CPF Top up questions

[highsulphur]

I would top up SA before MA.

MA harder to take out than SA.

Sent from Samsung SM-N960F using GAGT

MA can be used for medisave and pay for medishield life

 

[crimsontactics]

MA can be used for medisave and pay for medishield life

I see Bro highsulphur.

That's the dilemma of SA vs MA.

SA easier to take out next time while MA have instant use but cannot be taken out until one passed on...

Sent from Samsung SM-N960F using GAGT

 

[nautilus]

I see Bro highsulphur.

That's the dilemma of SA vs MA.

SA easier to take out next time while MA have instant use but cannot be taken out until one passed on...

Sent from Samsung SM-N960F using GAGT

But MA allows them to reach BHS faster which means eventually more MC overflow into SA.

 

[Value.Matrix]

But MA allows them to reach BHS faster which means eventually more MC overflow into SA.

On the same term, SA can grow beyond FRS earlier even though it doesnt flow to OA. Priorities...

 

[crimsontactics]

But MA allows them to reach BHS faster which means eventually more MC overflow into SA.

I see Bro nautilus.

Sent from Samsung SM-N960F using GAGT

 

[crimsontactics]

On the same term, SA can grow beyond FRS earlier even though it doesnt flow to OA. Priorities...

You have a point Bro Value.Matrix

Sent from Samsung SM-N960F using GAGT

 

[buaytuckchek]

But MA allows them to reach BHS faster which means eventually more MC overflow into SA.

The rate BHS increment is about 5%, which is higher than the 4% interest rate.

Will need to continue to add funds (employment or VC) to keep up with BHS.

 

[highsulphur]

The rate BHS increment is about 5%, which is higher than the 4% interest rate.

Will need to continue to add funds (employment or VC) to keep up with BHS.

Don't think the objective of topping up children's cpf SA or MA is to hit the FRS or BHS limit. Just planning ahead for them that's all

In a sense consider it to be their life insurance policy with guaranteed 4-5% returns

 

[maple96]

Don't think the objective of topping up children's cpf SA or MA is to hit the FRS or BHS limit. Just planning ahead for them that's all

In a sense consider it to be their life insurance policy with guaranteed 4-5% returns

To be more precise, it is like an endowment plan, single premium or regular savings plan. Not life insurance, as life insurance pays a much bigger sum assured upon death, tpd or CI

 

[BBCWatcher]

Not life insurance, as life insurance pays a much bigger sum assured upon death, tpd or CI

That's not a given, and I do think it's fair to treat CPF top ups in this situation at least as broadly similar to whole life insurance but with compulsory age 70+ phased, partial surrenders. (The MediSave portion is not subject to compulsory surrenders.)

First of all, Critical Illness (CI) insurance is not life insurance and is optional. Insurance companies and salespeople like to upsell CI with life insurance, but that doesn't make CI life insurance, and even the insurance industry doesn't describe it that way (because it isn't). ECI, DII, PA, and probably even home appliance insurance -- the insurance industry can be "creative" -- are also available upsells with life insurance in at least some cases, but they too are not life insurance. They're only bundled products, like a car dealer who sells you a car then offers you a folding bicycle for $500 to go along with it.

Second, in 2020, the BHS and FRS limits are $60,000 and $181,000 respectively. (The MediSave portion would take two installments in two separate years to fill due to the CPF Annual Limit.) Excluding interest that's a total of $241,000. You can certainly buy life insurance policies in Singapore with sums assured less than $241,000, even way less. For example, if you buy NTUC membership then you get $40,000 worth of term life insurance to age 65, less than 1/6th the 2020 SA+MA limit sans interest. As another example, the Dependants’ Protection Scheme is $46,000 of term life insurance coverage to age 60. Direct purchase life insurance policies are available starting at $100,000 of coverage.

Third, CPF does offer hardship withdrawals on medical grounds, and those hardship withdrawals are reasonably closely aligned to Total and Permanent Disability (TPD) insurance coverage terms.

To be clear, I'm not a big fan of CPF top ups for children in general. However, I don't think they're crazy or anything like that, and I can understand why some parents do it. For example, it makes a great deal of sense why parents living overseas who have a Singaporean child who also has some other citizenship would make CPF top ups for their child. Currently the government requires that child to "choose sides" as a young adult, which means that young adult has the option to receive all his/her CPF assets at age 21 or thereabouts. A 4+%/year interest earning vehicle with ~20 years to withdrawal is not a bad thing.

 

[maple96]

That's not a given, and I do think it's fair to treat CPF top ups in this situation at least as broadly similar to whole life insurance but with compulsory age 70+ phased, partial surrenders. (The MediSave portion is not subject to compulsory surrenders.)

First of all, Critical Illness (CI) insurance is not life insurance and is optional. Insurance companies and salespeople like to upsell CI with life insurance, but that doesn't make CI life insurance, and even the insurance industry doesn't describe it that way (because it isn't). ECI, DII, PA, and probably even home appliance insurance -- the insurance industry can be "creative" -- are also available upsells with life insurance in at least some cases, but they too are not life insurance. They're only bundled products, like a car dealer who sells you a car then offers you a folding bicycle for $500 to go along with it.

Second, in 2020, the BHS and FRS limits are $60,000 and $181,000 respectively. (The MediSave portion would take two installments in two separate years to fill due to the CPF Annual Limit.) Excluding interest that's a total of $241,000. You can certainly buy life insurance policies in Singapore with sums assured less than $241,000, even way less. For example, if you buy NTUC membership then you get $40,000 worth of term life insurance to age 65, less than 1/6th the 2020 SA+MA limit sans interest. As another example, the Dependants’ Protection Scheme is $46,000 of term life insurance coverage to age 60. Direct purchase life insurance policies are available starting at $100,000 of coverage.

Third, CPF does offer hardship withdrawals on medical grounds, and those hardship withdrawals are reasonably closely aligned to Total and Permanent Disability (TPD) insurance coverage terms.

To be clear, I'm not a big fan of CPF top ups for children in general. However, I don't think they're crazy or anything like that, and I can understand why some parents do it. For example, it makes a great deal of sense why parents living overseas who have a Singaporean child who also has some other citizenship would make CPF top ups for their child. Currently the government requires that child to "choose sides" as a young adult, which means that young adult has the option to receive all his/her CPF assets at age 21 or thereabouts. A 4+%/year interest earning vehicle with ~20 years to withdrawal is not a bad thing.

Ah, a troll is awake today.
)

Dun anyhow quote with chicken and duck debate

U should reply to highsulphur

Don't think the objective of topping up children's cpf SA or MA is to hit the FRS or BHS limit. Just planning ahead for them that's all

In a sense consider it to be their life insurance policy with guaranteed 4-5% returns

 

[babyrobo]

In the cpf statement after we have done RSTU, it shows 'part of your account have been reserved' how does this topup amount affect us? If the reserved amount is $7k and current FRS is $181k; for the transfer into RA at age 55-would the calculations be
1. $181k from SA + $7k = $188k into RA or
2. $181k ie the RSTU amount is already inclusive in the $181k

Thanks!

 

[crimsontactics]

In the cpf statement after we have done RSTU, it shows 'part of your account have been reserved' how does this topup amount affect us? If the reserved amount is $7k and current FRS is $181k; for the transfer into RA at age 55-would the calculations be
1. $181k from SA + $7k = $188k into RA or
2. $181k ie the RSTU amount is already inclusive in the $181k

Thanks!

Just $181k

Sent from Samsung SM-N960F using GAGT

 

[dao]

At or After 55 after your RA is created, u cannot do OA transfers to SA anymore, u also cannot do cash topup to SA anymore.

If u are employed, your Mandatory contributions will continue to be allocated to SA. U can also do voluntary contributions (VC-3A): allocations to OA/SA/MA based on your age band, cap at CPF annual limit less MC

U can still topup your RA to current ERS limit, eg if u hit 55 in 2019 with ERS at 264k but ERS for 2020 is 271.5K, u can still topup your RA to 271.5k. In short, CPFB compares ERS to ERS to determine how much u can topup, the exact formula as below:

“You selected: 55 and above
If your recipient is 55 or above, the amount that he/she can receive is the current Enhanced Retirement Sum (ERS) less Retirement Account (RA) savings. RA savings refer to the cash set aside in the RA (excluding amounts such as interest earned, any government grants received) plus amounts withdrawn such as monthly payouts and payout eligibility age lump sum withdrawal.”

U can easily obtain the amt u can topup via CPF website, just login to your account.

To be clear (and for the benefit of others), on your 55th birthday the CPF Board creates your Retirement Account and then attempts to fund it up to the Full Retirement Sum, drawing first from your Special Account and then, if necessary, from your Ordinary Account until either the current FRS is reached or those two accounts are drained. The CPF Board does not automatically fund your RA to the Enhanced Retirement Sum (ERS). Once your RA is created you can then add funds to push it up to the current Enhanced Retirement Sum (ERS) if you wish. You can use cash for the RA top up, or (while the "SA shield" is still in place) you can transfer OA dollars into your RA, or some of both.


You can confirm this information by logging onto your CPF account. I believe the "My Messages" section should tell you whether you can top up your Retirement Account and by how much. You ought to check this way because your RA balance alone doesn't tell you whether you have a top up opportunity or not.


Sadly, no. Once you celebrate your 55th birthday you no longer have any mechanism to push additional funds in a directed fashion into your Special Account. A relatively small percentage of any "all three" account contributions will flow into your Special Account, but that's it.


It's not quite the only choice. A small portion of your compulsory contributions from employment in Singapore also flows into your SA. Hypothetically you could take a second, third, or even fifth job -- that part is a choice -- and have compulsory contributions flowing from all your jobs into CPF, including a small portion from each compulsory contribution flow into your Special Account.

It'd be wonderful if the government allowed us to shove a bunch of cash into a 4% interest earning Special Account which is fully liquid from age 55+, but sadly the government isn't that generous.

thanks for all the reply

 

[henrylbh]

Today spent $82,504 net on DBS 4.7% ncps.

Net yield 4.557%.

Wish me luck and hope there is no call

 

[tangent314]

It will almost certainly be called, so I'm seeing a YTW of 2.2%...

 

[BBCWatcher]

It will almost certainly be called, so I'm seeing a YTW of 2.2%...

Yes, it's callable on November 22, 2020, just shy of 10 months from now.

It looks adequate to me if it otherwise lines up with your needs (~10 month hold), and it'll look slightly brilliant if there's a regional slump this year and you want to resell.

 

[lifeafter41]

Today spent $82,504 net on DBS 4.7% ncps.

Net yield 4.557%.

Wish me luck and hope there is no call

Tbh, I believe a redemption will be called.
No reason for DBS to pay 4.75% when rates are so low....lol

 

[tangent314]

Well this is a CPF thread, so you used CPFISOA or CPFISSA to purchase this?

 

[chrisloh65]

You use CPF money to buy?
CPF-OA only limited to 30% to buy equities right?

Today spent $82,504 net on DBS 4.7% ncps.

Net yield 4.557%.

Wish me luck and hope there is no call