CPF SA

[BBCWatcher]

if you do that then the oa is trapped behind the sa. most people that can afford such topups will not want to withdraw the sa. so in effect, it is money is trapped. and if it is trapped, it is no different from ra. i might as well go for ra because interest rate is higher

I believe you described the possibility of keeping OA funds in place for mortgage servicing purposes. I can imagine certain scenarios when that approach would make some sense.

 

[ocs_woodlands]

got a question.

scenario:
Assume that by the time i am 55, the BRS is 115k.
Prior to that I raise a SA shield.
I pledge my property and 115k gets swept into RA.
After that my funds come back to SA.

upon reaching 64.5 years old, I raise the SA shield again and also move my OA out, leaving behind 20k in OA and 40k in SA. After I cross 65 yo, I move the money back into OA and SA.

MY question is, after this 2nd shield is put down, will CPF sweep money from my SA or OA at 65yo day into the RA to make up the FRS?

 

[Kaypohji]

Thought they said there is no second sweep although one forumer said has?

So it’s confirmed got second sweep

got a question.

scenario:
Assume that by the time i am 55, the BRS is 115k.
Prior to that I raise a SA shield.
I pledge my property and 115k gets swept into RA.
After that my funds come back to SA.

upon reaching 64.5 years old, I raise the SA shield again and also move my OA out, leaving behind 20k in OA and 40k in SA. After I cross 65 yo, I move the money back into OA and SA.

MY question is, after this 2nd shield is put down, will CPF sweep money from my SA or OA at 65yo day into the RA to make up the FRS?

 

[Gitaro]

got a question.

scenario:
Assume that by the time i am 55, the BRS is 115k.
Prior to that I raise a SA shield.
I pledge my property and 115k gets swept into RA.
After that my funds come back to SA.

upon reaching 64.5 years old, I raise the SA shield again and also move my OA out, leaving behind 20k in OA and 40k in SA. After I cross 65 yo, I move the money back into OA and SA.

MY question is, after this 2nd shield is put down, will CPF sweep money from my SA or OA at 65yo day into the RA to make up the FRS?

CPF won't touch your SA post-55 after settling your BRS, so long as you do not sell your pledged property.

 

[Andrew833]

got a question.

scenario:
Assume that by the time i am 55, the BRS is 115k.
Prior to that I raise a SA shield.
I pledge my property and 115k gets swept into RA.
After that my funds come back to SA.

upon reaching 64.5 years old, I raise the SA shield again and also move my OA out, leaving behind 20k in OA and 40k in SA. After I cross 65 yo, I move the money back into OA and SA.

MY question is, after this 2nd shield is put down, will CPF sweep money from my SA or OA at 65yo day into the RA to make up the FRS?

You don't need to shield 2nd time, CPF will send you a letter, just opt out will do.

 

[Andrew833]

Thought they said there is no second sweep although one forumer said has?

So it’s confirmed got second sweep

CPF will send you a letter, option to FRS or remain BRS.
They just scare that later you old age, no money, they need to feed you.

 

[ocs_woodlands]

ok thanks for all the answers to my question.

My basic attitude is that I like cpf up to age 55 and don't like CPFL (due to no interest from age 65 onwards).

 

[dork32]

I believe you described the possibility of keeping OA funds in place for mortgage servicing purposes. I can imagine certain scenarios when that approach would make some sense.

yes, with property loan, i am able to draw down for my oa.

yes it does make sense to puff up the oa to pay the property loan. but why do i have wait till 55 to do it? you can do it anytime, any day. i do it a few times already and i am not 55 yet.

but if you are talking about pure cash top up with the hundreds of thousand in SA, i prefer to ers to oa.

 

[dork32]

My basic attitude is that I like cpf up to age 55 and don't like CPFL (due to no interest from age 65 onwards).

there is no right or wrong in terms of liking or disliking cpf life.

but since you dislike it, it is a good idea that you go brs so that as little as possible is transfered to cpf life.

 

[ocs_woodlands]

there is no right or wrong in terms of liking or disliking cpf life.

but since you dislike it, it is a good idea that you go brs so that as little as possible is transfered to cpf life.

still quite many years for me before I hit the chequered flag of age 55.

I will definitely choose Basic payout plan. But I am toggling between ERS or BRS.

The thing is, if I choose BRS, I can leave a lot of money in my SA that will continue to get me 4% yield till the day I die or it is exhausted (whichever is earlier).

if i put ERS into RA, it can't earn me interest after 65. the actual yield will depend on how long I actually live..

Gotta watch my mom for clue on my own longevity...... my dad is gone but thats due to accident...

 

[a4973]

still quite many years for me before I hit the chequered flag of age 55.

I will definitely choose Basic payout plan. But I am toggling between ERS or BRS.

The thing is, if I choose BRS, I can leave a lot of money in my SA that will continue to get me 4% yield till the day I die or it is exhausted (whichever is earlier).

if i put ERS into RA, it can't earn me interest after 65. the actual yield will depend on how long I actually live..

Gotta watch my mom for clue on my own longevity...... my dad is gone but thats due to accident...

hello, i do understand your view with regards to CPFL Basic Plan but may i know why the consideration between ERS or BRS ? and why totally no consideration for FRS?
thanks

 

[dork32]

still quite many years for me before I hit the chequered flag of age 55.

I will definitely choose Basic payout plan. But I am toggling between ERS or BRS.

The thing is, if I choose BRS, I can leave a lot of money in my SA that will continue to get me 4% yield till the day I die or it is exhausted (whichever is earlier).

if i put ERS into RA, it can't earn me interest after 65. the actual yield will depend on how long I actually live..

Gotta watch my mom for clue on my own longevity...... my dad is gone but thats due to accident...

wat you are considering is correct.

like i said, i will also choose either brs or ers.

but you got some of your facts a bit wrong.

first mistake is ers into ra do earn interest after 65. eg you have 100k in your ra. 80k is earning full interest of 4%. the other 20k is not earning.

second mistake is with basic, the yield is more or less a constant. the reason is you are still earning a 4% interest. it will rise as you survive beyond 90.

if you choose basic, the yield is forever 3+% (close to 4%) for age up to 90. beyond that it rises slowly to above 4%. the fluctuation is small.

if you standard or escalating, the yield fluctuates wildly. it goes down from 3+% to 2.5% and then increase to 5+%if you start you calculation from 55. f you start your calculation from 65, then it fluctuates from 0 to 5+%. so you are right about the yield fluctuating and dependent on how long you live.

The way you talk, you are a risk averse person. you decision would be to choose the plan that has the least fluctuations or risk. so basic is the correct choice.

you are much richer than me. i will not have to depend on the cpf payout for survival. you definitely do not need it. You taught me this: we should be looking at cpf life as part of our total assets that will be left for our kids. hence it may be a wise choice to choose ers if the guaranteed yield of 3++% is good enough for you.

again i have mentioned before there is no right or wrong answers, but you got two points wrong in the above post.

 

[dork32]

hello, i do understand your view with regards to CPFL Basic Plan but may i know why the consideration between ERS or BRS ? and why totally no consideration for FRS?
thanks

for a guy that likes cpf life, ers is the choice. (must have money to top up, and ocs has lots of it. he has enuf to top up his kids cpf.)

for a guy that hates cpf life, brs is the choice.

for a blur king, frs is the choice. you cannot lose too much, you cannot win too much as well.

 

[a4973]

wat you are considering is correct.

like i said, i will also choose either brs or ers.

but you got some of your facts a bit wrong.

first mistake is ers into ra do earn interest after 65. eg you have 100k in your ra. 80k is earning full interest of 4%. the other 20k is not earning.

second mistake is with basic, the yield is more or less a constant. the reason is you are still earning a 4% interest. it will rise as you survive beyond 90.

if you choose basic, the yield is forever 3+% (close to 4%) for age up to 90. beyond that it rises slowly to above 4%. the fluctuation is small.

if you standard or escalating, the yield fluctuates wildly. it goes down from 3+% to 2.5% and then increase to 5+%if you start you calculation from 55. if you live long enough. if you start your calculation from 65, then it fluctuates from 0 to 5+%. so you are right if about the yield fluctuating and dependent on how long you live.

The way you talk, you are a risk averse person. you decision would be to choose the plan that has the least fluctuations or risk. so basic is the correct choice.

you are much richer than me. i will not have to depend on the cpf payout for survival. you definitely do not need it. You taught me this: we should be looking at cpf life as part of our total assets that will be left for our kids. hence it may be a wise choice to choose ers if the guaranteed yield of 3++% is good enough for you.

again i have mentioned before there is no right or wrong answers, but you got two points wrong in the above post.

i am risk averse as well with a child and wife as dependents. so as of current version of CPF & CPFL , my profile should be choosing CPFL Basic plan & ERS level ?
thanks

 

[BBCWatcher]

if i put ERS into RA, it can't earn me interest after 65. the actual yield will depend on how long I actually live..

I think you're misunderstanding how Retirement Account top ups work. Let's assume you choose the CPF LIFE Basic Plan. (I'm not necessarily recommending you do that, but let's assume.) Here's how the CPF Board explains it:

Q. How does the CPF LIFE Basic Plan work?

A. CPF LIFE Basic Plan is a legacy plan carried over from the time CPF LIFE was first introduced in 2009. Unlike the CPF LIFE Standard Plan that gives higher and stable monthly payouts, the monthly payouts under the Basic Plan are lower and will get progressively lower when your combined CPF balances eventually fall below $60,000. This is because the extra interest is earned in your Retirement Account and paid as part of your monthy payouts, which will decline when balances fall as payouts are made.

Under the LIFE Basic Plan, about 10-20% of your Retirement Account (RA) savings will be deducted as CPF LIFE premium when you join CPF LIFE, which can be anytime from age 65 to age 70.

Your monthly payout will first be paid from your RA and is estimated to last until age 90. Thereafter, monthly payouts will be paid from your CPF LIFE premium. If your CPF LIFE premium is depleted, you will continue to receive monthly payouts for as long as you live from the interest that you and other members have accumulated.

OK, so let's assume the following:

1. You are celebrating your 55th birthday this year (2020).

2. Your Retirement Account is funded to the Full Retirement Sum.

3. You make a $90,500 cash top up within your birthday month, to boost your Retirement Account to the ERS. Thus the $90,500 is your principal in this analysis.

4. You then get 10 years of 4.0% interest on this top up. The accumulated interest boosts your top up to about $133,962.

5. You choose the CPF LIFE Basic Plan and start payouts at age 65. (You're allowed to start as late as age 70, but let's assume 65 here.)

6. The CPF Board subtracts a "worst case" maximum figure (20%) from your top up, or about $26,792 (probably too high, but let's assume 20%), and shifts it to the CPF Lifelong Income Fund, leaving $107,170 in your Retirement Account.

7. That $107,170's gradually dwindling residuals continue to earn 4.0% interest compounded annually. This amount supports a portion of your monthly CPF LIFE payout until about age 90.

8. You die in precisely the worst possible month from a net effective yield point of view, so you don't earn any interest on the 20% ($26,792). You/your nominee(s) only get principal return from that portion.

Got all that? OK, so if you make all those worst case assumptions, then it turns out you and your nominee(s) still earn about 3.2% net effective interest on your cash top up from the FRS to the ERS, not counting possible reinvestment. That's pretty attractive, of course.

 

[Andrew833]

i am risk averse as well with a child and wife as dependents. so as of current version of CPF & CPFL , my profile should be choosing CPFL Basic plan & ERS level ?
thanks

Firstly CPFL is not liquidity, mean money inside is lock, payout to you monthly after 65.
Secondly, after 55, SA is liquidity, mean money inside can be withdraw or keep for interest. Freedom to decide what you want.

ERS is good for you if you are cash rich.
FRS is good for you if you are in the middle class. No cash rich, no money discipline.
BRS with property pledge, sold your property you need to top up to FRS.

You decide for yourself

 

[dork32]

i am risk averse as well with a child and wife as dependents. so as of current version of CPF & CPFL , my profile should be choosing CPFL Basic plan & ERS level ?
thanks

there is no current version cpf. it is just cpfl. so it is whether you like it or not.

my definition of risk averse is small fluctuation in the yield. some people's definition of risk averse is to have a lot of payout at a very old age if you can survive till then. if you agree to my definition, choose basic. if you agree to some people's definite choose standard or escalating.

you must understand the advantages and disadvantage of cpfl before you can say you like it or not.
Advantage is it pays till you die, regardless of your age.
Disadvantage is you will lose some/all of your interest, which results in a smaller bequest.

 

[dork32]

Got all that? OK, so if you make all those worst case assumptions, then it turns out you and your nominee(s) still earn about 3.2% net effective interest on your cash top up from the FRS to the ERS, not counting possible reinvestment. That's pretty attractive, of course.

if you understand the calculation of mirr, you will not be writing this para.

if xirr = 3.2%, mirr > 3.2% if reinvestment rate is > 3.2%. if reinvestment rate > 3.2%, why waste time on ers, go do your reinvestment.

so reinvestment rate will be less the 3.2%, it will make the mirr lower making it less attractive. and xirr assumes reinvestment rate = xirr.

 

[ocs_woodlands]

wat you are considering is correct.

like i said, i will also choose either brs or ers.

but you got some of your facts a bit wrong.

first mistake is ers into ra do earn interest after 65. eg you have 100k in your ra. 80k is earning full interest of 4%. the other 20k is not earning.

second mistake is with basic, the yield is more or less a constant. the reason is you are still earning a 4% interest. it will rise as you survive beyond 90.

if you choose basic, the yield is forever 3+% (close to 4%) for age up to 90. beyond that it rises slowly to above 4%. the fluctuation is small.

if you standard or escalating, the yield fluctuates wildly. it goes down from 3+% to 2.5% and then increase to 5+%if you start you calculation from 55. f you start your calculation from 65, then it fluctuates from 0 to 5+%. so you are right about the yield fluctuating and dependent on how long you live.

The way you talk, you are a risk averse person. you decision would be to choose the plan that has the least fluctuations or risk. so basic is the correct choice.

you are much richer than me. i will not have to depend on the cpf payout for survival. you definitely do not need it. You taught me this: we should be looking at cpf life as part of our total assets that will be left for our kids. hence it may be a wise choice to choose ers if the guaranteed yield of 3++% is good enough for you.

again i have mentioned before there is no right or wrong answers, but you got two points wrong in the above post.

ok thanks for pointing out my misunderstanding.

So, whether or not I get paid interest on my RA depends on whether I choose Basic or Standard payout plan (the money that get pooled will not have any interest accursed to me), am I correct?

If the above is correct, then basically whether I choose ERS or BRS, 80%-90% of my balance will still continue to earn 4% interest for me post 65? the other 10%-20% does not earn interest as it is pooled.

 

[dork32]

ok thanks for pointing out my misunderstanding.

So, whether or not I get paid interest on my RA depends on whether I choose Basic or Standard payout plan (the money that get pooled will not have any interest accursed to me), am I correct?

If the above is correct, then basically whether I choose ERS or BRS, 80%-90% of my balance will still continue to earn 4% interest for me post 65? the other 10%-20% does not earn interest as it is pooled.

you are right in both your question.

if this is the case, you may want to choose ers, if you consider the returns for cpf life good enuf.