Exemption from CPF Retirement Sum Scheme

[Clopixol]

From CPF webpage, "Can i be exempted from setting aside a retirement sum?"



https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-scheme
You may apply for an exemption from setting aside a retirement sum if you:*

*****have your own life annuity bought using cash. The monthly payout you receive from the life annuity should be equal to or above the payout benchmark applicable to you based on when you are born; or
*****are a pensioner receiving a monthly pension equal to or above the payout benchmark applicable to you based on when you are born.

To apply for an exemption, you can submit a copy of the annuity policy or a recent letter issued by the Pension Office of the Accountant-General’s Department, certifying the monthly pension amount. You may wish to visit the Pensioner’s Portal for more information.

Anyone know which life annuity plan (bought using cash) satisfy CPF requirement for private annuity???

 

[lifeafter41]

Currently none.......
Or maybe the gurus here can shed some light.......lol

 

[Value.Matrix]

From CPF webpage, "Can i be exempted from setting aside a retirement sum?"



https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-scheme
You may apply for an exemption from setting aside a retirement sum if you:*

*****have your own life annuity bought using cash. The monthly payout you receive from the life annuity should be equal to or above the payout benchmark applicable to you based on when you are born; or
*****are a pensioner receiving a monthly pension equal to or above the payout benchmark applicable to you based on when you are born.

To apply for an exemption, you can submit a copy of the annuity policy or a recent letter issued by the Pension Office of the Accountant-General’s Department, certifying the monthly pension amount. You may wish to visit the Pensioner’s Portal for more information.

Anyone know which life annuity plan (bought using cash) satisfy CPF requirement for private annuity???

Currently. 0 that satisfy the criteria. Its easier to give up your citizenship if you are rich enough. And get a PR.

 

[havetheveryfun]

any life annuity plan that can pay out more than the CPF, will cost a LOT more than what the CPF currently is.

 

[boredboiboi]

https://www.cpf.gov.sg/members/faq/...group=CPF LIFE&ajfaqid=2186365&folderid=11656

 

[BBCWatcher]

Any/all Singapore dollar life annuities that have a sufficiently large monthly payout and that are sold by reputable life insurers can, in principle, qualify as substitutes for CPF LIFE.

Please note that "life (to age 99)" or "life (to age 100)" are not life annuities. A couple insurers in Singapore try to play games with term annuities and call them "life" annuities, but that doesn't work for these purposes. They must be genuine life annuities.

Also, you are not allowed to opt out of CPF LIFE but keep your funds in your CPF Retirement Account. Opting out means opting out, fully. You must withdraw your funds from your CPF Retirement Account. That means no more 4+% interest on your money if you opt out.

There is no life annuity sold in Singapore that comes anywhere near the value of CPF LIFE, so financially this is a losing proposition. You would never rationally do this, with the possible exception of having an alternative life annuity "fall into your lap" -- a traditional pension that you earned as part of employment, for example. But even then you'd probably not opt out of CPF LIFE given that the net effective yield on your Singapore dollars in CPF LIFE is still incredibly excellent.

 

[maple96]

There were some deep discussions on this topic some mths ago in another CPF related thread, with "Q&A" with CPFB, thanks to kelhot2001, u can read it here

https://forums.hardwarezone.com.sg/120331342-post393.html

If there is any annuity which can be used get exemption from CPF Life, I would likely be the first to jump in but not to get exemption from CPF Life.

If u read the CPF Life papers, u will know none of the pte insurers "dare to compete" with CPFB. U might find pte annuity which can supplement/complement but not totally replace CPF Life. ie U might be able to get partial exemption but what is the point/benefit, what is your objective?

If the insurer cannot outlive u, u have to pay back to CPF with interest.

Just some points to note.

 

[maple96]

Currently. 0 that satisfy the criteria. Its easier to give up your citizenship if you are rich enough. And get a PR.

Are u sure u can still get PR

 

[Value.Matrix]

Are u sure u can still get PR

Just highlighting. If its difficult to get PR, isnt it worse to get an annuity which can replace cpf life.

 

[maple96]

Currently. 0 that satisfy the criteria. Its easier to give up your citizenship if you are rich enough. And get a PR.

Just highlighting. If its difficult to get PR, isnt it worse to get an annuity which can replace cpf life.

If u give up citizenship, is it possible to get PR? U cannot return with CPF anymore?

U cannot get an pte annuity to totally replace CPF Life as of now, but if u can find one to get partial exemption, is possible. U are still a Singaporean. Even if u can find one to replace CPF Life, u still can return with CPF Life.

U cannot compare the 2 alternatives, objective is different, route is different.

 

[BBCWatcher]

Its easier to give up your citizenship if you are rich enough. And get a PR.

Are u sure u can still get PR

Just highlighting. If its difficult to get PR, isnt it worse to get an annuity which can replace cpf life.

If u give up citizenship, is it possible to get PR? U cannot return with CPF anymore?

I don't understand where you two are going with this. A former Singaporean citizen (or PR) who (miraculously -- this is very rare) acquires or re-acquires Singapore Permanent Residence is required to repay withdrawn CPF funds, including all accrued interest. There's no opt-out maneuver available here. Moreover, the costs for PRs to live/retire in Singapore are considerably higher than they are for citizens. And what's the other citizenship that this hypothetical PR has? It's very unlikely to be as attractive, and presumably it won't be free. Adult Singaporean citizens only (legally) possess one citizenship: Singaporean.(*)

(*) Footnote: OK, there are a couple weird, exotic exceptions that presumably the Singaporean government quietly, reluctantly tolerates. For example, a citizen of Mexico who was born in Mexico has no way to terminate his/her Mexican citizenship. There is simply no such mechanism under Mexican law; it's a legal impossibility. Such an individual can operate solely as a Singaporean citizen, and presumably Singapore's government would insist on that. Notable example: this individual must not renew his/her Mexican passport. But de jure such an individual is still legally, inalterably a Mexican citizen. Mexico isn't the only one, but it's the one I happen to have heard about. There are approximately 16 other countries (estimates vary) that make it legally impossible to terminate their citizenships, and most of them are in the Americas.

U cannot get an pte annuity to totally replace CPF Life as of now....

Sure you can. All Singapore dollar genuine life annuities that provide a sufficiently large monthly payout and that are sold/paid by a reputable life insurer in Singapore qualify for these purposes. It just doesn't make financial sense to do this, that's all. (Unless you have such a life annuity "by accident" -- a traditional company pension, for example -- have a serious cash flow problem, and have no lower cost source of funds to tap than your CPF Retirement Account. This particular combination of factors is quite rare.)

Even if u can find one to replace CPF Life, u still can return with CPF Life.

Yes, you can "re-enter" CPF LIFE but only strictly before your 80th birthday and only if you're a citizen or PR at the time you re-enter. Moreover, you won't have the benefit of attractive interest on your CPF Retirement Account. To be crystal clear, opting out of CPF LIFE means opting out of your CPF Retirement Account, too. It's an all-or-nothing deal -- you cannot "cherry pick." Opting out and withdrawing your funds from your CPF Retirement Account are part of the same, single opt out process.

 

[maple96]

I don't understand where you two are going with this. A former Singaporean citizen (or PR) who (miraculously -- this is very rare) acquires or re-acquires Singapore Permanent Residence is required to repay withdrawn CPF funds, including all accrued interest. There's no opt-out maneuver available here. Moreover, the costs for PRs to live/retire in Singapore are considerably higher than they are for citizens. And what's the other citizenship that this hypothetical PR has? It's very unlikely to be as attractive, and presumably it won't be free. Adult Singaporean citizens only (legally) possess one citizenship: Singaporean.(*)

(*) Footnote: OK, there are a couple weird, exotic exceptions that presumably the Singaporean government quietly, reluctantly tolerates. For example, a citizen of Mexico who was born in Mexico has no way to terminate his/her Mexican citizenship. There is simply no such mechanism under Mexican law; it's a legal impossibility. Such an individual can operate solely as a Singaporean citizen, and presumably Singapore's government would insist on that. Notable example: this individual must not renew his/her Mexican passport. But de jure such an individual is still legally, inalterably a Mexican citizen. Mexico isn't the only one, but it's the one I happen to have heard about. There are approximately 16 other countries (estimates vary) that make it legally impossible to terminate their citizenships, and most of them are in the Americas.

If u dun understand, obviously u got bad comprehension/interpretation skills!

If u give up citizenship and still think u want to get PR, u must be crazy to get back CPF Life again

Sure you can. All Singapore dollar genuine life annuities that provide a sufficiently large monthly payout and that are sold/paid by a reputable life insurer in Singapore qualify for these purposes. It just doesn't make financial sense to do this, that's all. (Unless you have such a life annuity "by accident" -- a traditional company pension, for example -- have a serious cash flow problem, and have no lower cost source of funds to tap than your CPF Retirement Account. This particular combination of factors is quite rare.)

Which life annuities can replace, pls support with facts! If u cannot, it is as good as none! Again your bad comprehension/interpretation skills fail u! Dun just talk theory!

Yes, you can "re-enter" CPF LIFE but only strictly before your 80th birthday and only if you're a citizen or PR at the time you re-enter. Moreover, you won't have the benefit of attractive interest on your CPF Retirement Account. To be crystal clear, opting out of CPF LIFE means opting out of your CPF Retirement Account, too. It's an all-or-nothing deal -- you cannot "cherry pick." Opting out and withdrawing your funds from your CPF Retirement Account are part of the same, single opt out process.

U dun understand what I am talking, again bad comprehension/interpretation skills! There is no age restriction for u to return to CPF Life if your pte annuity fail for whatever reasons. It is mandatory!

(fyi, I write with multiple implications and meanings, if u cannot read (comprehend/interprete) what I write, u fail. If after so long, u still dun understand my style of writing, u fail)

 

[maple96]

Moreover, the costs for PRs to live/retire in Singapore are considerably higher than they are for citizens.

Since u feel it is more expensive for u, a PR to live/retire in Singapore, so u are likely to defer choosing your ERS-CPF LIfe Escalating Plan to 70, give up PR at 69.5 and return to your own country or somewhere else cheaper?

 

[BBCWatcher]

If u give up citizenship and still think u want to get PR, u must be crazy to get back CPF Life again

I don't follow. Singapore PRs have exactly the same longevity insurance-related obligations that citizens have. However, they don't get the financial help many citizens get to meet those obligations.

Which life annuities can replace, pls support with facts!

Refer to CPF Form RSS/8. The CPF Board accepts either life pensions or life annuities as viable substitutes, in principle. It's up to the CPF Board to decide whether a particular payer is sufficiently reputable and reliable, but if it's SDIC covered that'd certainly be fine.

The CPF Board also publishes additional details here. In particular, the CPFB requires that the life insurer add a particular endorsement to the policy.

There is no age restriction for u to return to CPF Life if your pte annuity fail for whatever reasons. It is mandatory!

That's not clear, actually. In particular, Singapore life insurers are all covered under SDIC, including their life annuities. They don't "fail" as such for individual policyholders, because the government itself is insuring them, up to SDIC coverage limits.

In the event a life insurer fails, the SDIC arranges either assumption of the life annuity (and other) policies by another carrier, or the SDIC pays out the residual, subject to the coverage limit. In the latter case, it's likely that the SDIC would be obliged to honor the CPFB's policy endorsement language.

The endorsement language does NOT specify that the individual is placed onto CPF LIFE. It only specifies that the residual must be paid into the individual's CPF Retirement Account. A CPF Retirement Account and CPF LIFE are not quite the same thing. To my knowledge there's no published information about what the CPFB will do with respect to CPF LIFE participation in such an event (age 80 or over, life annuity failure or cessation, SDIC or other residual payout back into the Retirement Account). However, in my view it's likely that the CPF Board will stick to its published policy and will forbid an individual age 80 or older from joining CPF LIFE at least when the cessation of the life annuity is voluntary. The CPFB is unlikely to tolerate longevity risk game playing, which is too serious a risk in such circumstances.

 

[celtosaxon]

Looks like a foreign pension might qualify for said exemption. Maybe this could be an option for SC/SPR who either had lengthy stint abroad or becomes eligible through marriage to a foreign spouse. Even if one did, one would have to weigh the pros/cons of keeping CPF LIFE vs. cashing it out. This would also depend whether planning to retire in Singapore or abroad, since the tax treatment of CPF LIFE in the eventual country of residence may also be a factor.

 

[celtosaxon]

Also, you are not allowed to opt out of CPF LIFE but keep your funds in your CPF Retirement Account. Opting out means opting out, fully. You must withdraw your funds from your CPF Retirement Account. That means no more 4+% interest on your money if you opt out.

It seems like there is a chance my spouse could be eligible for opting out on the basis of spousal Social Security benefits.

When we reach full retirement age (67) our US tax situation could make CPF LIFE payments unfavorable (I believe each entire payment is considered ordinary income). In such a senario, it seems like we should not top up her RA to ERS until we are totally sure which way we can or should go. Would you agree?

I’m assuming SA can stay in tact and only RA must be liquidated if the exemption is approved. It still seems good to maximize SA since only interest earned would be US taxable.

 

[BBCWatcher]

It seems like there is a chance my spouse could be eligible for opting out on the basis of spousal Social Security benefits.

I think that’s rather unlikely actually, but you can check.

When we reach full retirement age (67) our US tax situation could make CPF LIFE payments unfavorable (I believe each entire payment is considered ordinary income).

In such a senario, it seems like we should not top up her RA to ERS until we are totally sure which way we can or should go. Would you agree?

You’ll have to clarify here, specifically:

1. She’s the only CPF member?
2. You file a separate U.S. tax return, and she doesn’t file any U.S. tax return (except non-resident alien perhaps)?
3. She will receive spousal Social Security benefits, not benefits based on her own earning history?

I’m assuming SA can stay in tact and only RA must be liquidated if the exemption is approved. It still seems good to maximize SA since only interest earned would be US taxable.

As background, there’s no indication that the CPF Board will accept a foreign social insurance benefit as a valid opt-out of CPF LIFE. The opt-out form suggests they won’t, but you can ask. Also, you have to be in receipt of the retirement income in order to opt out (which is also a full RA withdrawal — the two concepts are inseparable), and that’s not helpful because....

I was/am interested in how the current U.S. Social Security Windfall Elimination Provision works, so if that’s a factor, bad news: you have to make a full exit from CPF before its earliest payout eligibility age, which is age 65, in order to avoid the WEP. But you cannot actually do that with the possible exception of buying a Singapore dollar life annuity that starts payouts at age 64 1/2 (for example) then opting out of CPF LIFE with a full RA withdrawal. And even that is questionable since it’s not technically before age 65 but rather at age 65, I believe. And it’s expensive.

By the way, you and she may make very different decisions about when to start receiving Social Security benefits. You’re still allowed to do that even if spousal benefits are in the mix, specifically that you file for benefits then immediately suspend, and she starts receiving her spousal benefits.

If you and/or she have payments into another country’s (or countries’) social insurance system(s), don’t forget to collect those benefits, either outright/directly or with the benefit of treaty totalization. Yes, you’re allowed to collect from multiple systems. Of course there may be U.S. tax to pay, but it’s still net income.

 

[henrylbh]

As long as she is still a Singaporean, I doubt very much that spousal SS can be compared to CPFL as the former can be withdrawn on certain conditions unlike CPFL.

 

[henrylbh]

I think that’s rather unlikely actually, but you can check.


You’ll have to clarify here, specifically:

1. She’s the only CPF member?
2. You file a separate U.S. tax return, and she doesn’t file any U.S. tax return (except non-resident alien perhaps)?
3. She will receive spousal Social Security benefits, not benefits based on her own earning history?


As background, there’s no indication that the CPF Board will accept a foreign social insurance benefit as a valid opt-out of CPF LIFE. The opt-out form suggests they won’t, but you can ask. Also, you have to be in receipt of the retirement income in order to opt out (which is also a full RA withdrawal — the two concepts are inseparable), and that’s not helpful because....

I was/am interested in how the current U.S. Social Security Windfall Elimination Provision works, so if that’s a factor, bad news: you have to make a full exit from CPF before its earliest payout eligibility age, which is age 65, in order to avoid the WEP. But you cannot actually do that with the possible exception of buying a Singapore dollar life annuity that starts payouts at age 64 1/2 (for example) then opting out of CPF LIFE with a full RA withdrawal. And even that is questionable since it’s not technically before age 65 but rather at age 65, I believe. And it’s expensive.

By the way, you and she may make very different decisions about when to start receiving Social Security benefits. You’re still allowed to do that even if spousal benefits are in the mix, specifically that you file for benefits then immediately suspend, and she starts receiving her spousal benefits.

If you and/or she have payments into another country’s (or countries’) social insurance system(s), don’t forget to collect those benefits, either outright/directly or with the benefit of treaty totalization. Yes, you’re allowed to collect from multiple systems. Of course there may be U.S. tax to pay, but it’s still net income.

Say so much also no use when the said person is a SC/PRC. SS is gone if the person decides to come back for good?

 

[BBCWatcher]

As long as she is still a Singaporean, I doubt very much that spousal SS can be compared to CPFL as the former can be withdrawn on certain conditions unlike CPFL.

No, Henry, that's not correct. U.S. Social Security does not have any cash or surrender value. Also, legally owed U.S. Social Security/Medicare payroll tax contributions are strictly nonrefundable. Moreover, spousal benefits don't require any contributions into U.S. Social Security at all, except on the part of the "working" spouse.

If she qualifies for U.S. Social Security spousal benefits, she qualifies for life as long as she takes no voluntary action that would end her rights to those benefits, notably divorce and remarriage. (Divorce alone is not necessarily disqualifying.)

Say so much also no use when the said person is a SC/PRC. SS is gone if the person decides to come back for good?

No, not necessarily or even very often. U.S. Social Security benefits are always payable to U.S. citizens residing in Singapore and in the vast majority of other countries. U.S. Social Security benefits are often payable to other qualified individuals residing in Singapore (and most other places).

For example, let's suppose that Celtosaxon's wife is a Singaporean citizen resident in Singapore, that she lived in the United States for at least 5 years while married to Celtosaxon, that she does not qualify for U.S. Social Security benefits based on her own contribution history, and that Celtosaxon qualifies for U.S. Social Security benefits based on his/her own work history (non-trivial contributions within any 10 calendar years). (I add "her" since legal same sex marriages also qualify.) In this scenario, Celtosaxon's wife qualifies for U.S. Social Security spousal retirement benefits, and she can (and obviously should) collect those benefits as a resident of Singapore. She can start collecting those monthly benefits as early as age 62. (Exactly when it's best for her to start collecting depends on several factors.) If Celtosaxon should predecease his/her wife, then her spousal benefits end but she then picks up Celtosaxon's retirement benefit for the rest of her life, and Celtosaxon's estate receives a modest death benefit. In many cases these benefits survive divorce.

If Celtosaxon's wife happens to hold a citizenship that's on U.S. Social Security's "privileged" list, then it's even easier to meet the payment eligibility requirements as a resident of Singapore.

For more details, please refer to the U.S. Social Security publication Your Payments While You Are Outside the United States.