA should not be allowed to grow and compound beyond ERS. In fact, if you hit FRS already, you have to decide whether the money remains in SA/RA for good, or if you rather have it in OA. That's a good way to be consistent.

SA if it still remain should be capped at ERS and excess flow to OA as gov has allowed ERS to be BRSx4.

Hell younger members who hit FRS should already be allowed to withdraw their cpf monies out. Why not?

Right thing to do but this will be mind blogging even if raise to prevailing ERS to withdraw all whenever you like. Still some will never withdraw as they have been caged too long and apprehensive when allowed to fly out.

 

[henrylbh]

You did. Others have asserted the same. But if (see that word?) you didn't or have changed your mind, OK then.

Give up. Another crab and now accusing me and trying to draw on others to support what you're saying.

 

[snowcrabramyeon]

Without SA interest or shielding, my projected retirement income will be depleted earlier and at around age 90 I will have nothing left except for CPF life payouts which obviously is not enough even at ERS level. I'm single and will definitely need to be in a nursing home at that age. Can last abit longer if there is SA. Too bad, hope I don't live so long.

You are single and presumably would be thinking of maximising your monthly payout rather than bequest? If so, then why not put more of your SA into your CPF Life? CPF Life has much better monthly payout as compared to the SA 4%. Of course CPF Life would not have as good a bequest amount as SA 4% but since you are single, is that even going to be an issue for you?

 

[chong18]

You are single and presumably would be thinking of maximising your monthly payout rather than bequest? If so, then why not put more of your SA into your CPF Life? CPF Life has much better monthly payout as compared to the SA 4%. Of course CPF Life would not have as good a bequest amount as SA 4% but since you are single, is that even going to be an issue for you?

Put in more CPF Life means earlier years before drawdown age not enough money to spend..lol

 

[henrylbh]

Without SA interest or shielding, my projected retirement income will be depleted earlier and at around age 90 I will have nothing left except for CPF life payouts which obviously is not enough even at ERS level. I'm single and will definitely need to be in a nursing home at that age. Can last abit longer if there is SA. Too bad, hope I don't live so long.

Don't you have a fully paid for property to liquidate and move into a nursing home. Be prepared before dementia creep in.

 

[DevilPlate]

Put in more CPF Life means earlier years before drawdown age not enough money to spend..lol

Then work longer and save up more then.