CPF SA Shielding hack - RIP (Obsolete)

[closeCPFIAopenCPFIA]

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how to efficiently take out OA before SA when the time comes due to change of CPF rules of not allowing interest to be withdrawn first.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.

So it means u need to invest SA with above 4% return long term, remaining SA 40k to spouse RA, only then withdraw from OA every month 2k. Is this correct?

 

[henrylbh]

So it means u need to invest SA with above 4% return long term, remaining SA 40k to spouse RA, only then withdraw from OA every month 2k. Is this correct?

Already mentioned that spouse reached CPF annual limit and FRS limit due to contribution from wages. It's not easy to ensure SA is zero for purpose of withdrawing OA. Already damned angry that can only withdraw principal from SA/OA first instead of accrued interest from SA/OA like before.

 

[BlueRobin]

Already mentioned that spouse reached CPF annual limit and FRS limit due to contribution from wages. It's not easy to ensure SA is zero for purpose of withdrawing OA. Already damned angry that can only withdraw principal from SA/OA first instead of accrued interest from SA/OA like before.

I didn't follow the announcement of that change and was still thinking that the original withdrawal sequence still works.

Not sure the motivation behind that change but just from simple observation, CPF Board not keen for people to continue to earn interests in their accounts (especially SA) post 55. If that is the motivation, then a simple instruction to banks to stop people from closing their CPFIA account while it still has holdings would stop the leak.

 

[henrylbh]

I didn't follow the announcement of that change and was still thinking that the original withdrawal sequence still works.

Not sure the motivation behind that change but just from simple observation, CPF Board not keen for people to continue to earn interests in their accounts (especially SA) post 55. If that is the motivation, then a simple instruction to banks to stop people from closing their CPFIA account while it still has holdings would stop the leak.

But CPFB repeatedly mention that if you do not the money, leave it in CPF post 55, and continue to earn respectable interest from CPF But now members are investing the CPF and it's unreasonable to stop them closing CPFIA.

 

[henrylbh]

I didn't follow the announcement of that change and was still thinking that the original withdrawal sequence still works.

Better take note of changes in CPF that affect your retirement planning unless CPF money is not factored in your retirement and whatever CPF you have post 55 is a bonus to your plan. For me, I factored and amortised the withdrawal of CPF inclusive of monthly accrued interest to supplement monthly CPF payout till 95. Now without accrued interest to withdraw, my principal sum would decline faster and zero earlier and the attributable interest goes with the decline

 

[closeCPFIAopenCPFIA]

Already mentioned that spouse reached CPF annual limit and FRS limit due to contribution from wages. It's not easy to ensure SA is zero for purpose of withdrawing OA. Already damned angry that can only withdraw principal from SA/OA first instead of accrued interest from SA/OA like before.

OIC. U want the status quo but able to withdraw 2k from oa every month. I cannot read ur mind or intentions.
The only way is through the property pledge:
U withdraw from ra 2k and spouse topup ra 2k from her oa to your ra.
Your spouse also do the same and u topup for her.
Both must be eligible for property pledge.

This is how i empty my spouse oa. But the limit is BRS.
Is this workable?

 

[BBCWatcher]

OIC. U want the status quo but able to withdraw 2k from oa every month. I cannot read ur mind or intentions.
The only way is through the property pledge:
U withdraw from ra 2k and spouse topup ra 2k from her oa to your ra.
Your spouse also do the same and u topup for her.
Both must be eligible for property pledge.
This is how i empty my spouse oa. But the limit is BHS.
Is this workable?

You could do that, but withdrawing dollars from Retirement Accounts is permanent in the sense that the Enhanced Retirement Sum (ERS) is still binding. The ERS limit is inclusive of prior lump sum withdrawals. If you want to fund a Retirement Account above (or at least substantially above) the Full Retirement Sum then the ERS limit will be more severely limiting after any RA withdrawals. Moreover, you can't do this once CPF LIFE payouts start, and that's age 70 at the latest.

RAs top ups are good deals, in my view — and clear up to the ERS they remain good deals. So I wouldn't be inclined to withdraw funds from RA. Cross-spousal OA to RA transfers are a great way to jack up RA balances and future (or current) CPF LIFE payouts.

There doesn't seem to be any limit to CPF Investment Account openings and closures, but I wouldn't test this premise too much. One fairly chunky OA withdrawal via the CPF Investment Scheme every couple years is about as far as I'd dare push that particular maneuver.

 

[henrylbh]

OIC. U want the status quo but able to withdraw 2k from oa every month. I cannot read ur mind or intentions.
The only way is through the property pledge:
U withdraw from ra 2k and spouse topup ra 2k from her oa to your ra.
Your spouse also do the same and u topup for her.
Both must be eligible for property pledge.

This is how i empty my spouse oa. But the limit is BHS.
Is this workable?

Property pledge would be my last resort as my property is wholly funded with cash i.e not paid with CPF. That move wouldn't reduce my OA before SA. Like my spouse, my already FRS for any top up.

 

[closeCPFIAopenCPFIA]

You could do that, but withdrawing dollars from Retirement Accounts is permanent in the sense that the Enhanced Retirement Sum (ERS) is still binding. The ERS limit is inclusive of prior lump sum withdrawals. If you want to fund a Retirement Account above (or at least substantially above) the Full Retirement Sum then the ERS limit will be more severely limiting after any RA withdrawals. Moreover, you can't do this once CPF LIFE payouts start, and that's age 70 at the latest.

RAs top ups are good deals, in my view — and clear up to the ERS they remain good deals. So I wouldn't be inclined to withdraw funds from RA. Cross-spousal OA to RA transfers are a great way to jack up RA balances and future (or current) CPF LIFE payouts.

There doesn't seem to be any limit to CPF Investment Account openings and closures, but I wouldn't test this premise too much. One fairly chunky OA withdrawal via the CPF Investment Scheme every couple years is about as far as I'd dare push that particular maneuver.

Everytime i withdrew from my ra, immediately my spouse was able to topup my ra back to ERS.

 

[closeCPFIAopenCPFIA]

I doubt she can top your RA once you have met yearly FRS especially if you already have ERS. Only you yourself can top up to ERS and there a limit off 150% based on annual increase in FRS. Eg this year increase in FRS is $6,800, you can top up only $10,200. So if you draw more than 2k monthly, no way you can top up $24k.

i did many times few years back until this year Jan 2023. If i withdraw 2k, my spouse can immediately topup 2k. if 1 withdraw 59k, my wife can immediately topup 59k.
i am surprised that u could not topup to ers unless u are below55.

 

[BBCWatcher]

Everytime i withdrew from my ra, immediately my spouse was able to topup my ra back to ERS.

Well that's a first if so. Are you thinking of the Full Retirement Sum? Or the ERS inclusive of interest? (The ERS limit is actually interest exclusive.) Or the ERS as it was when you were 55? (The ERS typically increases every January.) Or some combination?

According to CPF's published rules lump sum RA withdrawals certainly reduce the limit. The ERS limit is lump sum withdrawal inclusive. Whether the limit actually binds you or not is a very separate question.

 

[closeCPFIAopenCPFIA]

Well that's a first if so. Are you thinking of the Full Retirement Sum? Or the ERS inclusive of interest? (The ERS limit is actually interest exclusive.) Or the ERS as it was when you were 55? (The ERS typically increases every January.) Or some combination?

According to CPF's published rules lump sum RA withdrawals certainly reduce the limit. The ERS limit is lump sum withdrawal inclusive. Whether the limit actually binds you or not is a very separate question.

How can current ra of more than 360k not at ERS when frs was 171k at 55.

 

[BBCWatcher]

How can current ra of more than 360k not at ERS when frs was 171k at 55.

Interest isn't counted as part of the ERS limit, and the ERS has been raised since then. The current (2023) ERS is $298,200, but that's based on principal only (plus lump sum withdrawals). So take your total "entry" principal at age 55 ($171,000 I assume, the 2018 FRS), all the top ups, and all the lump sum withdrawals. Add those 3 sets of numbers up. But ignore all interest — don't include that. If the total principal (including top ups) plus lump withdrawals adds up to greater than $298,200 then you've won the lottery (in CPF rule terms). Congratulations if so.

If you're under the current ERS, OK, now you know how much room you have left before you hit it. When the ERS is raised on January 1, 2024, you'll get some more room below the (new) ERS. But your lump sum withdrawals should be effectively reducing how much you can put back in your RA. While the annual increase in the ERS pushes the limit progressively up.

This is how the CPF Board appears to have written the rules. Your experience is important, and it'll be interesting to read if you're seeing anything different in reality.

 

[henrylbh]

i did many times few years back until this year Jan 2023. If i withdraw 2k, my spouse can immediately topup 2k. if 1 withdraw 59k, my wife can immediately topup 59k.
i am surprised that u could not topup to ers unless u are below55.

Topping up is restricted to 1.5x of prevailing FRS. If you have the max ERS say beginning last year it would be 192,000 (FRS) x 1.5 = 288,000 ERS. This year FRS increased by 6,800 to 198,800 . Max top up to ERS is 6,800 x 1.5 = 10,200. So new ERS is 288,000 + 10,200 = 298,200 same as 198,800 (increased FRS) x 1.5 = 298,200. Had you drawn down 24k last year bringing down ERS to 264,000 (288k -24k), you can't top up 24k as the max top up is 6,800 X 1.5 = 10,200. Otherwise even at age 100 you will still have ERS by topping up what was withdrawn.

So there is some missing info in your assertion, like previously you did not actually attain Full ERS thereby leaving gap for subsequent top-ups or you had full ERS but did not keep up with subsequent ERS amount when FRS increased annually.

 

[reddevil0728]

Interest isn't counted as part of the ERS limit, and the ERS has been raised since then. The current (2023) ERS is $298,200, but that's based on principal only (plus lump sum withdrawals). So take your total "entry" principal at age 55 ($171,000 I assume, the 2018 FRS), all the top ups, and all the lump sum withdrawals. Add those 3 sets of numbers up. But ignore all interest — don't include that. If the total principal (including top ups) plus lump withdrawals adds up to greater than $298,200 then you've won the lottery (in CPF rule terms). Congratulations if so.

If you're under the current ERS, OK, now you know how much room you have left before you hit it. When the ERS is raised on January 1, 2024, you'll get some more room below the (new) ERS. But your lump sum withdrawals should be effectively reducing how much you can put back in your RA. While the annual increase in the ERS pushes the limit progressively up.

This is how the CPF Board appears to have written the rules. Your experience is important, and it'll be interesting to read if you're seeing anything different in reality.

actually dashboard will show

 

[BBCWatcher]

actually dashboard will show

Yes, true. There's one of the dashboards in "my CPF" that should indicate how much top up "room" remains in RA. I don't think it necessarily tells you how that top up limit is computed, though. I think I've described the computation accurately. Shorter version: look only at the current Enhanced Retirement Sum and ignore all interest. Subtract from the current ERS your entry principal (age 55), all top ups, and all lump sum withdrawals from RA. If there's any gap that should be your RA top up limit shown in your "my CPF" dashboard readout.

 

[closeCPFIAopenCPFIA]

Yes, true. There's one of the dashboards in "my CPF" that should indicate how much top up "room" remains in RA. I don't think it necessarily tells you how that top up limit is computed, though. I think I've described the computation accurately. Shorter version: look only at the current Enhanced Retirement Sum and ignore all interest. Subtract from the current ERS your entry principal (age 55), all top ups, and all lump sum withdrawals from RA. If there's any gap that should be your RA top up limit shown in your "my CPF" dashboard readout.

Before i withdraw from my ra, spouse cannot topup my ra from her oa even 10cts.
Once i withdraw my ra, her topup went through.

 

[henrylbh]

How can current ra of more than 360k not at ERS when frs was 171k at 55.

The RA balance does hint that you have ERS with topping up along the 10 years or so years to age 65 or so, but was it maxed to new ERS yearly without fail?

 

[henrylbh]

Before i withdraw from my ra, spouse cannot topup my ra from her oa even 10cts.
Once i withdraw my ra, her topup went through.

If you log in to Retirement Dashboard and tap on Top-ups, it will show you exactly how much you can top up or something like Your Retirement Account balance has reached the current Enhanced Retirement Sum. You cannot receive any more top-ups at the moment. The amount you can top up is reviewed every year, so check your Retirement dashboard regularly.

 

[henrylbh]

Before i withdraw from my ra, spouse cannot topup my ra from her oa even 10cts.
Once i withdraw my ra, her topup went through.

Ha ha sounds like you squeezing your spouse when she barely has BRS.