CPF SA

[BBCWatcher]

"It's for the same reason: OA is earning 2.5%, so you want to draw down OA first, before touching SA."
SA cannot use for HDB loan. As you said, you have to withdraw then pay as cash.

Yes! And SA is earning 4.0%, not 2.5%, and cash still works very, very well for all purposes, including housing. From age 55 onward SA is fully liquid.

Don't forget after 55, if still working, salary will still deposit into OA.

Yes, and if you're allowed (you are in this case), and if you want to tap CPF to pay for housing, tap OA first. But if you can choose to have a dollar in SA or a dollar in OA, you'd choose SA every time from age 55 onward, no question.

uncle, oredy say many times. my sa at least 100k till i die. no need grandma stories. i sure have bonus interest

And I never said otherwise. Neither did the CPF Board.

i oredy say it.

for me, i will receive bonus throughout my life. my payout will not sag, regardless what i have in my oa. i oredy say he is tokking rubbish.

No, the CPF Board is correct. The Basic Plan experiences a "sag" if you live long enough, when bonus interest specifically associated with RA partially unwinds. In your case you're still getting all bonus interest, but you're not getting it in CPF LIFE Basic Plan payouts at some point (not as much). The bonus interest contribution shifts to SA (and perhaps MA to some extent).

You still get all bonus interest, but at some point it's not via Basic Plan payouts, not fully. That's the point the CPF Board is making, and they're absolutely correct about that. It's the Basic Plan "burble," a quirky little aspect of the Basic Plan.

my sa will have more than 60k thoughout my life. this is not to mention the amount i have in my ma

Yes, that's fine.

It gets a little complicating as SA will start to earn extra interest when RA, including balances used to pay for the annuity premium under CPF LIFE drops below 60k.

Right, exactly.

 

[henrylbh]

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.

If you referring to yield in RA under basic plan, it can't be forever 3+% till 90.

My understanding -

Under basic plan, assuming 20% (of $90,500 = $18,100) of RA goes to CPFL, the remaining 80% (of $90,500 = $74,400) will continue to earn interest at 4% plus extra interest. The interest earned in RA using whether $90,500 or $74,400 as denominator will still give a yield of more than 4%, though not 'forever'.

For standard or escalating plan, there is no yield to speak of as the whole amount of RA is wiped out into CPFL.

Actually for basic plan, there is also no yield to speak of when the actual amount of payout and bequest at each point of time is not clear or fixed, though range is given.

 

[henrylbh]

Who can spot all the seriously incorrect/wrong CPF Facts/Rules above?

I don't really bother to read long text with superfluous words like cockle in my heart

 

[henrylbh]

At age 55, is it better to have more money in SA rather than OA after setting aside the FRS?

OA if you need to pay HDB loan or other purpose.
SA earn 4% so compounding effect is great.

What a question? He can answer that himself.

Even if need to pay HDB loan, SA can be withdrawn to pay the loan, while earning 4%, no need to have OA. And it would be better to use cash to service loan, if cash is idle as money in SA can be withdrawn anytime when needed.

 

[Kaypohji]

Hmm so u mean the interest is being put in sa account instead of being paid out monthly as payout? We just have to withdraw from sa every month by ourselves will do.
Possible ?

Amount not affected so long more than 60k in total right

No, the CPF Board is correct. The Basic Plan experiences a "sag" if you live long enough, when bonus interest specifically associated with RA partially unwinds. In your case you're still getting all bonus interest, but you're not getting it in CPF LIFE Basic Plan payouts at some point (not as much). The bonus interest contribution shifts to SA (and perhaps MA to some extent).

You still get all bonus interest, but at some point it's not via Basic Plan payouts, not fully. That's the point the CPF Board is making, and they're absolutely correct about that. It's the Basic Plan "burble," a quirky little aspect of the Basic Plan.


Yes, that's fine.


Right, exactly.

 

[BBCWatcher]

Hmm so u mean the interest is being put in sa account instead of being paid out monthly as payout? We just have to withdraw from sa every month by ourselves will do.
Possible ?

Sure, that's possible. However, there's no requirement to withdraw bonus interest or to make any other withdrawals from your Special Account. That's up to you.

Amount not affected so long more than 60k in total right

At a certain point, if you live long enough, the CPF LIFE Basic Plan monthly payout amount will slightly decline due to some bonus interest roll off. That's just how the Basic Plan is designed. I call it a "burble."

However, yes, it's still possible to earn maximum bonus interest for the rest of your life. You just need to keep enough funds in place in CPF for the rest of your life to make that happen. That's what Dork32 plans to do. As one example, $60,000 or more kept in your Special Account will certainly get the job done.

 

[Tiger9119]

However, yes, it's still possible to earn maximum bonus interest for the rest of your life. You just need to keep enough funds in place in CPF for the rest of your life to make that happen. That's what Dork32 plans to do. As one example, $60,000 or more kept in your Special Account will certainly get the job done.

Bonus interest also apply to MA? Just cannot withdraw.

 

[BBCWatcher]

Bonus interest also apply to MA?

Yes. In fact, since the 2020 Basic Healthcare Sum is $60,000, it's now mathematically possible to earn maximum bonus interest with only MediSave dollars, with zero dollars in your other CPF accounts. This development might be slightly important to self-employed workers in Singapore in particular.

Just cannot withdraw.

Subject to various caps, you can spend MediSave dollars any time you wish, at any age, on qualified medical expenses and hospitalization insurance premiums in Singapore, yours and/or for qualified family members.

 

[henrylbh]

Hmm so u mean the interest is being put in sa account instead of being paid out monthly as payout? We just have to withdraw from sa every month by ourselves will do.
Possible ?

Amount not affected so long more than 60k in total right

Interest is credited to the accounts according to the default sequence. But, if your referring to the extra interest, it is paid out together with your monthly life payout (under basic plan).

As long as combined balances is 60k and above, you will receive the extra interest according to the default sequence subject to what you have in OA, example if OA is 30k and others total 30k, you will not receive the full extra interest.

 

[henrylbh]

i oredy say it.

for me, i will receive bonus throughout my life. my payout will not sag, regardless what i have in my oa. i oredy say he is tokking rubbish.

my sa will have more than 60k thoughout my life. this is not to mention the amount i have in my ma

No, the CPF Board is correct. The Basic Plan experiences a "sag" if you live long enough, when bonus interest specifically associated with RA partially unwinds. In your case you're still getting all bonus interest, but you're not getting it in CPF LIFE Basic Plan payouts at some point (not as much). The bonus interest contribution shifts to SA (and perhaps MA to some extent).

dork32 is not entirely wrong. The 'sag' is based on certain assumption.

The extra interest earned on your RA, SA and MA balances will go to the respective accounts, while the extra interest earned on your OA balances will go into your RA to enhance your retirement savings.

If you have joined the CPF LIFE scheme, the extra interest earned will be paid into your RA or the CPF LIFE Annuity Fund.

 

[dork32]

If you referring to yield in RA under basic plan, it can't be forever 3+% till 90.

My understanding -

Under basic plan, assuming 20% (of $90,500 = $18,100) of RA goes to CPFL, the remaining 80% (of $90,500 = $74,400) will continue to earn interest at 4% plus extra interest. The interest earned in RA using whether $90,500 or $74,400 as denominator will still give a yield of more than 4%, though not 'forever'.

For standard or escalating plan, there is no yield to speak of as the whole amount of RA is wiped out into CPFL.

Actually for basic plan, there is also no yield to speak of when the actual amount of payout and bequest at each point of time is not clear or fixed, though range is given.

the yield is above 4% for some time, below 4 at other times. average out it is 3.xx %.

yes the payout and bequest may fluctuate. it is because interest rate fluctuates. but interest rate is stable for many many years already. it is quite safe a 4% interest and hence the payout is fixed

 

[BBCWatcher]

dork32 is not entirely wrong. The 'sag' is based on certain assumption.

The amount of the sag (burble) is in question, but there’s always some. At some point at least a portion of the $900 maximum bonus interest stops feeding into the Basic Plan payouts.

To repeat, it’s still possible to earn maximum bonus interest for the rest of your life. This is just about how the Basic Plan payouts behave, not other parts of CPF.

 

[Kaypohji]

So second paragraph superseded the first right? Meaning all extra interest earned will be paid in RA or cpf life annuity fund. Meaning as long as other accounts combined 60k then it is still alright.

MA 60k extra interest will still go into RA and paid out from cpf life payout right?

The extra interest earned on your RA, SA and MA balances will go to the respective accounts, while the extra interest earned on your OA balances will go into your RA to enhance your retirement savings.

If you have joined the CPF LIFE scheme, the extra interest earned will be paid into your RA or the CPF LIFE Annuity Fund.

 

[henrylbh]

So second paragraph superseded the first right? Meaning all extra interest earned will be paid in RA or cpf life annuity fund. Meaning as long as other accounts combined 60k then it is still alright.

MA 60k extra interest will still go into RA and paid out from cpf life payout right?

Depends on whose view you taking Let's hear what others say.

 

[dork32]

So second paragraph superseded the first right? Meaning all extra interest earned will be paid in RA or cpf life annuity fund. Meaning as long as other accounts combined 60k then it is still alright.

MA 60k extra interest will still go into RA and paid out from cpf life payout right?

so i correct lah. if all extra interest goes into ra then my payout will not decrease till i die lah.

it is quite a common sense in my post. it is clear that garmen prefer to have large amount in the ra to sa after 55. this is why there are so many measures that prevents your sa from rising quick. this measures include
1. forcing you to withdraw from your sa first.
2. reducing the amount going into the sa for vc and employment contribution.
3. no more direct top up of sa.

 

[Andrew833]

What a question? He can answer that himself.

Even if need to pay HDB loan, SA can be withdrawn to pay the loan, while earning 4%, no need to have OA. And it would be better to use cash to service loan, if cash is idle as money in SA can be withdrawn anytime when needed.

My thinking is first 20k in OA earn 3.5% and I will still be working, more money into OA. Not going to touch SA for 10 years after 55.

"And it would be better to use cash to service loan"
I understand this point of view.

 

[Andrew833]

so i correct lah. if all extra interest goes into ra then my payout will not decrease till i die lah.

it is quite a common sense in my post. it is clear that garmen prefer to have large amount in the ra to sa after 55. this is why there are so many measures that prevents your sa from rising quick. this measures include
1. forcing you to withdraw from your sa first.
2. reducing the amount going into the sa for vc and employment contribution.
3. no more direct top up of sa.

You guys mean after 55, amount exceed 60K in MA goes into RA?

 

[Tiger9119]

You guys mean after 55, amount exceed 60K in MA goes into RA?

BHS will continue to increase every year until you reach 65.

 

[dork32]

You guys mean after 55, amount exceed 60K in MA goes into RA?

no. i mean all bonus interest go into ra after 55.

 

[dork32]

My thinking is first 20k in OA earn 3.5% and I will still be working, more money into OA. Not going to touch SA for 10 years after 55.

"And it would be better to use cash to service loan"
I understand this point of view.

this is wrong. it is not 3.5% interest. it is your oa earns 2.5%. your extra 1% goes into (the sa if you are below 55) and (ra if you are above 55). in fact, this 1% does not have to earned in through you oa, it can be done with your sa and/or ma.

who are the people use cash to service home loan:
1. too much cash
2. cash not earning 2.5%