CPF SA

[Mysterio2020]

Dear all,

Please advise me on the following.

OA: $62,996
SA: $166,311
MA: $60,000

Property
Net Amount Used (OA): $159,703
Accrued Interest: $25,639

Investment
Net Amount Used
OA: $66,929
SA: $30,000

Given that as at 1 Jan 2020:
Basic Retirement Sum (BRS) 90,500
Full Retirement Sum (2 x BRS) 181,000
Enhanced Retirement Sum (3 x BRS) 271,500

I am 53 this year. Should I top up OA or can I still top up SA? How much can I top up? At the bare minimum, I should top up OA by the net amt used + accrued interest for property so that I can enjoy the 2.5% interest, am I right?

Can I pledge my property for the ERS? What's the implication when I sell my property beyond 60 years of my age? The proceeds will go to my retirement account because of the former?
WHat elese can I do?

Thank you all for the advice and inputs. Our CPF scheme is such a complicated thingie, how do we expect the elderly, like my parents who were born duirng the flinstones era, to undertsand how it actually works?

Based on all the inputs and given that I am a lousy and lazy investor, I should return to CPF the amount I have used for property plus the accrued interests so as to enjoy the 2.5% interest rate. At age 55, when I opt for BRS/FRS/ERS, I can withdraw anytime the balance amount. Will CPF aportion some of my refunds to SA till the FRS amount or they will leave everything to OA?

 

[SkyNinja]

Don't gian png the tax relief for spouse hor. You top up $7k to your spouse, the money belongs to him/her permanently. He/She can nominate to someone else.

 

[SKenny]

You going for the BRS basic plan?

ERS basic plan.

 

[highsulphur]

ERS basic plan.

Basic plan means more bequest? You want to leave more for the next generation?

 

[hwmook]

Other ppl think I really stupid to clear hdb loan outstanding loan with 200k cash.

Just do whatever u think is comfortable.

Nothing to say when i see this. I am refinancing my 200k HDB loan now. OA 2.5% > 1.5% Loan. I put money in CPF OA also earn more than the interest on loan. Why payback outstanding loan when you could have put the money into CPF to earn more?

 

[razoreigns]

Nothing to say when i see this. I am refinancing my 200k HDB loan now. OA 2.5% > 1.5% Loan. I put money in CPF OA also earn more than the interest on loan. Why payback outstanding loan when you could have put the money into CPF to earn more?

Could have reached the annual limit for CPF and already met minimum sum requirement. Can invest into equities but if the equity allocation is already met, and not willing to take corporate debt risk, the next best is to repay housing loan.

 

[moolahloolah]

Any amount above FRS can be withdrawn regardless source

CPF is not very clear on this I believe. The underlying rule is that any monies above FRS can be withdrawn, top-up or not. It’s like what the other edmwers have shared. I wrote to CPF to ask before.

SA believer here too. Have been topping since I started work. Aim is to be CPF SA millionaire by retirement!

This is to clarify that any amount above FRS can be withdrawn as lump-sum cash at age 55 regardless of source (whether from voluntary top up or employment income). I just called IRS to check.

But when a person's RA is above BRS but below FRS at age 55, then the source matters. In this case, any voluntary top up must be excluded from the calculation of lump sum that can be withdrawn.

 

[polyglob]

Will CPF aportion some of my refunds to SA till the FRS amount or they will leave everything to OA?

Your CPF statement should show how much of OA and SA has been used for housing. Bulk should be from OA. My statement showed small amount SA usage for stamp duty etc. I don't remember whether is because I cleaned out my OA when buying the property. Anyhow I have made some refunds in the last 3 months and currently SA amount used and accrued interest shows 0, so it seems refunding gave priority to SA up to the amount used.

 

[Gitaro]

No leh. I got more cash than cpf but I also won't dump hard cash into cpf. If forced savings then got no choices.

Yes, each one of us should work according to our situation and preference.

 

[Gitaro]

Your CPF statement should show how much of OA and SA has been used for housing. Bulk should be from OA. My statement showed small amount SA usage for stamp duty etc. I don't remember whether is because I cleaned out my OA when buying the property. Anyhow I have made some refunds in the last 3 months and currently SA amount used and accrued interest shows 0, so it seems refunding gave priority to SA up to the amount used.

Yes, first cut for voluntary refund would be to repay SA plus the SA accrued interests, then OA plus OA accrued interests.

At withdrawal, the same sequence applies (i.e., takeout SA first then OA).

To elaborate, using my case:

I owed SA and OA plus respective accrued interests of more than$500k for my house purchase. Upon my 55 last year, I made voluntary housing refund to my own account. All of my SA amount and interests were made good followed by part of my OA amount. Now I have a balance of about $200K outstanding, which was used for housing in my OA. and my plan is to pay all and collect interests. Use CPF OA and SA accounts just like my bank FD earning 2,5 to 4% per annum.

Caveat: I have to wait until 55 becos as after that point, I can clean out all my OA and SA (after settling my FRS) anytime. For those who are below 55, be careful though. Current withdrawal rules may change. I assume CPF rules if change would not apply retroactively (for people above 55).

 

[BBCWatcher]

only transfer from OA to SA when you have fully paid for your housing loan.

That's not correct. Let's pick a simple example: a relatively wealthy (or wealthier) person. A wealthy person doesn't need OA dollars as OA. He/she has plenty of wealth to make down payments on homes and service mortgages. Such a person will/should transfer every OA dollar into SA as long as allowed, as early as allowed.

Non-wealthy people generally should determine how much loan servicing buffer is appropriate in their OAs (household basis, months) then manage OA levels accordingly. Also, if you're taking a HDB loan, you're not allowed to keep more than $20K per person (after down payment) when you pick up the keys. The rest is swept into leasehold equity. On this occasion it's ordinarily quite wise to transfer the excess above $20K into SA.

Don't gian png the tax relief for spouse hor. You top up $7k to your spouse, the money belongs to him/her permanently. He/She can nominate to someone else.

This is quite dumb, sorry. Whatever your relationship to your spouse (which doesn't seem strong), your spouse is already legally entitled to reasonable division of all household assets in the event the marriage dissolves. CPF assets count. Total household wealth is lower when tax relief isn't collected.

 

[Gitaro]

Don't gian png the tax relief for spouse hor. You top up $7k to your spouse, the money belongs to him/her permanently. He/She can nominate to someone else.

For me, I have no issue with this. I topped up my wife, a homemaker, until FRS in her CPF account. She will be 55 this year. By 65, she can have $1300++ for life.

 

[Gitaro]

Thank you all for the advice and inputs. Our CPF scheme is such a complicated thingie, how do we expect the elderly, like my parents who were born duirng the flinstones era, to undertsand how it actually works?

Based on all the inputs and given that I am a lousy and lazy investor, I should return to CPF the amount I have used for property plus the accrued interests so as to enjoy the 2.5% interest rate. At age 55, when I opt for BRS/FRS/ERS, I can withdraw anytime the balance amount. Will CPF aportion some of my refunds to SA till the FRS amount or they will leave everything to OA?

Yes, refunds will go to SA and accrued interests from SA first. Not to FRS amount (up to the amount used under SA plus accrued interests). Hence your total amount in SA after voluntary refund may exceed FRS amount, but not problem, as you can withdraw at 55 any excess of FRS (current rule, may or may not change - you know CPF lah, can suka suka change along the way for future cohorts)

The out flow after settling SA account will go to OA and OA accrued interests.

 

[Mysterio2020]

Yes, refunds will go to SA and accrued interests from SA first. Not to FRS amount (up to the amount used under SA plus accrued interests). Hence your total amount in SA after voluntary refund may exceed FRS amount, but not problem, as you can withdraw at 55 any excess of FRS (current rule, may or may not change - you know CPF lah, can suka suka change along the way for future cohorts)

The out flow after settling SA account will go to OA and OA accrued interests.

I just cross my fingers and pray there won't be any change in wiithdrawal principal in the next two years. I think shouldn't be any change as election coming. Any change in CPF ruling will have a little uproar.

What about Enhanced Retirement Sum? This is voluntary right? If I opt for BRS/FRS/ERS upon reaching 55, is this decision irreversible?

 

[henrylbh]

I just cross my fingers and pray there won't be any change in wiithdrawal principal in the next two years. I think shouldn't be any change as election coming. Any change in CPF ruling will have a little uproar.

What about Enhanced Retirement Sum? This is voluntary right? If I opt for BRS/FRS/ERS upon reaching 55, is this decision irreversible?

Change in withdrawal in excess of FRS at 55 is very very remote compare to change in interest rates or CPF Life payouts.

ERS is optional. Once you topped up to ERS, no way can take out except for non top-up money in excess of BRS with sufficient property charge/pledge.

But if you opt for BRS or FRS, you still have some leeway to increase it.

 

[terence2112]

Yes, CPF schemes are complicated.
But maybe we shouldn't over think it.

Its just a tool to receive LIFE payout at a minimal rate, to fund your retirement.
Emphasis should be other investments.

 

[razoreigns]

your spouse is already legally entitled to reasonable division of all household assets in the event the marriage dissolves. CPF assets count.

This isn't automatic and certain is it? What you have transferred to her is hers and not divisible but what remains in your account might be, without a fixed formula. If a marriage ends with the woman being wealthier, I don't think the household wealth will be evenly distributed.

 

[inmyopinion]

Some want liquidity, not redeeming and put back in OA.

Private condos easily over 1 mil. It can wipe out the OA easily.

Some who bought much earlier - happy. Some who now plans to buy for investment - good luck also.

 

[d3n]

Put into cpf see money grow happily... but reality is are you able to use up the whole sum?

For me i am in retrenchment age, i rather save money in cash and do investment, use whatever in my OA to clear my hdb before i turn 55 then whatever balance then transfer to SA.

Hence even if my SA can go to 1million, when i retired , like this slowly withdraw till i die also cannot use finish. End up pass to my kid.

What for right?

www.dennislee.co HardwareZone Forums app

 

[lordofthering]

I got one friend at 35. he and his wife just topped up to 182k each.

so at 55, all $ will go into ERS? They want the $2000 (in today real terms) each so that they can at least have a comfortable retirement.

Will there be any money left at 55 after putting into ERS?

182k is the most one can top up? Nothing else right?