Five changes to CPF rules

[reddevil0728]

SINGAPORE - Various rules around the Central Provident Fund (CPF) will be streamlined to make it easier for people to receive their retirement payouts and build their nest egg, under proposed changes to the CPF Act debated in Parliament on Monday (Nov 1).

They are:

1. Retirement Sum Scheme automatic transfers​

Now: After their Retirement Account is depleted, members will continue receiving payouts, only if they apply to transfer money in their Ordinary Account and Special Account to their Retirement Account.

After: Members automatically continue to receive payouts from their Ordinary and Special Accounts savings when their Retirement Account savings are used up. This will benefit around 83,000 people under the Retirement Sum Scheme from the first quarter of 2022.

For CPF Life members who have started getting payouts, Retirement Account inflows will automatically be used to increase their payouts as well, benefiting some 75,000 people.

2. Flexibility in deciding when to transfer funds​

Now: For members turning 65 from 2023, the transfer of Ordinary and Special Accounts savings to their Retirement Account will occur, up to their cohort's full retirement sum, once they are eligible to start payouts.



From Jan 2023: Members have the flexibility to decide on when to transfer the funds, anytime between 65 and 70 years old. There is no change to current rules for lump sum withdrawal of CPF savings.

3. Simplifying tax relief rules​

Now: There is a $7,000 tax relief cap for the Retirement Sum Topping-Up scheme provided to givers.
Separately, there is also a limit for tax relief for the Voluntary Contributions to MediSave Account scheme for the recipients, which depends on the CPF Annual Limit and the current Basic Healthcare Sum.
From Jan 1, 2022: To align rules for both schemes, tax relief for the Voluntary Contributions to MediSave Account scheme will also be provided to givers, instead of recipients
There will be a higher combined tax relief cap for both schemes set at $8,000. This means the cap is $8,000 for top-ups to self and $8,000 for top-ups to loved ones.

4. Quicker disbursement of CPF money after a member dies​

Now: CPF funds can continue to be retained with accrued interest up to seven years after a member dies. Discounted Singtel shares are also retained in the CPF accounts for up to seven years.
From April 2022: The duration that CPF money is retained after death will be shortened to six months.
Discounted Singtel shares will also be liquidated and automatically disbursed six weeks after the member's death.
There is no change to the nominees' rights to make claims at any time.

5. Government to recover grants if eligibility criteria not met​

Now: The Government can already claw back grants made erroneously to ineligible people

From Jan 1, 2022: This is just a technical update to the rules so the Government can recover grants in cases where the grants were automatically issued to eligible members, but the members later chose not to continue meeting the eligibility conditions.

https://www.straitstimes.com/singapore/politics/five-changes-to-cpf-rules

 

[zoneguard]

Wondering if this is what was mentioned earlier in Sep? Or there's more coming..

 

[yiron]

Wooo..so next Jan should top up $8000 instead of $7000 to max the tax relief.

 

[reddevil0728]

Wondering if this is what was mentioned earlier in Sep? Or there's more coming..

Reckon that might be if not will confuse people even more.

 

[reddevil0728]

Wooo..so next Jan should top up $8000 instead of $7000 to max the tax relief.

For people doing SA and MA top up, might end up being a reduction.

 

[yiron]

For people doing SA and MA top up, might end up being a reduction.

My MA already maxed so I guess this isn't an issue for me. But you are right that the overall tax relief avenue has been reduced for certain groups.

 

[badsector]

For people doing SA and MA top up, might end up being a reduction.

https://www.cpf.gov.sg/member/infoh...ouncements/cpf-amendment-bill-highlights-2021
Tax relief of up to $8,000 a year for top-ups to self and loved ones respectively



From 1 January 2022, members can enjoy $8,000 tax relief, up from $7,000, when they top up their own CPF account in cash. They can enjoy another $8,000 tax relief when they top up for their loved ones. This cap in tax relief is applicable for top-ups to Special, Retirement and MediSave accounts.





Simplification of top-ups to MediSave



Starting 1 January 2022, the amount members can top up to MediSave will be the difference between their Basic Healthcare Sum (BHS) and their current MediSave balances. Currently, members have to consider the CPF Annual Limit and BHS for top-ups to MediSave. With the simplification, there is no longer a need to consider the CPF Annual Limit which is typically made known only at the end of each year.

 

[BBCWatcher]

My MA already maxed so I guess this isn't an issue for me. But you are right that the overall tax relief avenue has been reduced for certain groups.

The Basic Healthcare Sum increases every January 1 (typically) until you celebrate your 65th birthday, opening up room to make a Voluntary Contribution with tax relief. You should have this opportunity if you wish to take advantage of it.

Simplification of top-ups to MediSave
Starting 1 January 2022, the amount members can top up to MediSave will be the difference between their Basic Healthcare Sum (BHS) and their current MediSave balances. Currently, members have to consider the CPF Annual Limit and BHS for top-ups to MediSave. With the simplification, there is no longer a need to consider the CPF Annual Limit which is typically made known only at the end of each year.

This part I personally like.

I'm still looking through the rest of this news. One immediate reaction is that the $8,000 per year aggregated tax relief limit (SA+RA+MA) for self closes off an opportunity newly minted Permanent Residents have: slam lots of cash into MediSave with tax relief. So if you're a newly minted PR, you'll have to make that move (if you want to) no later than December 31, 2021. Newly minted PRs are subject to lower contribution rates for the first 24 months, so the CPF Annual Limit is less limiting.

 

[zoneguard]

AMP is removed.

Higher CPF LIFE payouts following inflows to Retirement Account

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.

 

[GameTheory]

The Basic Healthcare Sum increases every January 1 (typically) until you celebrate your 65th birthday, opening up room to make a Voluntary Contribution with tax relief. You should have this opportunity if you wish to take advantage of it.

This part I personally like.

I'm still looking through the rest of this news. One immediate reaction is that the $8,000 per year aggregated tax relief limit (SA+RA+MA) for self closes off an opportunity newly minted Permanent Residents have: slam lots of cash into MediSave with tax relief. So if you're a newly minted PR, you'll have to make that move (if you want to) no later than December 31, 2021. Newly minted PRs are subject to lower contribution rates for the first 24 months, so the CPF Annual Limit is less limiting.

Yea. I think for majority of the earners here, topping up MA isn’t an option anymore due to the annual cap sharing with employer/employee contribution piece.

so this just affords us option to choose between SA and MA (for the voluntary top up)

 

[BBCWatcher]

AMP is removed.

It seems so.

Automatic payout of OA/SA when an older member exhausts his/her Retirement Account (per the classic Retirement Sum Scheme) seems like a net negative. Unless the member can opt out of the automatic OA/SA payouts. It will slightly reduce the amount of interest the CPF Board needs to pay on OA and SA balances. Add this one to the pile of reasons why a member on classic RSS might want to switch to CPF LIFE. (This can be done before age 80.)

The CPF Board has been progressively reducing the interest it pays on deceased members' balances. Not that long ago the deceased member's nominee(s) could leave all funds on account with CPF earning the standard interest rates indefinitely. That was/is pretty attractive for an "on demand" account. Not any more.

 

[yiron]

The Basic Healthcare Sum increases every January 1 (typically) until you celebrate your 65th birthday, opening up room to make a Voluntary Contribution with tax relief. You should have this opportunity if you wish to take advantage of it.

Yea. I think for majority of the earners here, topping up MA isn’t an option anymore due to the annual cap sharing with employer/employee contribution piece.

so this just affords us option to choose between SA and MA (for the voluntary top up)

From an interest accrual standpoint, no diff whether topping up SA or MA, as long as within cap right?

 

[zoneguard]

Another sweep of SA and OA to RA (up to FRS) after 55 at payout start age??

Transfer of Ordinary and Special accounts savings to Retirement Account at payout start age

For members turning 65 from 2023, their Ordinary and Special accounts savings will be transferred to their Retirement Account, up to their Full Retirement Sum, when they start their monthly payouts instead of when they are eligible to start payouts. This allows members to receive higher monthly payouts.

 

[BBCWatcher]

From an interest accrual standpoint, no diff whether topping up SA or MA, as long as within cap right?

SA and MA earn the same interest rate and count the same for bonus interest purposes.

Another sweep of SA and OA to RA (up to FRS) after 55 at payout start age??

This part is a little confusing and may not apply to many readers of this forum.

Currently there's a "sweep" on your 55th birthday to create your Retirement Account from SA then OA. If this sweep results in a new RA funded to the Full Retirement Sum, there are no further sweeps. (This is likely to be the case for most readers of this forum.)

However, if your RA is not funded to the FRS on your 55th birthday, then currently another sweep is attempted at age 65. This rule change means the second sweep won't occur until you start payouts, which can be as late as age 70.

I think the basic idea is that some people are still working and still have dollars streaming into SA and OA past their 65th birthdays, and so deferring the second sweep will result in a bigger sweep. That's tempered by the fact OA earns a lower interest rate. Indeed, you're probably better off shifting those OA dollars to RA as soon as you can. Cross-spousal transfers can usually do that, for example.

 

[zoneguard]

Side-tracking: CPF website also seem to have a makeover and after login, took me a while to orientate to the new look.

 

[swathe]

Topping up MA first seems to be better. When MA hits BHS, it overflows into SA.

 

[yiron]

Topping up MA first seems to be better. When MA hits BHS, it overflows into SA.

Given that MA+SA 'share' a common pool with same interest rates, where you top up that $8k makes no diff?

 

[BrandonnC]

SA shielding is still possible come 55 years old?

 

[xiaomitao]

one question with regards to the top up.

If i top up my own CPF and my spouse CPF, i will get a total of $16000 tax relief from this top up from 2022. Is that correct?

 

[reddevil0728]

one question with regards to the top up.

If i top up my own CPF and my spouse CPF, i will get a total of $16000 tax relief from this top up from 2022. Is that correct?

Are you aware of spousal income criteria?