CPF SA Shielding hack - RIP (Obsolete)

[stanlawj]

If SG Govt goes to war, it needs funding, and it can easily tap into CPF by issuing war bonds and converting all CPF into temporary source of funding using the war bonds. (CPF force buy war bonds)

 

[stanlawj]

hmmm,

just 10 years ago, SGD/BRL was like 1.+, today it is 3.+

10 years ago, SGD/MXN was 6.+, today it is 12.+

they both are worse than MYR in the last 10 years...

Looks like you aren't paying attention to turning points. They are not meant for you.
BRL and MXN are both beneficiaries of China+1 move which didn't start 10 years ago.

 

[fr33d0m]

If SG Govt goes to war, it needs funding, and it can easily tap into CPF by issuing war bonds and converting all CPF into temporary source of funding using the war bonds. (CPF force buy war bonds)

if an asteroid hits Mexico/Brazil/Switzerland, all your dream currencies will go to 0.

 

[stanlawj]

if an asteroid hits Mexico/Brazil/Switzerland, all your dream currencies will go to 0.

Yes. But the path of the asteroid is well-known for the extinction level events.
I can also give you the predictions;
Apophis: 2028/2029 and 2066/2069.

There's alot of time to prepare for it.

 

[fr33d0m]

Yes. But the path of the asteroid is well-known for the extinction level events.
I can also give you the predictions;
Apophis: 2028 and 2062.

There's alot of time to prepare for it.

no war will come to Singapore before 2028. How much do you want to bet on this?

 

[stanlawj]

no war will come to Singapore before 2028. How much do you want to bet on this?

Not betting with you. I might lose the bet with probability of 99%.
That 1% probability of turning true is rightfully called black swan event.

 

[highsulphur]

Not betting with you. I might lose the bet with probability of 99%.
That 1% probability of turning true is rightfully called black swan event.

just diversify into global equity etf for black swan exit plan out of Singapore

 

[stanlawj]

just diversify into global equity etf for black swan exit plan out of Singapore

Which basically means either taking money out of CPF to invest or not putting extra cash into CPF voluntarily.

 

[BBCWatcher]

Talk nonsense lah. If your nightmare scenario happens, all your SGD bank deposits and cash at hand are all affected, not just the CPF. So how? Does that mean your last sentence should replace "CPF" with "anything"?

That's absolutely correct. Literally everything you could possibly do with money/wealth involves hypothetical policy risks. CPF is a model of stability in comparison to most other options.

I would appreciate if the few people raising "OMG! CPF could change something!!!" scenarios would please explain what specifically they're proposing as an alternative that doesn't involve exposure to possible regulatory or policy changes. I'm pretty imaginative, but I can't think of anything that isn't subject to such hypothetical risks.

If you really believe the Government of Singapore will do something completely bonkers like set the minimum CPF LIFE payout age to 85 and hike compulsory CPF contributions to 62%...then why don't you believe the same government, or another government, will do something else completely bonkers that will affect whatever else you do in the alternative? Why single out CPF? It just doesn't make any sense.

There's really only one rational way to mitigate this class of risks: reasonable diversification, including reasonable global diversification of your assets. Which means (in the Singapore context) taking advantage of CPF and saving/investing in other vehicles, too.

A few changes I think would be reasonable to expect in the future would be an increase of the employer 17% contribution rate toward 20% and an inflation increase on the $102k annual salary maximum. Both have not changed in a very long time.

I don't think the 37% contribution rate will be increased any time soon if ever. That's awfully high already. Keep in mind the government can effectively modulate the OA leg of these contributions via HDB-related policies, including housing grants and HDB loans. Also, contribution rates are increasing after age 55. The 37% rate will end up applying to workers under age 60 instead of under age 55.

I think the cap will increase at some point, but effectively that's already happening with the formula adjustment between variable and regular monthly pay.

I think it's likely the government will eventually extend compulsory contributions at least for SA (and RA if below the FRS) to self-employed individuals. I can't see how the OA/SA waiver is tenable given mounting retirement adequacy challenges among self-employed workers. But the OA waiver part might be tenable with that cohort.

Because Singaporean citizen cannot withdraw CPF less than FRS as cash, only extract annuity cash payments after 65 years old.

That's incorrect. There are $5,000 (age 55+) and 20% (age 65+, inclusive of the $5,000) lump sum RA withdrawal options even without a property pledge or charge. (With a property pledge or charge, even more.) And if your RA is below $60,000 when you start payouts (age 65+) then you have the option for classic Retirement Sum Scheme-style payouts instead of life annuity payouts if you wish.

If you below 65 years old, you are a long-term investor in Singapore Inc.

There's not much requirement to do so. If you're a Singaporean citizen born in 1980 or later who lives permanently overseas then there's only one "investor" requirement: CareShield Life premiums. If you were born before 1980 you don't even have that requirement.

For cash in bank, you can always convert it and TT elsewhere during the short window period of opportunity in the event of a nightmare scenario. But if you wait too late, the window will still close.

If there are no warning signs nor any window of opportunity, then your backup plans (relocation, gold/foreign currency, etc) have to be ready on standby 24/7. This is why the rich Indos flock to SG as insurance against their own Indo govt.

If you want to travel down the "prepper" rabbit hole then you really should leave Singapore. Singapore in several ways is just not an appropriate base for a "prepper" lifestyle.

if an asteroid hits Mexico/Brazil/Switzerland, all your dream currencies will go to 0.

For example.

 

[stanlawj]

That's incorrect. There are $5,000 (age 55+) and 20% (age 65+, inclusive of the $5,000) lump sum RA withdrawal options even without a property pledge or charge. (With a property pledge or charge, even more.) And if your RA is below $60,000 when you start payouts (age 65+) then you have the option for classic Retirement Sum Scheme-style payouts instead of life annuity payouts if you wish.

Wow... thanks for pointing this out about the CPF RA withdrawal options. I had not registered any attention to these withdrawal options.

 

[limlg73]

Reply from cpf

The amount you can withdraw based on this example is $78,500.

The formula works in such a way that the [total amount in RA at age 65 will minus your top up monies x 20%] - 5000.

You may refer to the link below to understand on the computation for the withdrawal of 20% at age 65. cpf.gov.sg/member/faq/retirement-income/retirement-withdrawals/how-is-the-withdrawable-amount-computed

Sorry but may I confirm that this is indeed Reply from CPF?
I have doubt whether 20% of the Interest earned on the TopUP (213k) from 55yo to 65yo can be withdawn.

For withdraw down to BRS with property pledge, the TopUp and its interest earned over the years cannot be withdraw. When we login to CPF, we actually can see this so called "reserved" amount (topup+interest) which cannot be withdraw.

https://www.cpf.gov.sg/member/faq/r...inety-five-withdraw-ra-savings-using-property

I previously emailed CPF about this and here the reply:

If your CPF balance at 55 is more than $192,000:

• Year you reach 55 2022
• Full Retirement Sum (FRS) $192,000
• Your Ordinary Account (OA) and Special Account (SA) balances when you reach 55 $300,000 (includes $20,000 top-up monies)

At age 55, we will transfer the Full Retirement Sum of $192,000 from your SA and OA to your Retirement Account (RA).
You can choose to leave the FRS in your RA and withdraw the remaining amount of $108,000

• Retirement Sum in your retirement Account (RA) = $192,000
• CPF withdrawal amount from OA/SA = $108,000

If you own a property with remaining lease that can last you to at least 95 years old, you can choose to withdraw RA savings (excluding interest earned, any government grants received and top-ups made under the Retirement Sum Topping-up Scheme) above your Basic Retirement Sum (BRS) of $96,000.

Topped-up monies in the RA do not form part of the BRS when computing the amount that can be withdrawn i.e. the BRS has to be made up with non-topped up monies.

Based on your example, the maximum RA withdrawal amount is $76,000 (calculated as FRS $192,000 - BRS $96,000 - Top-up $20,000 = $76,000)
CPF withdrawal amount from OA/SA and RA = $184,000 ($108,000 + $76,000)

 

[highsulphur]

Sorry but may I confirm that this is indeed Reply from CPF?
I have doubt whether 20% of the Interest earned on the TopUP (213k) from 55yo to 65yo can be withdawn.

For withdraw down to BRS with property pledge, the TopUp and its interest earned over the years cannot be withdraw. When we login to CPF, we actually can see this so called "reserved" amount (topup+interest) which cannot be withdraw.

https://www.cpf.gov.sg/member/faq/r...inety-five-withdraw-ra-savings-using-property

I previously emailed CPF about this and here the reply:

If your CPF balance at 55 is more than $192,000:

• Year you reach 55 2022
• Full Retirement Sum (FRS) $192,000
• Your Ordinary Account (OA) and Special Account (SA) balances when you reach 55 $300,000 (includes $20,000 top-up monies)

At age 55, we will transfer the Full Retirement Sum of $192,000 from your SA and OA to your Retirement Account (RA).
You can choose to leave the FRS in your RA and withdraw the remaining amount of $108,000

• Retirement Sum in your retirement Account (RA) = $192,000
• CPF withdrawal amount from OA/SA = $108,000

If you own a property with remaining lease that can last you to at least 95 years old, you can choose to withdraw RA savings (excluding interest earned, any government grants received and top-ups made under the Retirement Sum Topping-up Scheme) above your Basic Retirement Sum (BRS) of $96,000.

Topped-up monies in the RA do not form part of the BRS when computing the amount that can be withdrawn i.e. the BRS has to be made up with non-topped up monies.

Based on your example, the maximum RA withdrawal amount is $76,000 (calculated as FRS $192,000 - BRS $96,000 - Top-up $20,000 = $76,000)
CPF withdrawal amount from OA/SA and RA = $184,000 ($108,000 + $76,000)

The reply was from a cpf officer whom I asked over their WhatsApp chat

The number 78500 is from them after I provided my example.

You can check with them again

 

[highsulphur]

Sorry but may I confirm that this is indeed Reply from CPF?
I have doubt whether 20% of the Interest earned on the TopUP (213k) from 55yo to 65yo can be withdawn.

For withdraw down to BRS with property pledge, the TopUp and its interest earned over the years cannot be withdraw. When we login to CPF, we actually can see this so called "reserved" amount (topup+interest) which cannot be withdraw.

https://www.cpf.gov.sg/member/faq/r...inety-five-withdraw-ra-savings-using-property

I previously emailed CPF about this and here the reply:

If your CPF balance at 55 is more than $192,000:

• Year you reach 55 2022
• Full Retirement Sum (FRS) $192,000
• Your Ordinary Account (OA) and Special Account (SA) balances when you reach 55 $300,000 (includes $20,000 top-up monies)

At age 55, we will transfer the Full Retirement Sum of $192,000 from your SA and OA to your Retirement Account (RA).
You can choose to leave the FRS in your RA and withdraw the remaining amount of $108,000

• Retirement Sum in your retirement Account (RA) = $192,000
• CPF withdrawal amount from OA/SA = $108,000

If you own a property with remaining lease that can last you to at least 95 years old, you can choose to withdraw RA savings (excluding interest earned, any government grants received and top-ups made under the Retirement Sum Topping-up Scheme) above your Basic Retirement Sum (BRS) of $96,000.

Topped-up monies in the RA do not form part of the BRS when computing the amount that can be withdrawn i.e. the BRS has to be made up with non-topped up monies.

Based on your example, the maximum RA withdrawal amount is $76,000 (calculated as FRS $192,000 - BRS $96,000 - Top-up $20,000 = $76,000)
CPF withdrawal amount from OA/SA and RA = $184,000 ($108,000 + $76,000)

Your example is based on your age of 55 when RA is formed right?

 

[limlg73]

My example is for the amount that can be withdrawn with property pledge (down to BRS), it can be withdraw anytime from 55yo till pay out date (where RA is deducted to pay CPF Life premium).
It is not for the calculation of 20% that can be withdrawn at 65.

 

[narutos]

Sorry but may I confirm that this is indeed Reply from CPF?
I have doubt whether 20% of the Interest earned on the TopUP (213k) from 55yo to 65yo can be withdawn.

For withdraw down to BRS with property pledge, the TopUp and its interest earned over the years cannot be withdraw. When we login to CPF, we actually can see this so called "reserved" amount (topup+interest) which cannot be withdraw.

https://www.cpf.gov.sg/member/faq/r...inety-five-withdraw-ra-savings-using-property

I previously emailed CPF about this and here the reply:

If your CPF balance at 55 is more than $192,000:

• Year you reach 55 2022
• Full Retirement Sum (FRS) $192,000
• Your Ordinary Account (OA) and Special Account (SA) balances when you reach 55 $300,000 (includes $20,000 top-up monies)

At age 55, we will transfer the Full Retirement Sum of $192,000 from your SA and OA to your Retirement Account (RA).
You can choose to leave the FRS in your RA and withdraw the remaining amount of $108,000

• Retirement Sum in your retirement Account (RA) = $192,000
• CPF withdrawal amount from OA/SA = $108,000

If you own a property with remaining lease that can last you to at least 95 years old, you can choose to withdraw RA savings (excluding interest earned, any government grants received and top-ups made under the Retirement Sum Topping-up Scheme) above your Basic Retirement Sum (BRS) of $96,000.

Topped-up monies in the RA do not form part of the BRS when computing the amount that can be withdrawn i.e. the BRS has to be made up with non-topped up monies.

Based on your example, the maximum RA withdrawal amount is $76,000 (calculated as FRS $192,000 - BRS $96,000 - Top-up $20,000 = $76,000)
CPF withdrawal amount from OA/SA and RA = $184,000 ($108,000 + $76,000)

Hi. the Top-up $20,000 in your example is it just the original cash capital you top-up last time OR is it include the cash capital + interest earned on the topup?

 

[limlg73]

Hi. the Top-up $20,000 in your example is it just the original cash capital you top-up last time OR is it include the cash capital + interest earned on the topup?

it includes the Interest earned. This is stated in CPF website "* Excluding interest, any government grants and top-ups made under the Retirement Sum Topping-Up Scheme."

https://www.cpf.gov.sg/member/faq/r...inety-five-withdraw-ra-savings-using-property

Also, if one login to CPF, one can see this "Reserved" amount (TopUp+Interest)

 

[royalmix]

The reply was from a cpf officer whom I asked over their WhatsApp chat

The number 78500 is from them after I provided my example.

You can check with them again

Of course the officer will answer based on the example posted at CPFB website.

As the other forumer highlighted, why the difference in definition/calculation compared to property pledge? I see this as another potential loophole, as per CPF, topups are to increase your future retirement payouts. Topups should include interest paid on those topups right? Any withdrawal will result in lower CPF Life monthly payout.

So quickly withdraw if the system allow you to!

Do you know the conditions for withdrawal of this 20%?

I guess you are below 55 (you shared somewhere in another thread?), maybe not yet plan when you intend to start CPF Life Payout?

 

[royalmix]

it includes the Interest earned. This is stated in CPF website "* Excluding interest, any government grants and top-ups made under the Retirement Sum Topping-Up Scheme."

https://www.cpf.gov.sg/member/faq/r...inety-five-withdraw-ra-savings-using-property

Also, if one login to CPF, one can see this "Reserved" amount (TopUp+Interest)

Are u below 55 now? If so, what you see as Reserved is correct.

If you are above 55, do you still see the Reserved amount?

 

[limlg73]

Are u below 55 now? If so, what you see as Reserved is correct.

If you are above 55, do you still see the Reserved amount?

I'm below 55.
Now that you said that, I become unsure of what I wrote earlier.
I mean maybe for those above 55, the amount shown in their CPF as "Reserve" does not include interest earned?
Hope members who are above 55 can share. Thanks

 

[royalmix]

I'm below 55.
Now that you said that, I become unsure of what I wrote earlier.
I mean maybe for those above 55, the amount shown in their CPF as "Reserve" does not include interest earned?
Hope members who are above 55 can share. Thanks

Ok, what you topup before 55 gets 'wipeout" (the records) after 55!

What you topup after 55 will be counted. For property pledge, what is excluded includes interest on topups.

Those who shield SA/OA and topup their RA with cash will be affected.