CPF SA

[BBCWatcher]

You understood correctly.

 

[shallow]

Wow okay, this is something I am not aware of.

1. Meaning based on what we have discussed so far, we should keep our OA to an bare sufficient amount of the 30k (and transfer to excess amount to SA for 4%) prior to key pickup.
> Is there anywhere I can read up more on the process of how and when the HDB loan kicks in during the HDB flat purchasing process?
> Based on the link here, I can only see that 10% downpayment will be charged during lease signing? Is there something that is off here? Saw that you mentioned on key pick up. (sorry I am still a noob on buying a flat....)

OR did I misread your line???
Meaning suppose for key pick up is on June 15, 2022.
> Couple would have settled the 30k payment (before hand)
> The remaining in the OA should be at about 20K (to prevent it being swept into leasehold equity)
Did I get your meaning correctly?

Yes you are absolutely right that down payment is usually paid during signing of lease (full 10%) but we are eligible for staggered down payment where we paid 5% during signing and remaining on key collection.

 

[henrylbh]

I also notice that Shallow and his wife are not currently earning maximum bonus interest unless they each have at least $20K in their respective MediSave Accounts.

They have 20k SA each. Likely they have more than 20k each in MA as the CPF allocation rate to MA is higher than SA,

 

[BBCWatcher]

They have 20k SA each. Likely they have more than 20k each in MA as the CPF allocation rate to MA is higher than SA,

There’s absolutely no guarantee of that. MA can be spent on qualified medical expenses (including CareShield Life and Integrated Shield base plan premiums) at any/every age, on yourself, each other, and/or other qualifying family members. MA balances could even be zero or near zero.

 

[henrylbh]

There’s absolutely no guarantee of that. MA can be spent on qualified medical expenses (including CareShield Life and Integrated Shield base plan premiums) at any/every age, on yourself, each other, and/or other qualifying family members. MA balances could even be zero or near zero.

You guess I guess

 

[ExEngineer]

A couple of questions on MA (sorry hijacking this SA thread, at least in name)!

1. Can PRs open CPF MA accounts for their dependent children (assuming the kids are also PRs)? I know newborn citizens have their MA created upon birth, but I couldn’t find anything stating yes or no for PR.

2. Also on MA for children...for people who have maxed out their own CPF contributions (hitting the 37k annual limit, plus already maximising self/spouse top-ups etc), it seems to me the depositing into children’s/dependent’s MA might be a better choice than depositing into their SA, for the reason that MA is at least somewhat liquid/useable for medical expenses regardless of age, and pays the same high interest as SA (up to 5%), without having the downside that SA is completely illiquid at least to age 55+. Does that make sense or have I missed something?

 

[BBCWatcher]

A couple of questions on MA (sorry hijacking this SA thread, at least in name)!
1. Can PRs open CPF MA accounts for their dependent children (assuming the kids are also PRs)? I know newborn citizens have their MA created upon birth, but I couldn’t find anything stating yes or no for PR.

Yes. You have the following options for a PR child:

1. You can make a Voluntary Contribution to the child's MediSave Account. This cash deposit must fit within both the CPF Annual Limit (2021: $37,740) and the Basic Healthcare Sum (2021: $63,000).

2. You can make a cash top up to the child's Special Account. This cash top up must fit within the Full Retirement Sum (2021: $186,000).

3. You can make an "all three account" Voluntary Contribution. This cash deposit must fit within the CPF Annual Limit.

4. Any CPF member can nominate a PR or Singaporean citizen child as his/her beneficiary under the CPF Enhanced Nomination Scheme. When that CPF member passes, his/her CPF account balances are then transferred to the child's CPF accounts. The BHS and FRS limits still apply, but the CPF Annual Limit does not.

Within applicable limits, these four options are not mutually exclusive.

2. Also on MA for children...for people who have maxed out their own CPF contributions (hitting the 37k annual limit, plus already maximising self/spouse top-ups etc), it seems to me the depositing into children’s/dependent’s MA might be a better choice than depositing into their SA, for the reason that MA is at least somewhat liquid/useable for medical expenses regardless of age, and pays the same high interest as SA (up to 5%), without having the downside that SA is completely illiquid at least to age 55+. Does that make sense or have I missed something?

There is some logic in that, and it's a much discussed topic in this forum. My current point of view is that, while a 5% interest rate is very tempting (4% plus bonus interest), I still think it's better to dollar cost average into low cost, long-term investments for a child that are then liquid for a range of purposes such as university tuition, buying a first home, starting a business, or even the child's own retirement.

However, there's one notable exception I can think of: a Singaporean citizen or PR child who likely will not be a Singaporean citizen or PR child when he/she becomes a young adult. Let's suppose for example a married couple happily living in France gives birth to a child, and the child is born both a Singaporean and Belgian citizen. (Dad is Singaporean and Mom is Belgian, let's suppose.) The family has no plans to move to Singapore, and under current Singapore nationality law the child must "choose sides" shortly after age 20. In this case the parents may wish to inject lots of money into CPF MA and SA, and even perhaps OA (from the child's teenage years for example), because these funds will become fully liquid at circa age 20.5 if/when the child chooses to be a Belgian citizen and continue living in France. Or at least that's a "reasonable bet." A 4+% interest rate on Singapore dollars over this period of time seems like a good deal, although bear in mind the interest will presumably be taxable in France every year (as earned) in this example.

Another possible complication is that certain countries have benefit programs that effectively heavily penalize children with substantial assets. U.S. university student financial need calculations work this way, for example. You might be able to make an argument that MA and SA are illiquid and thus shouldn't be counted (or shouldn't be counted as much as liquid assets), but who knows whether that'll work.

CPF assets are very well protected against creditors and adverse court judgments, and certain parents may feel that adding funds to a child's CPF accounts is useful/helpful primarily for asset protection reasons.

In some countries there are tax implications if you give a child "too much," including CPF deposits, but Singapore is not one of those countries.

 

[Okenba]

A couple of questions on MA (sorry hijacking this SA thread, at least in name)!

2. Also on MA for children...for people who have maxed out their own CPF contributions (hitting the 37k annual limit, plus already maximising self/spouse top-ups etc), it seems to me the depositing into children’s/dependent’s MA might be a better choice than depositing into their SA, for the reason that MA is at least somewhat liquid/useable for medical expenses regardless of age, and pays the same high interest as SA (up to 5%), without having the downside that SA is completely illiquid at least to age 55+. Does that make sense or have I missed something?

You don't get Tax Relief for topping up your kid's MA.
You do get tax relief for topping up your own MA (if below annual limit of 37k) or
if you RSTU into your SA if SA below FRS (up to 7k)

 

[dappermen]

use it on Endwus
ref here pls - https://forums.hardwarezone.com.sg/...ting-using-cpf.6151140/page-23#post-133860810


sign 1st 4 the offfer fast by Singpass!!!!sign 1st & deposit later on PH or Weekends when u r freer! now able to invest w just 1K! (Usu u need 10k leh)
"create an Endowus account during the Qualifying Promotion Period (see below), AND (ii) the Referee has invested a minimum of $1,000 (“the Qualifying Investment”) using that newly created account before 23:59 15 June 2021."

Dont ever miss deadline again!

 

[ExEngineer]

You don't get Tax Relief for topping up your kid's MA.
You do get tax relief for topping up your own MA (if below annual limit of 37k) or
if you RSTU into your SA if SA below FRS (up to 7k)

Thanks, am aware of these. None are really options for me (I’m already maximising, up to the limits), hence considering the option of depositing into child’s MA.

 

[Okenba]

Thanks, am aware of these. None are really options for me (I’m already maximising, up to the limits), hence considering the option of depositing into child’s MA.

If you're looking for gain, diy investing, or even robo-investing if you know what you're buying, can potentially get more than CPF. Of course, the guaranteed 5% of the first 60k is pretty good, but you lose liquidity over it.

If you're thinking of getting something out of your money, I'd rather keep it liquid.
If you consider it your contribution towards your children's retirement, then I think its fine. It won't help them towards early retirement, but it will compound such that they should have less worries about post-55 (or whatever withdrawal age is for their generation...)

 

[ExEngineer]

Yes. You have the following options for a PR child:



Within applicable limits, these four options are not mutually exclusive.

There is some logic in that, and it's a much discussed topic in this forum. My current point of view is that, while a 5% interest rate is very tempting (4% plus bonus interest), I still think it's better to dollar cost average into low cost, long-term investments for a child that are then liquid for a range of purposes such as university tuition, buying a first home, starting a business, or even the child's own retirement.

Yes. You have the following options for a PR child:

1. You can make a Voluntary Contribution to the child's MediSave Account. This cash deposit must fit within both the CPF Annual Limit (2021: $37,740) and the Basic Healthcare Sum (2021: $63,000).

2. You can make a cash top up to the child's Special Account. This cash top up must fit within the Full Retirement Sum (2021: $186,000).

3. You can make an "all three account" Voluntary Contribution. This cash deposit must fit within the CPF Annual Limit.

4. Any CPF member can nominate a PR or Singaporean citizen child as his/her beneficiary under the CPF Enhanced Nomination Scheme. When that CPF member passes, his/her CPF account balances are then transferred to the child's CPF accounts. The BHS and FRS limits still apply, but the CPF Annual Limit does not.

Within applicable limits, these four options are not mutually exclusive.

Perhaps the question wasn’t clear - if the child is a PR (anywhere from 0 to 10 years old, say), how do the parents get a CPF account created for them in the first place? Is there an application that needs to be made?

On the CPF website it appeared to describe that citizen children have their CPF accounts automatically created at birth - but I didn’t see anything mentioning PR children.

There is some logic in that, and it's a much discussed topic in this forum. My current point of view is that, while a 5% interest rate is very tempting (4% plus bonus interest), I still think it's better to dollar cost average into low cost, long-term investments for a child that are then liquid for a range of purposes such as university tuition, buying a first home, starting a business, or even the child's own retirement.


Another possible complication is that certain countries have benefit programs that effectively heavily penalize children with substantial assets. U.S. university student financial need calculations work this way, for example. You might be able to make an argument that MA and SA are illiquid and thus shouldn't be counted (or shouldn't be counted as much as liquid assets), but who knows whether that'll work.

CPF assets are very well protected against creditors and adverse court judgments, and certain parents may feel that adding funds to a child's CPF accounts is useful/helpful primarily for asset protection reasons.

In some countries there are tax implications if you give a child "too much," including CPF deposits, but Singapore is not one of those countries.

Understand, & generally I have the same feeling about the illiquidity/inflexibility of putting money into kids’ CPF. For that reason the idea of SA deposits doesn’t make much sense to me....locking up funds that my kids might only be able to access several decades from now!
For MA though, it occured to me that modest amounts, say between 15-30k if deposited when they are children - which through interest alone would double to hit the 60k BHS maybe when they get to their 20s, would not really be locked up, in the sense that we can be reasonably sure that over the course of 10-20 years post-depositing, there are almost sure to be *some* medical costs (actual expenses, or insurance premiums, even medical costs for myself as their elderly, retired , dependent parent !)), for which their Medisave will be accessible and useful; how much exactly is difficult to predict but if it’s available to dip into for covering those costs if/when they emerge, then that also means those costs don’t need to be paid out of cash which can then be invested separately. And in the meantime so long as those costs don’t happen, the MA pot chugs along at 5% practically risk free.

 

[ExEngineer]

If you're looking for gain, diy investing, or even robo-investing if you know what you're buying, can potentially get more than CPF. Of course, the guaranteed 5% of the first 60k is pretty good, but you lose liquidity over it.

If you're thinking of getting something out of your money, I'd rather keep it liquid.
If you consider it your contribution towards your children's retirement, then I think its fine. It won't help them towards early retirement, but it will compound such that they should have less worries about post-55 (or whatever withdrawal age is for their generation...)

I’m thinking here of a middle-ground...ie for modest amount of money put into the kids’ MA, chances are some portion of it will end up being liquid/accessible, at least for specific kinds of medical expenses (its fair to assume most people will end up in hospital for one thing or another every few years). So in that case why not let the money compound at 5% while waiting for those occasions when it’s needed.

For the majority of my investible wealth, it’s spread across a variety of relatively liquid buckets (with exception of my own CPF as well, but I’m a good 40-50 years closer to retirement then my kids).

 

[BBCWatcher]

Perhaps the question wasn’t clear - if the child is a PR (anywhere from 0 to 10 years old, say), how do the parents get a CPF account created for them in the first place? Is there an application that needs to be made?

There's no application needed. Just direct the funds to the child's NRIC number through any regular CPF channel.

Understand, & generally I have the same feeling about the illiquidity/inflexibility of putting money into kids’ CPF. For that reason the idea of SA deposits doesn’t make much sense to me....locking up funds that my kids might only be able to access several decades from now!

That's overwrought. Let's suppose for example you shove the Full Retirement Sum into your child's SA (2021: $183,000) in one go, and you also spend the next two years (this year and next) boosting your child's MA to the Basic Healthcare Sum (2021: $63,000, 2022: TBD). (You need at least two years to get MA boosted this high because of the CPF Annual Limit constraint.) Assuming no withdrawals in the interim (or that withdrawals are replenished), this means your child will start accumulating a few OA dollars (the interest from MA credited on December 31, 2022) and that your child will accumulate OA dollars faster once he/she begins his/her working career in Singapore. That's because your child is at least much, much closer to having the MA portion of compulsory contributions spill over into OA. OA dollars can be used for housing and education in Singapore. In other words, boosting MA and SA (both) to the moon improves relatively near future CPF liquidity to some extent.

Let's suppose your child has a starting salary of $39,000/year ($3,000/month plus 13th month). When SA is at or above the FRS and MA is pegged at the BHS, the MA portion would be 8% (employer+employee) = S$3,120/year of additional OA inflow, which is ~34.8% higher OA inflow. With accelerated OA accumulation the child's housing aspirations are that much more obtainable that much earlier.

Also, with fatter MA and SA balances, once your child acquires his/her first dependent there's a reduced need for life insurance, with associated premium savings.

For MA though, it occured to me that modest amounts, say between 15-30k if deposited when they are children - which through interest alone would double to hit the 60k BHS maybe when they get to their 20s, would not really be locked up, in the sense that we can be reasonably sure that over the course of 10-20 years post-depositing, there are almost sure to be *some* medical costs (actual expenses, or insurance premiums, even medical costs for myself as their elderly, retired , dependent parent !)), for which their Medisave will be accessible and useful; how much exactly is difficult to predict but if it’s available to dip into for covering those costs if/when they emerge, then that also means those costs don’t need to be paid out of cash which can then be invested separately. And in the meantime so long as those costs don’t happen, the MA pot chugs along at 5% practically risk free.

True, but parents can already use their MA balances for their children's qualified medical expenses and often squeeze in Voluntary Contributions (within the CPF Annual Limit) with tax relief. Also bear in mind that adding funds to a child's CPF accounts reduces his/her own future CPF tax relief opportunities.

I don't think it's a crazy idea to add funds to a child's CPF account(s), but I think there are usually better options.

 

[RedsYWNA]

There's no application needed. Just direct the funds to the child's NRIC number through any regular CPF channel.

That's overwrought. Let's suppose for example you shove the Full Retirement Sum into your child's SA (2021: $183,000) in one go, and you also spend the next two years (this year and next) boosting your child's MA to the Basic Healthcare Sum (2021: $63,000, 2022: TBD). (You need at least two years to get MA boosted this high because of the CPF Annual Limit constraint.) Assuming no withdrawals in the interim (or that withdrawals are replenished), this means your child will start accumulating a few OA dollars (the interest from MA credited on December 31, 2022) and that your child will accumulate OA dollars faster once he/she begins his/her working career in Singapore. That's because your child is at least much, much closer to having the MA portion of compulsory contributions spill over into OA. OA dollars can be used for housing and education in Singapore. In other words, boosting MA and SA (both) to the moon improves relatively near future CPF liquidity to some extent.

Let's suppose your child has a starting salary of $39,000/year ($3,000/month plus 13th month). When SA is at or above the FRS and MA is pegged at the BHS, the MA portion would be 8% (employer+employee) = S$3,120/year of additional OA inflow, which is ~34.8% higher OA inflow. With accelerated OA accumulation the child's housing aspirations are that much more obtainable that much earlier.

Also, with fatter MA and SA balances, once your child acquires his/her first dependent there's a reduced need for life insurance, with associated premium savings.

True, but parents can already use their MA balances for their children's qualified medical expenses and often squeeze in Voluntary Contributions (within the CPF Annual Limit) with tax relief. Also bear in mind that adding funds to a child's CPF accounts reduces his/her own future CPF tax relief opportunities.

I don't think it's a crazy idea to add funds to a child's CPF account(s), but I think there are usually better options.

This is excellent info for people who dont know what to do with their spare cash. Many thanks for sharing!

 

[BBCWatcher]

The $3,120/year of additional OA inflow in the example I gave is oversimplified and does not account for the “weird” behaviors when MA is at or near the Basic Healthcare Sum. However, the key point is that there would likely be some additional compulsory contributions that end up in OA instead of MA in this hypothetical scenario.

Of course the CPF Board can change the rules at any time, but that’s always true and not only for CPF.

 

[ExEngineer]

That's overwrought. Let's suppose for example you shove the Full Retirement Sum into your child's SA (2021: $183,000) in one go, and you also spend the next two years (this year and next) boosting your child's MA to the Basic Healthcare Sum (2021: $63,000, 2022: TBD). (You need at least two years to get MA boosted this high because of the CPF Annual Limit constraint.) Assuming no withdrawals in the interim (or that withdrawals are replenished), this means your child will start accumulating a few OA dollars (the interest from MA credited on December 31, 2022) and that your child will accumulate OA dollars faster once he/she begins his/her working career in Singapore. That's because your child is at least much, much closer to having the MA portion of compulsory contributions spill over into OA. OA dollars can be used for housing and education in Singapore. In other words, boosting MA and SA (both) to the moon improves relatively near future CPF liquidity to some extent

I don't think it's a crazy idea to add funds to a child's CPF account(s), but I think there are usually better options.

I agree with all of this for the most part.

The only element that I quibble with a little - perhaps just a nuance - is the relative probabilities of anyone (ie either child or parent-as-dependent) being able to tap into the child’s MA vs OA (certainly SA is locked up).

For MA, I see it as a practical certainty that some Medisave-eligible expenses will come along (frequency & magnitude uncertain, but over 10-20 years cumulatively a meaningful amount say greater than 10k but probably not 100k).

While for OA (spilled over once SA maxed) the liquidity pathway is strictly conditional on the person being either interested in purchasing residential property in Singapore, or doing a “traditional “ tertiary education course (and within that, strictly in local Singapore institutions). While neither of these is highly unlikely - indeed for many people these may seem like “sure things” - at least for my own kids even with those “events” potentially being just 15-20 years away, at this stage I’d say there’s perhaps an 50/50 chance those choices are eventually irrelevant to them even if they do live & work in Singapore longterm. In that latter scenario then indeed the nicely-boosted-by-parents SA/OA truly does end up being locked up for decades (compounding nicely, but otherwise not doing much good to anyone until said kids themselves are retiring ...while booster-parents will be either in their graves or on the verge!)

 

[Value.Matrix]

Just to keep clear, the only reason why i say to shield OA is basically to have access to invest your OA in a globally diversified fund through endowus or other place, hence why you should shield OA.

I see no point putting more than 10% of cpf to pay for housing when you can invest spare monies in OA at a higher growth rate.

 

[dork32]

There is some logic in that, and it's a much discussed topic in this forum. My current point of view is that, while a 5% interest rate is very tempting (4% plus bonus interest), I still think it's better to dollar cost average into low cost, long-term investments for a child that are then liquid for a range of purposes such as university tuition, buying a first home, starting a business, or even the child's own retirement.

the few times that i agree with you. i do not believe topping up my kids sa unless i am filthy rich.

lets say you are 35, and your kid is a new born. you will only see the top up money when your kid is 55. you took a whole eternity to reach 35. you have to wait another 55 years to see the money again. how old will you be then?

bbc talks about university. i can tell you that there are a lot of expenses before your kids get to uni.
eg you want to buy the best milk powder for your kid. you know how much milk poweder cost these days
you want to send your kid to the best childcare/kindergarten so that your kid can be ahead of the peers. do you know how much that cost.
you want to give your kids the best tuition so that they can go to the best schools. you know how much that cost.
you want your kid to learn ballet violin, piano, fencing and golf. you know how much that cost.
you have to spend a lot more before your kid can get to uni. after that it is buy car, kow gal, buy condo, raise kids....
it is after all this that your kid will retire. after you set aside your own retirement, your kids expenses, how much have to got left for the CPF sa?

 

[dgeralds]

Hi All

Im fast approaching 55 on 10 july. I have created poems account and tested out buying Nikko AM shenton short term fund fd (SGD). I have the following today:
OA 272K
SA 276k

Please help to confirm the following actions / timeline that i am going to take are correct:
1. 1 Jul
- do shielding for 236K in SA
- SA 40K
- OA 272K

2. 10 Jul - 55 years old
- RA will be created auto by CPF board
- RA 186k (FRS) - 40K from SA and 146K from OA - auto done by cpf board
- SA 0K
- OA 126K

3. 13 Jul
- Transfer 93K from OA to RA via the Retirement Sum Topping-Up Scheme (RSTU).
- RA 279K
- SA 0K
- OA 33K

4. 15 Jul
- deshield SA
- SA 236K
- OA 33K
- RA 279K

Also how to make the balance OA 33K (and whatever cash i have) to go into SA?

Thank you.

Hi all. Refer to my above quoted plan. I have extra $100K cash which I do not need for the time being. Can I use this $100K to do voluntary refund HDB loan? Any benefits or should I change my above plan and deposit $93K cask into RA instead of doing RSTU in step 3 above. Thank you.