FRS vs ERS

[henrylbh]

My singlish not powderful la

Dear Sir,
I would like to enquiry with regard to Basic withdrawal plan at 65 of age. I understand that this premium of 10-20 percent will be place into the Life income fund (LIF). As the interest accured from the premium of BWP, it is pooled into LIF. How do I actually withdraw out this interest ?
Is it annually withdrawal from LIF in form of payout by returning this "interest" back into my RA and i draw out from my RA or from what I read , is it accrued till I am 90(when my R funds are depleted), then I start drawing out the interest in the LIF funds. Can explain in details as I am concern of the interest earn by the premium

You query can be found in the website itself. So understanding what's in the website is more important than the reply that you received.

When you join BP, 10%-20% is deducted from your RA as annuity premium to join the club.

You are more concerned with the interest thereon but not the principal amount which is the annuity premium on which interest is calculated?

There is no info on how unused annuity premium is arrived at, as that is used to calculate the interest and form part of bequest?

 

[Mecisteus]

You are more concerned with the interest thereon but not the principal amount which is the annuity premium on which interest is calculated?

There is no info on how unused annuity premium is arrived at, as that is used to calculate the interest and form part of bequest?

I thought this is quite straight forward?

The interests on the annuity premium don't belong to you.

If premium is $20k and if cumulative payout is $12k, then premium balance is $8k.

 

[henrylbh]

I thought this is quite straight forward?

The interests on the annuity premium don't belong to you.

If premium is $20k and if cumulative payout is $12k, then premium balance is $8k.

That not what I understand for Basic Plan.

10% to 20% of RA will deducted as annuity premium and it will be 'paid into Lifelong Income Fund'.

The annuity premium paid into LIF will continue to earn interest.

'We will pay the extra interest earned into your RA and pay it to you in the year it is earned as part of your monthly CPF LIFE payout'.

In other words, the monthly payout is mainly from RA and the extra interest earned on (the balance of unused) annuity premium in LIF.

The annuity premium, I guess will be gone or used before age 92 (because RA balance and bequest will be zero). By about age 90, your RA will be depleted. Your payout henceforth is basically the interest from LIF.

In other words, you can kiss goodbye to the 4% interest on the annuity premium unless your survive passed 90

 

[Mecisteus]

That not what I understand for Basic Plan.

10% to 20% of RA will deducted as annuity premium and it will be 'paid into Lifelong Income Fund'.

The annuity premium paid into LIF will continue to earn interest.

'We will pay the extra interest earned into your RA and pay it to you in the year it is earned as part of your monthly CPF LIFE payout'.

In other words, the monthly payout is mainly from RA and the extra interest earned on (the balance of unused) annuity premium in LIF.

The annuity premium, I guess will be gone or used before age 92 (because RA balance and bequest will be zero). By about age 90, your RA will be depleted. Your payout henceforth is basically the interest from LIF.

In other words, you can kiss goodbye to the 4% interest on the annuity premium unless your survive passed 90

I don't know where did you get those statements.

If you read the following FAQ from CPF Life, I can summarise that CPF Life Basic is a combination of:
1) 80-90% old RSS (evidence from underlined statement in Blue)
2) 10-20% deferred Standard Plan (evidence from underlined statement in Red)

But 1 CPF expert said I am talking rubbish.

Q Will my savings used to join CPF LIFE (i.e annuity premiums) continue to earn interest?
A Your savings used to join CPF LIFE (i.e. annuity premiums) will continue to earn interest like your Retirement Account (RA) savings, which is currently at 4% per year. The interest earned on the annuity premiums will be paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants. The interest will be paid to you as your monthly payouts for as long as you live.

Q What happens if I choose the CPF LIFE Basic Plan?
A When you join the CPF LIFE Basic Plan, we will deduct about 10 - 20% of your Retirement Account (RA) savings for the annuity premium at the point of policy issuance. The actual percentage will depend on your age and gender. We will inform you on the amount deducted when your policy is issued. The premium deducted will be paid into the Lifelong Income Fund. The rest of your RA savings will stay in your RA.

You will receive monthly payouts from the savings in your RA from your payout start age until one month before you reach 90 years old. Once you reach 90 years old, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live.

Payouts under your CPF LIFE Basic Plan will be reduced when the combined balances in your CPF accounts, including the amount committed to CPF LIFE, falls below $60,000.This is due to the reduction in any extra interest earned and paid to you.

 

[kelhot2001]

I don't know where did you get those statements.

If you read the following FAQ from CPF Life, I can summarise that CPF Life Basic is a combination of:
1) 80-90% old RSS (evidence from underlined statement in Blue)
2) 10-20% deferred Standard Plan (evidence from underlined statement in Red)

But 1 CPF expert said I am talking rubbish.

Q Will my savings used to join CPF LIFE (i.e annuity premiums) continue to earn interest?
A Your savings used to join CPF LIFE (i.e. annuity premiums) will continue to earn interest like your Retirement Account (RA) savings, which is currently at 4% per year. The interest earned on the annuity premiums will be paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants. The interest will be paid to you as your monthly payouts for as long as you live.

Q What happens if I choose the CPF LIFE Basic Plan?
A When you join the CPF LIFE Basic Plan, we will deduct about 10 - 20% of your Retirement Account (RA) savings for the annuity premium at the point of policy issuance. The actual percentage will depend on your age and gender. We will inform you on the amount deducted when your policy is issued. The premium deducted will be paid into the Lifelong Income Fund. The rest of your RA savings will stay in your RA.

You will receive monthly payouts from the savings in your RA from your payout start age until one month before you reach 90 years old. Once you reach 90 years old, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live.

Payouts under your CPF LIFE Basic Plan will be reduced when the combined balances in your CPF accounts, including the amount committed to CPF LIFE, falls below $60,000.This is due to the reduction in any extra interest earned and paid to you.

That is why a need for clarification, both way can be interpreted
If you see the 2 question are linked one after another, the monthly payout I highlight in green, it can refer to for blue and/or red. It can be interpret both way

 

[Mecisteus]

That is why a need for clarification, both way can be interpreted
If you see the 2 question are linked one after another, the monthly payout I highlight in green, it can refer to for blue and/or red. It can be interpret both way

Before the green statement, already mentioned interests on annuity premiums go to LIF.

For Basic and after 90, you will draw from LIF.

From 90 to 92, you are withdrawing from annuity premiums.

If you live past 92, then you will take the interests for as long as you live. Here is when your insurance payout kicks in.

 

[kelhot2001]

Before the green statement, already mentioned interests on annuity premiums go to LIF.

For Basic and after 90, you will draw from LIF.

From 90 to 92, you are withdrawing from annuity premiums.

If you live past 92, then you will take the interests for as long as you live. Here is when your insurance payout kicks in.

Okok, let clarify directly

 

[henrylbh]

It appears both of you are still not clear about interest relating to BP even after I bold and underlined my statements

The interests on the annuity premium don't belong to you.

That is why a need for clarification, both way can be interpreted
If you see the 2 question are linked one after another, the monthly payout I highlight in green, it can refer to for blue and/or red. It can be interpret both way

Before the green statement, already mentioned interests on annuity premiums go to LIF.

Firstly, you need to understand that interest on annuity premium, like interest on RA, is the standard 4%. The 1% + 1% is the extra interest.

Then refer to FAQ -

Where will the extra interest be paid to after I join CPF LIFE?

If you have chosen the CPF LIFE Basic Plan, we will pay the extra interest earned into your Retirement Account and pay it to you in the year it is earned as part of your monthly CPF LIFE payout. When your combined balances fall below $60,000, the extra interest will reduce. This reduces your monthly CPF LIFE payouts gradually.

The standard 4% interest on annuity premium is retained in LIF and you will only start to recoup it when you are about 90. That's as good as gone. Not only that, the 10% to 20% annuity premium paid into LIF is used and gone

The only part that's not transparent is how the annuity premium is used over the period until it is zero. But it doesn't matter much as the standard and 'extra interest' on the annuity premium become insignificant gradually over the period.

Both FAQ quoted by MikeDirnt are clear but not complete. He should also refer the the FAQ just after the first one he quoted in the list of FAQ.

You also need to understand the word earned and not just the extra interest. When is interest considered earned?

 

[henrylbh]

My singlish not powderful la

Dear Sir,
I would like to enquiry with regard to Basic withdrawal plan at 65 of age. I understand that this premium of 10-20 percent will be place into the Life income fund (LIF). As the interest accured from the premium of BWP, it is pooled into LIF. How do I actually withdraw out this interest ?
Is it annually withdrawal from LIF in form of payout by returning this "interest" back into my RA and i draw out from my RA or from what I read , is it accrued till I am 90(when my R funds are depleted), then I start drawing out the interest in the LIF funds. Can explain in details as I am concern of the interest earn by the premium

In short, you don't get back the interest (except extra interest) on the annuity premium but you continue to get free money for life when your RA deplete around 90. Ok? Fair? Suck thumb?

Take it that the annuity premium and interest thereon are gone in exchange for the assurance (whether you gain from it or not) of lifetime payout. And don't question anymore

 

[henrylbh]

They won't give a personalised answer.

Everyday got so many people asking stupid questions.

10% is not wrong also. CPF website puts 10-20%. Maybe for females, premium is on the upper limit.

Whoever say they don't give personalised answer/s?

After giving me some standard answers, they added -

To cater our reply to your profile, may we have your NRIC number please? Please be assured that your account information will be kept confidential.

I would be pleased to help if you require further assistance.

But the reply is still pending. Got problem trying to me give specific answers according to my profile

 

[Mecisteus]

Firstly, you need to understand that interest on annuity premium, like interest on RA, is the standard 4%. The 1% + 1% is the extra interest.

Then refer to FAQ -

Where will the extra interest be paid to after I join CPF LIFE?

If you have chosen the CPF LIFE Basic Plan, we will pay the extra interest earned into your Retirement Account and pay it to you in the year it is earned as part of your monthly CPF LIFE payout. When your combined balances fall below $60,000, the extra interest will reduce. This reduces your monthly CPF LIFE payouts gradually.

OK I see the FAQ you quoted.

After reading again, I think you are right on the extra interest part.

The remaining savings in your Retirement Account will continue to earn an interest of 4% per year. In addition, the first $60,000 of your combined CPF balances, of which up to $20,000 from your Ordinary Account, will earn an extra 1% interest per year. Combined balances refer to the total balances in your Ordinary, Special, MediSave and Retirement Accounts, including the annuity premiums for CPF LIFE less any payouts made.

The annuity premiums is referring to the CPF Life Basic premiums.

 

[kelhot2001]

It appears both of you are still not clear about interest relating to BP even after I bold and underlined my statements







Firstly, you need to understand that interest on annuity premium, like interest on RA, is the standard 4%. The 1% + 1% is the extra interest.

Then refer to FAQ -

Where will the extra interest be paid to after I join CPF LIFE?

If you have chosen the CPF LIFE Basic Plan, we will pay the extra interest earned into your Retirement Account and pay it to you in the year it is earned as part of your monthly CPF LIFE payout. When your combined balances fall below $60,000, the extra interest will reduce. This reduces your monthly CPF LIFE payouts gradually.

The standard 4% interest on annuity premium is retained in LIF and you will only start to recoup it when you are about 90. That's as good as gone. Not only that, the 10% to 20% annuity premium paid into LIF is used and gone

The only part that's not transparent is how the annuity premium is used over the period until it is zero. But it doesn't matter much as the standard and 'extra interest' on the annuity premium become insignificant gradually over the period.

Both FAQ quoted by MikeDirnt are clear but not complete. He should also refer the the FAQ just after the first one he quoted in the list of FAQ.

You also need to understand the word earned and not just the extra interest. When is interest considered earned?

Thanks Henrylbh for your patience lol, I already understand that from Maple96 in the last post many pages back lol.
But being stubborn as a mules, I still want to see what CPF reply nia nia la

My inital understanding is wrong and also not logical sense but generally a lot of people thought this way, a minorities read your way, some other read Mike way. Wow, it is a 3P

maple96 wrote:
"chicken" = the extra interest refers to 1% on first 60k and 1% on first 30k, these will be paid to RA for Basic Plans, for Standard and Escalating it will be paid into LIF.

"duck" = 4% on annuity premium = 20% of RA at 65 if start 65 = 4% interest paid into LIF

My accounting 101 post explains the 4% interest on the 20% premium only.
sound legit

 

[kelhot2001]

One more things about policy issuance

https://www.cpf.gov.sg/members/FAQ/schemes/Retirement/CPF-LIFE/FAQDetails?category=Retirement&group=CPF%20LIFE&folderid=11663&ajfaqid=2186371

Q When will you issue my CPF LIFE policy?
A
The issuance of your CPF LIFE policy depends on when your application is received:

If we receive your application by the 21st of the month

We will issue the policy in the same month

If we receive your application after the 21st of the month

We will issue the policy in the following month


If you would like to top up your Retirement Account (RA) and have your CPF LIFE policy issued in the same month, please send us your application to top up your RA by the 14th of the month.

Seem that they change it now, they now mention point of issuance , but not when

 

[kelhot2001]

Reply from CPFB

Using your example above, your $1,000 monthly (which include premium interest) start from day 1 when I start to withdraw from my RA, or this $1,000 (which include premium interest) start only at age 90 when I start to draw from LIFE

ANS
Under the CPF LIFE Basic Plan, the monthly payout will be paid to you from your RA at your payout eligibility age of 65 to approximately age 90. This payout includes the interest earned on your RA savings.

From age 90 onwards, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live. As shared previously, the interest earned on the annuity premium is paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants. The interest earned on the annuity premium will be paid as part of your annuity payout from age 90 onwards.

We would be pleased to assist if you require further assistance on CPF matters. Alternatively, you can call 1800 227 1188 (Mondays to Fridays, 8am – 5.30 pm) or book an appointment with us to speak to any of our officers at the CPF Service Centres.

 

[maple96]

Reply from CPFB

Using your example above, your $1,000 monthly (which include premium interest) start from day 1 when I start to withdraw from my RA, or this $1,000 (which include premium interest) start only at age 90 when I start to draw from LIFE

ANS
Under the CPF LIFE Basic Plan, the monthly payout will be paid to you from your RA at your payout eligibility age of 65 to approximately age 90. This payout includes the interest earned on your RA savings.

From age 90 onwards, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live. As shared previously, the interest earned on the annuity premium is paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants. The interest earned on the annuity premium will be paid as part of your annuity payout from age 90 onwards.

We would be pleased to assist if you require further assistance on CPF matters. Alternatively, you can call 1800 227 1188 (Mondays to Fridays, 8am – 5.30 pm) or book an appointment with us to speak to any of our officers at the CPF Service Centres.

U should stop continuing to post rubbish to confuse people here!

Even after 90, the Basic Plan member will continue to receive payouts from both RA and CPF Life Pool because:

1. RA will continue to receive the extra 2% interest (900) on the 10-20% CPF Life Premium until the premium gets depleted and/or
2. RA will continue to receive up to the extra 2% interest if the member continues to maintain up to 60k combined balances in OA/SA/MA even when CPF Life premium gets depleted.

Standard Plan & Escalating Plan members only receive payouts from the CPF Life Pool and their RA never gets any interest or give payouts, after payout starts at 65-70!

This part I wrote, they will not include in the standard reply because it is not in the CPFB website FAQ.

If u want double confirmation, u write in to specifically ask about after 90 extra interest paid into RA, what will happen

 

[lifeafter41]

Thanks Henrylbh for your patience lol, I already understand that from Maple96 in the last post many pages back lol.
But being stubborn as a mules, I still want to see what CPF reply nia nia la

My inital understanding is wrong and also not logical sense but generally a lot of people thought this way, a minorities read your way, some other read Mike way. Wow, it is a 3P

Can one also assume if one chose to top up to ERS at age 55 after the creation of RA. Ie, 55 and 2 weeks years old, RA at 264K, interest will be paid to RA even though one has not decide to go for basic, or standard or escalating, till age 65.?

 

[tangent314]

Can one also assume if one chose to top up to ERS at age 55 after the creation of RA. Ie, 55 and 2 weeks years old, RA at 264K, interest will be paid to RA even though one has not decide to go for basic, or standard or escalating, till age 65.?

Yes, you can top up your RA to the ERS immediately after your RA is created, and wait until Payout Eligible Age to apply to start CPF Life with the plan of your choice.

I would recommend topping up to ERS immediately after 55 instead of waiting until nearer PEA, because the interest rate of RA grows faster than the FRS/ERS growth rate.

 

[kelhot2001]

Can one also assume if one chose to top up to ERS at age 55 after the creation of RA. Ie, 55 and 2 weeks years old, RA at 264K, interest will be paid to RA even though one has not decide to go for basic, or standard or escalating, till age 65.?

Doing that, topping up to ERS means you you cannot withdraw the topup and interest even if you decide to do BRS

Or even if you do FRS, interest from ERS is not withdrawable

 

[BBCWatcher]

Doing that, topping up to ERS means you you cannot withdraw the topup and interest even if you decide to do BRS
Or even if you do FRS, interest from ERS is not withdrawable

Yes, perhaps, and then you have the awful, terrible "problem" of receiving bigger monthly payouts for life.

 

[kelhot2001]

Yes, perhaps, and then you have the awful, terrible "problem" of receiving bigger monthly payouts for life.

Also perhap,you die early, you lose around $200k in bequest into LIF