CPF Top-up for parents in 60s

[Investnewbie82]

Actually this is a topic I'm interested in. My mum is 64 this year and have like 10k in her CPF. We used to think that if we top up say even 100k, it won't hit basic retirement sum, so cannot withdraw.. No point at all..

So I see that's not the case.. So with her case, 64 yrs old and 10 k in CPF.. Say we top up 30k, what's the amount she can get per month starting when? Or does it depend on which plan she chooses.. What are the options?

 

[BBCWatcher]

So with her case, 64 yrs old and 10 k in CPF.. Say we top up 30k, what's the amount she can get per month starting when? Or does it depend on which plan she chooses.. What are the options?

It does depend on which plan she chooses. If she hasn’t already chosen something, she has four plan choices:

• the old Retirement Sum Scheme (since she was born before 1958)
• CPF LIFE Basic Plan
• CPF LIFE Escalating Plan
• CPF LIFE Standard Plan

She can start payouts at age 70, age 65, or anywhere in between. The longer she waits to start payouts, the bigger each monthly payout.

You can use the CPF LIFE calculator for the last three options. Assuming she was born on September 1, 1955 (or thereabouts), and if she has $40,000 in her Retirement Account today, on her 65th birthday she could start monthly payouts and get an estimated minimum of $194/month (2019 dollars, increasing 2%/year — that’s the Escalating Plan). If she waits until age 70 then that estimated minimum increases to $272/month (2024 dollars, also increasing 2%/year). It’s possible she might receive an additional top-up if she joins CPF LIFE (ask CPF), but I’m not including that amount in this estimate.

The Retirement Sum Scheme pays a monthly benefit for a fixed period of time (which varies; CPF can advise), so there’s a risk she would outlive the RSS payouts.

The CPF LIFE Standard and Basic Plan payouts are flat, so as consumer prices increase in Singapore the real purchasing power of her CPF LIFE monthly payout will keep falling. The Escalating Plan’s 2%/year increase is designed to combat that problem, or another possible way to combat that problem is to keep plowing more money into her Retirement Account if the family is having problems affording more.

Note that you and other qualified family members can get tax relief of up to $7,000 each per year for topping up her RA. So the smart strategy is to huddle together and make sure everybody who can get tax relief (who is qualified and who has taxable income) is getting tax relief in order to pull together that $30,000 or more. Even if that means somebody is passing $3,000 (or whatever) to somebody else to make the top up, that’s fine. You’re allowed to do that sort of thing within your family, and many families do. If I didn’t explain that part well enough, please let me know.

 

[henrylbh]

Actually this is a topic I'm interested in. My mum is 64 this year and have like 10k in her CPF. We used to think that if we top up say even 100k, it won't hit basic retirement sum, so cannot withdraw.. No point at all..

So I see that's not the case.. So with her case, 64 yrs old and 10 k in CPF.. Say we top up 30k, what's the amount she can get per month starting when? Or does it depend on which plan she chooses.. What are the options?

Firstly, by default, she is under RSS and can opt for CPF Life. Whether RSS or CPF Life, the earliest she can commence payout is age 65.

If she remains under RSS, I guess her payout would be about $248 that would deplete her RA by about age 85. But with the extra interest, her payout would stretch to about age 93 plus. If there is a min amount of payout of say $300 under RSS, then the payout would deplete the RA faster - by age 84 plus with the extra interest.

If she chooses CPF Life, according to the CPF Life Payout Calculator, she would be getting about -

SP - $234 - $247
BP - $233 - $245
EP - $185 - $197 (increasing by 2% each year).

The decision is hers

Better get more exact payout under under each option from CPF before deciding as the higher range of payout under SP and BP appears tempting.

 

[rerear]

Is the FRS for the upcoming taxation year at 181,000 or 176,000?

Seems also able to top up siblings' CPF rather than parents' CPF, is that also capped at a max by the yearly FRS minus their current SA, any SA investments, and does it need to also minus income like rental?

 

[mummynew]

Is it still possible to top up for someone who is 66 years old? Thinking of if can, I top up for my sister instead of giving her cash (she doesnt need cash now but I foresee she may need more for monthly expenses when at 70+).

 

[yoongf]

U can top up anyone’s acct up to ERS.
But take note.. the monthly payout is somewhere between 7-9% per annum. That’s not much.

The 5-6% interest is attractive but its ultimately a FISO.

Is it still possible to top up for someone who is 66 years old? Thinking of if can, I top up for my sister instead of giving her cash (she doesnt need cash now but I foresee she may need more for monthly expenses when at 70+).

 

[BBCWatcher]

Is the FRS for the upcoming taxation year at 181,000 or 176,000?

The Full Retirement Sum for 2019 is already $176,000.

Seems also able to top up siblings' CPF rather than parents' CPF, is that also capped at a max by the yearly FRS minus their current SA, any SA investments, and does it need to also minus income like rental?

CPF members who are age 55 and older have Retirement Accounts. You cannot top up their Special Accounts (not in directed fashion), but you can top up their Retirement Accounts up to the Enhanced Retirement Sum which is 50% higher than the Full Retirement Sum.

No, rental income is not a factor in determining how much Special Account or Retirement Account top up room is left.

Is it still possible to top up for someone who is 66 years old? Thinking of if can, I top up for my sister instead of giving her cash (she doesnt need cash now but I foresee she may need more for monthly expenses when at 70+).

Yes, of course, subject to limits. You have three and occasionally four top up options, and you can do them all if you wish:

1. You can top up her Retirement Account up to the Enhanced Retirement Sum. These dollars earn 4% interest plus any remaining bonus interest. They can be paid out as additional CPF LIFE (lifetime) or fixed term annuity amounts, as she prefers.

2. You can top up her MediSave Account, as long as the top up fits within both the CPF Annual Limit and Basic Healthcare Sum. These dollars earn 4% interest plus any remaining bonus interest.

3. You can top up “all three” of her CPF accounts: OA, SA, and MA. The allocations depend on her age and whether her MA has reached the BHS. This top up must fit within the CPF Annual Limit. These dollars earn a blended rate a little above 2.5%.

4. If she used OA for housing then she could repay that into her OA, up to the amount used plus accrued interest. She would have to fill out CPF Form HSD/VR (or any electronic equivalent), but you could hand her a crossed check made out to “CPF Board” to accompany that form. OA earns 2.5% interest.

 

[SBC]

Parents on old MSS scheme should top up to enjoy the drawn down.

 

[mummynew]

Thanks yoongf & BBCWatcher.

Any idea if I top up only the MA for my siblings without their knowing and in the event that the amount exceeds the maximum allowed in their MA, will the excess amount be automatically flowed to the SA / OA or the whole amount will be refunded?

Actually my issue is if I let them know I will be topping up, then some will ask me for cash instead (and I don't want to give cash because I know they cant handle cash). But if I were to top up and excess / full amount refunded, then the amount to be refunded likely to be in their name instead of to me and so not so ideal for my planning.

 

[BBCWatcher]

Any idea if I top up only the MA for my siblings without their knowing and in the event that the amount exceeds the maximum allowed in their MA, will the excess amount be automatically flowed to the SA / OA or the whole amount will be refunded?

First of all, it's quite rude to do that. In particular, one or more of your siblings may be eligible to top up his/her own MA with tax relief. If that's the case, then you're leaving free money on the table when you make the top up. You can insist on a gift of MA or nothing if you wish, but if there's tax relief at stake then it's best to collect that tax relief. "Show me your voluntary MA top up, and I'll reimburse you," basically.

Actually my issue is if I let them know I will be topping up, then some will ask me for cash instead (and I don't want to give cash because I know they cant handle cash).

Put your foot down, and let them keep the tax relief to spend (next year) on whatever. Everybody wins, especially them.

But if I were to top up and excess / full amount refunded, then the amount to be refunded likely to be in their name instead of to me and so not so ideal for my planning.

Probably in cash to them, without interest.

It's a little safer to do this in late (but not too late) December for somebody who receives variable pay and who might be threatening to hit the CPF Annual Limit. At that point there should be nearly complete information about whether the CPF Annual Limit will be hit and, if not, approximately how much room there is below the Annual Limit. However, waiting until December means lost interest for these several months until then.

 

[badsector]

Thanks yoongf & BBCWatcher.

Any idea if I top up only the MA for my siblings without their knowing and in the event that the amount exceeds the maximum allowed in their MA, will the excess amount be automatically flowed to the SA / OA or the whole amount will be refunded?

Actually my issue is if I let them know I will be topping up, then some will ask me for cash instead (and I don't want to give cash because I know they cant handle cash). But if I were to top up and excess / full amount refunded, then the amount to be refunded likely to be in their name instead of to me and so not so ideal for my planning.

how do u even have the option to top up cash to ur sibling's MA?

 

[maple96]

Thanks yoongf & BBCWatcher.

Any idea if I top up only the MA for my siblings without their knowing and in the event that the amount exceeds the maximum allowed in their MA, will the excess amount be automatically flowed to the SA / OA or the whole amount will be refunded?

Actually my issue is if I let them know I will be topping up, then some will ask me for cash instead (and I don't want to give cash because I know they cant handle cash). But if I were to top up and excess / full amount refunded, then the amount to be refunded likely to be in their name instead of to me and so not so ideal for my planning.

U mentioned earlier your sister is 66? If she is not working and you topup her MA, any excess above BHS will flow into her OA automatically upon topup (if you know how to hack, see subsequent posts on this)

If she is working, then excess for refund will be determined by the annual limit of $37k plus at end of Dec.

Alternative is consider topping up RA but first u need to confirm what scheme she is on, ie RSS or CPF Life, if CPF Life which plan. If RSS, good to topup. If CPF Life, need to think further after more info.

 

[mummynew]

how do u even have the option to top up cash to ur sibling's MA?

You mean this is not possible? In my simple mind, I thought I can just top up MA for them just like the way I did for my kids when they were young.

@the rest who kindly advised:

I have a few siblings and each having different financial situations. All except one drawing max $3000/month salary in non-white collar jobs (so most will not enter the tax issues).

I am particularly concerned about an elder brother who started only working about 10 years ago and now drawing about $2000+ per month as a driver while in the past mostly dependent on his wife who worked as a waitress financially (from here, I can foresee his CPF is far away from the max).

I have the intention to help them financially in their old ages but I am very careful about giving them hard cash (that I predict may be spent off easily). A sum of about $200,000+ has been set up for them that I put into ETFs and to liquidate as and when each requires in their old ages.

This thread set me thinking seriously of splitting the sum to top up their CPF instead as an option of long term help, esp if I am no longer around. ALL of them can't plan their finances well (due more to limited earnings and so minimal savings) and so I have to 'plot' in the dark.

Silly it may have seemed, but that was the promise I gave to my mum to take care of her children to the best that I can when she was at her death bed.

 

[maple96]

You mean this is not possible? In my simple mind, I thought I can just top up MA for them just like the way I did for my kids when they were young.

@the rest who kindly advised:

I have a few siblings and each having different financial situations. All except one drawing max $3000/month salary in non-white collar jobs (so most will not enter the tax issues).

I am particularly concerned about an elder brother who started only working about 10 years ago and now drawing about $2000+ per month as a driver while in the past mostly dependent on his wife who worked as a waitress financially (from here, I can foresee his CPF is far away from the max).

I have the intention to help them financially in their old ages but I am very careful about giving them hard cash (that I predict may be spent off easily). A sum of about $200,000+ has been set up for them that I put into ETFs and to liquidate as and when each requires in their old ages.

This thread set me thinking seriously of splitting the sum to top up their CPF instead as an option of long term help, esp if I am no longer around. ALL of them can't plan their finances well (due more to limited earnings and so minimal savings) and so I have to 'plot' in the dark.

Silly it may have seemed, but that was the promise I gave to my mum to take care of her children to the best that I can when she was at her death bed.

Simple I will do is if all above 55 and already on RSS, topup RA. Check which scheme they are on, if not CPF Life, just topup RA.

 

[BBCWatcher]

You mean this is not possible? In my simple mind, I thought I can just top up MA for them just like the way I did for my kids when they were young.

If you have the NRIC number, you can. Use CPF Form VC/1 or use an AXS kiosk.

....With the tax-related caveat I mentioned, if relevant to your recipient(s). IRAS requires that the MediSave contribution be made self-to-self. In other words, the top up cash must come from your recipient's own hands, however briefly, in order to qualify for tax relief. Reimbursement works well for these purposes. Example: You and your sibling go together to the AXS kiosk, your recipient makes a MediSave Account top up (using his/her own debit card), your sibling shows you the receipt, and you write him/her a check for that amount. Or perform a FAST transfer from your mobile phone so the funds are instantly replenished. You can repeat this exercise if they don't have much cash in their accounts, subject to debit card/AXS daily transfer limits (that can be adjusted).

If there's no tax relief at stake, then you can just do it directly. But it seems there's some tax relief at stake.

@the rest who kindly advised:
I have a few siblings and each having different financial situations. All except one drawing max $3000/month salary in non-white collar jobs (so most will not enter the tax issues).

Well, $3,000/month is $36,000/year (or $38,000/year if there's a 13th month), and there might be some tax relief at stake. There shouldn't be serious CPF Annual Limit concerns, though.

Let's suppose you are going to top up this individual's MA by $5,000. Even if that person is in the 2% tax bracket (on this full amount), that's still $100 in free money from the government. Why not?

You also have $7,000 per year of tax relief available to yourself when you top up a sibling's Special Account (under age 55) or Retirement Account (age 55 or older), assuming your sibling has not reached the Full Retirement Sum. That can be $7,000 to one sibling, or $7,000 split between two or more siblings. You can make that top up directly and should since you're in a higher tax bracket. AND you can gift them $7,000 that they then top up, for their own tax relief (if/as applicable). Use the "trip to the AXS kiosk" method if you wish.

I have the intention to help them financially in their old ages but I am very careful about giving them hard cash (that I predict may be spent off easily). A sum of about $200,000+ has been set up for them that I put into ETFs and to liquidate as and when each requires in their old ages.

That's great, but I like CPF too. It's prudent to combine methods here.

This thread set me thinking seriously of splitting the sum to top up their CPF instead as an option of long term help, esp if I am no longer around. ALL of them can't plan their finances well (due more to limited earnings and so minimal savings) and so I have to 'plot' in the dark.

Bingo, agreed. It's bedrock, foundational stuff and well worth doing. The value is excellent in these broad age ranges.

Silly it may have seemed, but that was the promise I gave to my mum to take care of her children to the best that I can when she was at her death bed.

Not silly.

 

[drkcynic]

Am I right to say that if I top up my parents' (above 70 yo) RA account up to 7k, I get tax relief and they get their cash via drawdown (if they want due to their age)?

Sorry pretty new to this.

 

[BBCWatcher]

Am I right to say that if I top up my parents' (above 70 yo) RA account up to 7k, I get tax relief and they get their cash via drawdown (if they want due to their age)?

Yes, you can get up to $7,000 (total) tax relief per year when you top up a qualified parent's (or parents') Retirement Account(s). That's in addition to the up to $7,000 of tax relief you can get when you top up your own Special Account. (I'm assuming you're under age 55.) For example, you could deposit $4,000 into your mother's RA, $3,000 into your father's, and $7,000 into your own Special Account. All $14,000 qualifies for tax relief, assuming everyone is below the Full Retirement Sum (and you haven't busted the annual tax relief maximum of $80,000).

It's generally better to top up the RA of the parent with a lower balance first, especially if that parent can get some bonus interest with your top up. And you can top up more, or top up above the FRS (up to the Enhanced Retirement Sum), or both -- just not with tax relief. The interest is still very good, though.

Your parent can choose to have his/her top up paid out as either more monthly CPF LIFE payout for life (if on CPF LIFE -- I like it) or monthly as a finite term annuity.

 

[henrylbh]

Am I right to say that if I top up my parents' (above 70 yo) RA account up to 7k, I get tax relief and they get their cash via drawdown (if they want due to their age)?

Sorry pretty new to this.

Whether you can claim tax relief depends on top ups to parents' RA depends on whether they have met the min sum when they were 55.

The top ups will be paid to them in monthly instalments according to their age and the balance in RA after topping up.

 

[henrylbh]

U mentioned earlier your sister is 66? If she is not working and you topup her MA, any excess above BHS will flow into her OA automatically upon topup.

If she is working, then excess for refund will be determined by the annual limit of $37k plus at end of Dec.

Alternative is consider topping up RA but first u need to confirm what scheme she is on, ie RSS or CPF Life, if CPF Life which plan. If RSS, good to topup. If CPF Life, need to think further after more info.

Any excess of voluntary top up directed to MA will be refunded to her. It will not flow to any other accounts.

 

[henrylbh]

Is it still possible to top up for someone who is 66 years old? Thinking of if can, I top up for my sister instead of giving her cash (she doesnt need cash now but I foresee she may need more for monthly expenses when at 70+).

For someone who is 66yo, you can make contribution (within the various limits) to -

a. all 3 accounts, namely OA, SA and MA
b. only to MA
c. only to RA

Except for MA, the recipient is at liberty to withdraw what's in her accounts or to opt for immediate monthly payout accordingly if she knows she has money in CPF, especially if she is not financially disciplined. Even if she do not turn to CPF for money, automatic payout will start at age 70.