Five changes to CPF rules

[andyhtc]

That’s been the case as long as it is below Annual Limit

Yes, I should have topped up long ago so that I can get more tax deductions while channelling some savings into my OA (my SA is above FRS). I'm just trying to squeeze more tax deductibles while getting higher interest within this year

 

[The_Davis]

CPF VA?

New account?

 

[nautilus]

If I read the new rules correctly, CPF MA topups will not be restricted by CPF annual limit? So say on 1st Jan 2022 I top up my MA to the new BHS, even if I hit the CPF annual limit for 2022, the top up will remain in my MA and not refunded to me in 2023? This part isn't very clear though the ST infographics did mention a bit of it.

 

[reddevil0728]

If I read the new rules correctly, CPF MA topups will not be restricted by CPF annual limit? So say on 1st Jan 2022 I top up my MA to the new BHS, even if I hit the CPF annual limit for 2022, the top up will remain in my MA and not refunded to me in 2023? This part isn't very clear though the ST infographics did mention a bit of it.

Appears to be the case.

but note the combined tax relief cap with top up to SA

 

[nautilus]

Appears to be the case.

but note the combined tax relief cap with top up to SA

Thanks! My SA is above FHS so cannot top up anymore.

 

[Okenba]

I think the delinking of MA top-up with CPF annual limit is a significant change (to me).

Previously, the strategy might be to top-up MA first when one is young, since income will increase as we age and once we hit annual limit, we would no longer be able to top-up MA. Hence, MA first, then SA.

However, now MA is treated like SA. So it may make sense to top-up SA first. Because the faster you hit FRS, then more of your income contribution would result in pumping your SA over the FRS.

 

[Value.Matrix]

I think the delinking of MA top-up with CPF annual limit is a significant change (to me).

Previously, the strategy might be to top-up MA first when one is young, since income will increase as we age and once we hit annual limit, we would no longer be able to top-up MA. Hence, MA first, then SA.

However, now MA is treated like SA. So it may make sense to top-up SA first. Because the faster you hit FRS, then more of your income contribution would result in pumping your SA over the FRS.

Correct.

But even before the announcement, most would be topping up Ma first unless you got so much cash, that topping up SA makes sense because you want to have more than FRS so when shielding can be done (provided this is not close), your shielding can be more than FRS

 

[firsttimebuyer]

Hi everybody, I need some help understanding the new CPF rules.

One of the 5 changes is that "RA inflows will automatically be used to increase their CPF Life payouts".

Is it possible to opt out of this? My parents are making a big hoo-hah about this; they say they either want to opt out of the automatic transfers or find a way to transfer funds out of RA into their bank account.

 

[midnightinparis]

Apologies just to clarify. We can top up the MA account up to the BHS, but the tax relief applies to the first 8k only. Is my understanding correct?

so if I top up 5k into SA and 5k into MA (assuming my MA is still below BHS), my tax relief will only be applied on the first 8k. Is that correct?

 

[zoneguard]

Is it possible to opt out of this? My parents are making a big hoo-hah about this; they say they either want to opt out of the automatic transfers or find a way to transfer funds out of RA into their bank account.

https://www.cpf.gov.sg/member/infoh...ouncements/cpf-amendment-bill-highlights-2021

From November 2021, CPF LIFE members who receive inflows, such as top-ups or housing refunds, will see an automatic increase in their CPF LIFE payouts. Members will start receiving higher payouts from July 2022. Currently, they have to apply to increase their CPF LIFE premiums with these inflows. Otherwise, these inflows will be paid to them as additional monthly payouts outside of CPF LIFE.

This was passed in Parliament today. So nothing can be done and you cannot opt out.

 

[reddevil0728]

Correct.

But even before the announcement, most would be topping up Ma first unless you got so much cash, that topping up SA makes sense because you want to have more than FRS so when shielding can be done (provided this is not close), your shielding can be more than FRS

not sure if most will top up MA first. diff consideration.

 

[reddevil0728]

Hi everybody, I need some help understanding the new CPF rules.

One of the 5 changes is that "RA inflows will automatically be used to increase their CPF Life payouts".

Is it possible to opt out of this? My parents are making a big hoo-hah about this; they say they either want to opt out of the automatic transfers or find a way to transfer funds out of RA into their bank account.

very rarely can cpf stuff opt out 1 lor

Apologies just to clarify. We can top up the MA account up to the BHS, but the tax relief applies to the first 8k only. Is my understanding correct?

so if I top up 5k into SA and 5k into MA (assuming my MA is still below BHS), my tax relief will only be applied on the first 8k. Is that correct?

per year yes.

yes.

 

[midnightinparis]

very rarely can cpf stuff opt out 1 lor

per year yes.

yes.

Thanks. I’ll probably split 4K each into SA and MA in that case.

 

[firsttimebuyer]

very rarely can cpf stuff opt out 1 lor

per year yes.

yes.

My parents' thinking is that CPF Life benefit those that live longer but RA interest and payout helps them so they are not happy that their money in RA would be taken out to CPF life.

 

[reddevil0728]

My parents' thinking is that CPF Life benefit those that live longer but RA interest and payout helps them so they are not happy that their money in RA would be taken out to CPF life.

What to do. No opt out provision.

 

[andyhtc]

It is quite amazing that I'm still learning new things about CPF after much reading and exchange of information over the past 2 years. It is no wonder that many uncles and aunties, including my parents and siblings, have so many suspicions of it. The complexity is sufficient to have several SkillsFuture courses on it.

 

[reddevil0728]

It is quite amazing that I'm still learning new things about CPF after much reading and exchange of information over the past 2 years. It is no wonder that many uncles and aunties, including my parents and siblings, have so many suspicions of it. The complexity is sufficient to have several SkillsFuture courses on it.

Agreed.

 

[firsttimebuyer]

It is quite amazing that I'm still learning new things about CPF after much reading and exchange of information over the past 2 years. It is no wonder that many uncles and aunties, including my parents and siblings, have so many suspicions of it. The complexity is sufficient to have several SkillsFuture courses on it.

It is becoming too complex; I just spent the last few hours reading the new changes and I can't make head or tail out of it.

 

[BBCWatcher]

One of the 5 changes is that "RA inflows will automatically be used to increase their CPF Life payouts".
Is it possible to opt out of this? My parents are making a big hoo-hah about this; they say they either want to opt out of the automatic transfers or find a way to transfer funds out of RA into their bank account.

My parents' thinking is that CPF Life benefit those that live longer but RA interest and payout helps them so they are not happy that their money in RA would be taken out to CPF life.

I see others have answered, but I'll add this point. There's an "easy" answer here: they're not required to add any funds to their Retirement Accounts, at least not if they've already reached the Full Retirement Sum (or Basic Retirement Sum with sufficient property pledge/charge).

Prior to this rule change if you are receiving CPF LIFE payouts and add funds to a Retirement Account, then did nothing, the dollars you add would stream out as "Additional Monthly Payouts" (AMPs). The AMPs are similar to the classic Retirement Sum Scheme payouts, meaning they end at a certain age (typically age 90). Now when you add funds to a RA the CPF Board will automatically recompute your CPF LIFE payout, and you'll receive a higher CPF LIFE payout, for life. That's the only thing changing with this rule change: no more AMPs.

I still think they ought to consider adding funds to their RA, though, if they're in a position to do it. RA -> CPF LIFE is still a great deal, better than they're likely to find anywhere else for discretionary savings.

There's a separate rule change relating to older CPF members who have remained on the classic Retirement Sum Scheme with payouts that typically end at age 90. Whenever those payouts end, evidently the CPF Board will now start making automatic payouts from any residual SA and OA funds until those funds are exhausted. OK, fair enough. That is genuinely slightly more convenient for most members. But if there's no opt-out option then (self evidently) an important reason why the CPF Board is doing this is to reduce interest payments on OA and SA balances. There are a few older members who, if they could, wouldn't even touch any of their dollars parked at CPF. Members who are in this category, and who are still below the age of 80 and in good health, should seriously consider switching to CPF LIFE before the deadline. CPF LIFE participants can keep their OA and SA dollars on account for entire the rest of their lives, plus 6 months beyond.

 

[yiron]

It is quite amazing that I'm still learning new things about CPF after much reading and exchange of information over the past 2 years. It is no wonder that many uncles and aunties, including my parents and siblings, have so many suspicions of it. The complexity is sufficient to have several SkillsFuture courses on it.

That's actually a great idea. Don't mind attending an in-depth course on CPF. Not those skim the surface type of briefing, but really in-depth about the detailed mechanics and pros and cons.