FRS vs ERS

[kelhot2001]

Sorry to hear that. Was she was alone when robbed in JB? Which part of JB?

Many years ago, my BIL was robbed while in the queque to JB immigration check point. He was forced to drive out of the q to some secluded spot and he came back without his car.

It was a motorist to motorist snatch theif, in the end MIl badly injured,brought her back to SGH A&E

 

[romeo88]

For one I thought you were joking about the robbery but meant to be satirical about CPF's answer.

Sorry for the mishap.

It was a motorist to motorist snatch theif, in the end MIl badly injured,brought her back to SGH A&E

 

[romeo88]

Fantastic answers, especially for now.

It's some near to 10 years before I need to make a decision. By which time, as you know, the changes that are going to happen may all be a brand new game altogether by the time.

And there's only 1 way to get a definite answer, which is to visit the CPF office, like I've been doing the last few years.

Thanks, mate.

U read the FAQ first, below was what I posted before to help K:

Q What should I take note of when applying to be exempted from setting aside a retirement sum in my Retirement Account (RA)?
A
Please note the following when applying for exemption:

- You must be 55 and above to apply for an exemption.
- The use of investment instruments such as endowments and bonds for exemption is not allowed.
- You must be in receipt of the monthly payment from your annuity policy/pension which pays you for as long as you live.
- If an exemption is granted and you surrender or terminate your annuity policy, the retirement sum withdrawn plus the accrued interest have to be refunded to your Retirement Account (RA).
- The annuity policy cannot be pledged for granting you a loan as the Board needs to secure the refund of the retirement sum plus the accrued interest upon termination of the policy.
- You must be both the policy holder and the sole insured person of the annuity policy.
- You can use multiple annuity policies to seek exemption.
- The amount you may withdraw from your RA excludes any monies topped up to your RA under the Retirement Sum Topping-Up Scheme and the interest earned on it.
- Upon exemption, you will not be eligible to receive top-ups under the Retirement Sum Topping-Up Scheme unless you opt to join the CPF LIFE Scheme.
- You cannot choose to only withdraw an amount which is lower than the amount payable to you upon exemption.

U not only look at the mthly payouts > CPF Life payout, u also have to look at the "returns" and if the insurer can survive u.

My little research/reading shows no insurer can beat CPF Life/RA returns. If your can, pls share the insurer and name of policy.

But I will not pursue this route because there are more disadvantages than advantages. But it is your choice.

(note: he can replicate but not always all correct, do your due diligence)

(note highlighted in red, on RA, not SA )

 

[kelhot2001]

My question to CPF life and waiting for answer last week

You
Dear Sir
I would like to find out more about full exemption of CPF life. My company had agreed upon providing me a pension fund of $2300.00 per month upon my 65 years of age and it will only end upon my death. My company is a local incorporate company in Singapore. Is there a procedure to go about for CPF acceptance to full exemption of CPF life ?

Secondly , what are the private annuities in place that are acceptable by CPF life full exemption. Do you have any example like what is the minimum payout rate acceptable and payout age for full exemption of CPF life

LOL

 

[kelhot2001]

For one I thought you were joking about the robbery but meant to be satirical about CPF's answer.

Sorry for the mishap.

No worries, it is a real bad robbery with no regards of human life. So, be especially careful in JB, especially those ladies with handbag. My advise if there is handbag, dont sling over your shoulder, it is more dangerous than just holding with your hand

 

[henrylbh]

My question to CPF life and waiting for answer last week

You
Dear Sir
I would like to find out more about full exemption of CPF life. My company had agreed upon providing me a pension fund of $2300.00 per month upon my 65 years of age and it will only end upon my death. My company is a local incorporate company in Singapore. Is there a procedure to go about for CPF acceptance to full exemption of CPF life ?

Secondly , what are the private annuities in place that are acceptable by CPF life full exemption. Do you have any example like what is the minimum payout rate acceptable and payout age for full exemption of CPF life

LOL

That's a waste of their time.

Your company got what standing or rating compare to CPF Board?

Not for them to find out which private annuities are acceptable.

You need to be specific or you get answers like no answers

The website generally set the criteria needed to be exempted from CPF Life. Go look for one that you have in mind that meet the criteria and submit for approval.

 

[kelhot2001]

That's a waste of their time.

Your company got what standing or rating compare to CPF Board?

Not for them to find out which private annuities are acceptable.

You need to be specific or you get answers like no answers

The website generally set the criteria needed to be exempted from CPF Life. Go look for one that you have in mind that meet the criteria and submit for approval.

Lol, 5 minutes wasted for trying, as most get a trust fund to manage lor. Maybe they say can leh

 

[kelhot2001]

The main concern is once CPF Life starts to commence payout, after all it’s still in the infant stage as it was only enacted not too long ago, will there be big accumulation of surplus funds like elder shield?

This is a big unknown, based on stats, it should be quite balance or even per year payout the living might still outdraw the LIF funds (that doesnt mean the funds run out)

 

[kelhot2001]

https://www.asiaone.com/singapore/risk-pooling-secret-cpf-lifes-lifelong-payout-feature?amp

Read this before, and it is up to individual understanding on what is being say.
I mentioned before if a leader cannot bring in enough investment for growth then something is wrong while he can only look at reducing cost by increasing tax.

In the first place, tax, gst, directly or indirectly, due to whatever cause, they are always increasing, it is the fact of life and not to be as argument. Not one know for sure what is the actual reason for certain tax increase.

Today I am running my company of 100 person and I will to tell them in 20 years time due to rising cost I have to stop all increment so to sustain the company operation. Then that year I happen to have surplus and tell them that this was accidental and that will go into company reserves. And yet every year I pat my back and say look our investment achieve a 2 digit growth. But no, employee benefit cannot increase because rising cost in 20 years time. LOL, this argument will never end, taxes, gst will still increase
Look at areas to tax on the rich then, not cutting the staff benefits. If you cannot increase growth, then maybe you are not justified your remuneration.

Anyway again my opinion, you are entitled yours

 

[kelhot2001]

I did a simple solution for those non risk taker, not sure if it can works with rules of CPF with some assumption

1) FRS at $200,000.00 maybe in 5 years time, MA is full, while member can achieve FRS at $200,000.00. So at 55, Go for BRS at $100,000 with pledge
while $100,000 remain in SA, Monthly withdrawal for SA is allow, probably you have external hospital insurances. All interest from MA is not consider in calculation. Using the same method, you will also see standard withdrawal will reaped better benefit with BRS as compare to Full FRS BP(hopefully my math is correct as I have not slept for about 24 hrs lol)

FRS $200,000.00
BRS $100,000.00
SA $100,000.00

With FRS BP withdrawal from RA per month is at $1400.00
With BRS BP withdrawal from RA per month is at $796.00
With SA at (4%) withdrawal from SA per month is at $604.00
Total withdrawal from RA+SA $796.00 plus $604.00 is equal FRS $1400.00
Everything amount is the same, but the bequest now is totally difference from FRS BP at $1400.00

Now look at bequest

Age SA RA SA+RA FRS BP
55 $100,000.00 $100,000.00 $200,000.00 $200,000.00
65 $149,000.00 $153,000.00 $302,000.00 $301,000.00
70 $141,000.00 $132,000.00 $273,000.00 $254,000.00
75 $132,000.00 $110,000.00 $242,000.00 $204,000.00
80 $121,000.00 $84,000.00 $205,000.00 $163,000.00
85 $108,000.00 $53,000.00 $161,000.00 $103,000.00
90 $92,000.00 $14,800.00 $106,800.00 $28,000.00
95 $72,000.00 $- $72,000.00 $-
100 $48,000.00 $- $48,000.00 $-
105 $19,000.00 $- $19,000.00 $-


Using this method, you can see even with SA at 4%, you are getting a much better deal with BRS at 55, balance at SA @4%

 

[henrylbh]

I did a simple solution for those non risk taker, not sure if it can works with rules of CPF with some assumption

1) FRS at $200,000.00 maybe in 5 years time, MA is full, while member can achieve FRS at $200,000.00. So at 55, Go for BRS at $100,000 with pledge
while $100,000 remain in SA, Monthly withdrawal for SA is allow, probably you have external hospital insurances. All interest from MA is not consider in calculation. Using the same method, you will also see standard withdrawal will reaped better benefit with BRS as compare to Full FRS BP(hopefully my math is correct as I have not slept for about 24 hrs lol)

FRS $200,000.00
BRS $100,000.00
SA $100,000.00

With FRS BP withdrawal from RA per month is at $1400.00
With BRS BP withdrawal from RA per month is at $796.00
With SA at (4%) withdrawal from SA per month is at $604.00
Total withdrawal from RA+SA $796.00 plus $604.00 is equal FRS $1400.00
Everything amount is the same, but the bequest now is totally difference from FRS BP at $1400.00

Are you assuming SA is 300k before 200k is transferred to RA (as FRS) and then you withdraw 100k from RA to stay with BRS?

If you have 200k only, all will go to RA (as FRS). What you withdraw from RA to opt for BRS cannot go back to SA.

If you manage to have 100k in SA, the drawdown of $604 pm will deplete SA (which form your bequest on that diminishing 100k) by around age mid 84.

 

[maple96]

Questiom I need to ask

If at 55, i had

RA $90.5K
SA $60.5K
OA $0.00
bhs $57K

Can I ask what is the rate of interest for SA in total is it also 6+5+4
Will my BHS interest goes into SA since not full frs yet

Your example not "normal". If your RA balance is BRS with property pledge/charge, the amts (including interest) above BHS will go to OA.

Others already answered by henry.

 

[kelhot2001]

Are you assuming SA is 300k before 200k is transferred to RA (as FRS) and then you withdraw 100k from RA to stay with BRS?

If you have 200k only, all will go to RA (as FRS). What you withdraw from RA to opt for BRS cannot go back to SA.

If you manage to have 100k in SA, the drawdown of $604 pm will deplete SA (which form your bequest on that diminishing 100k) by around age mid 84.

I meant FRS is $200K, at 54, I opt for BRS, what you meant is CPF rules will still take 200K from SA into RA at 55(regardless what i choose), and refunded 100K to OA , with balance 100K to be BRS in RA. Am I right?

IF so, then the only way is via SA shielding lor. That is definitely possible right ?

If you manage to have 100k in SA, the drawdown of $604 pm will deplete SA (which form your bequest on that diminishing 100k) by around age mid 84.

I meant leave $100k through shielding in SA at age 55 and grow for 10 yrs t $149K with 4% interest. and draw down at 65 with monthly amount of $634. Even with 4% interest base of amount $149K of monthly drawout@$634, it will last approximately 38 years which is about 103 years old

Your example not "normal". If your RA balance is BRS with property pledge/charge, the amts (including interest) above BHS will go to OA.

As for MA, I have not taken consideration of MA interest in my calculation, since i am not sure where it goes

 

[romeo88]

I just looked at the form – as expected, not seeing my answers there except some leads to more questions but anyways, I think you’ve answered them.

I’ve no problem leaving any money in the usual OA/SA/RA/MA accounts but just not wasting the money away to be withdrawn (without an option for me) towards the insurance fee which I don’t need as in I’m not going to live past 90 and if I do, the “legacy” that I’ll have will certainly be much more than the annuity – self-insurance if you will. Buying an insurance makes sense because one sees the need of it. Here, the need doesn’t exist – so why buy something one doesn’t need.

By saying that, hope I’m not triggering another debate here like I’ve seen in the other 100-page threads.

With what you stated below, I’m happy to still be able to retain some money in RA. Question will be is that going to earn the usual RA interest and the rules surrounding it like withdrawal.. At 65 for me, the money in RA consists of the FRS, topping up of 1xBRS to ERS, top-up to new ERS limit (7,500) every year, and the interest earned at 4% plus the additional $900 every year, for 10 years. I supposed the original FRS amount is what has to be withdrawn immediately upon exiting LIFE

I’m paying CPF a visit to clarify and hopefully put it all to bed for now.
I’m keeping my options open – there’s still some 9+years to go before making a decision. By the time, 10% deduction for the Basic plan may still be alright. Anything more than that will require some serious number crunching.

Thanks for teeing up the questions for me. Appreciate your inputs.

I already did: go grab a copy of CPF Form RSS/8.

Answering your questions....

If you apply to opt out of CPF LIFE (Form RSS/8), you're required to withdraw all Retirement Account funds that are not attributable to Retirement Sum Topping-Up Scheme funds. Retirement Fund Topping-Up Scheme dollars (plus accrued interest on those dollars) must stay in place and are streamed out as monthly payments -- you cannot opt out of that portion. You have to take more drastic action (terminate your right of abode in Singapore) if you want to withdraw Retirement Sum Topping-Up Scheme dollars. If you didn't make any Retirement Sum Topping-Up Scheme contributions then obviously this distinction doesn't apply.

The private annuity will pay as long as the private annuity provider is able to pay. If it doesn't, for whatever reason, that's your problem, not CPF's. You're then legally required to notify CPF and to make yourself whole again in CPF LIFE. One way you can reduce this particular risk -- a small risk, but a risk -- is to have a couple life annuities from different insurers. Regardless, I'd advise keeping your life annuities (and other insurance products) at or under SDIC coverage limits.

 

[maple96]

My question to CPF life and waiting for answer last week

You
Dear Sir
I would like to find out more about full exemption of CPF life. My company had agreed upon providing me a pension fund of $2300.00 per month upon my 65 years of age and it will only end upon my death. My company is a local incorporate company in Singapore. Is there a procedure to go about for CPF acceptance to full exemption of CPF life ?

Secondly , what are the private annuities in place that are acceptable by CPF life full exemption. Do you have any example like what is the minimum payout rate acceptable and payout age for full exemption of CPF life

LOL

from CPFB website:

"If you are receiving lifelong monthly payouts from a pension

To apply, please submit the "Apply for Exemption from Setting Aside a Retirement Sum" (Form RSS/8) (PDF, 1.28MB), together with the original pension letter bearing the Pension Office’s letterhead dated within six months, to the Board.

The original pension letter should state amount of lifelong monthly pension that you are receiving and the conditions which the pension may be revoked or terminated."

 

[romeo88]

The CPF LIFE principle I supposed is this:

Numbers (note historical) seem to suggest that people are living longer than before.

There’s a paranoia that people will outlive their wealth, and thus causing social problem to the government of the day. Introducing CPF LIFE, voila, a panacea for the problem. Let the people pool up money so they can help fund each other. The government does not need to spend money and yet may end up with surplus – more than 2 birds here.

With the above introduction, and just for discussion (or chit-chat if you like), why would CPF care if your insurer is generating better return than LIFE (i.e. 4%, ignoring the additional 1+1%) or not ? What they care is are you getting lifelong annuity amount more than what you would get from LIFE. I don’t see why an annuity of 36k pa (50% more than LIFE) for my case would not be exempted. BTW, 24k pa is based on ERS (with yearly top-ups) and Basic plan. The requirement is just BRS, isn’t it ?

There’s only 1 way to find out – get confirmation from CPF. I’ll definitely fill you in when I’ve the answers.

As usual, good on you for the inputs.

PS. I have my take on what the (longevity) numbers mean. These are snapshots and not for linear extrapolation. Moore’s law doesn't apply for living things.

My little research/reading shows no insurer can beat CPF Life/RA returns. If your can, pls share the insurer and name of policy.
(note highlighted in red, on RA, not SA )

 

[maple96]

With the above introduction, and just for discussion (or chit-chat if you like), why would CPF care if your insurer is generating better return than LIFE (i.e. 4%, ignoring the additional 1+1%) or not ? What they care is are you getting lifelong annuity amount more than what you would get from LIFE. I don’t see why an annuity of 36k pa (50% more than LIFE) for my case would not be exempted. BTW, 24k pa is based on ERS (with yearly top-ups) and Basic plan. The requirement is just BRS, isn’t it ?

.

My comments are for your consideration, not from CPF (I forgot to annotate). I will definitely not buy a pte annuity just to get exemption if it cannot give me returns better than CPF RA 4%, my benchmark!

Below additional info from CPF website:

"If you are receiving monthly payouts from a private lifelong annuity

To apply, please submit the "Apply for Exemption from Setting Aside a Retirement Sum" (Form RSS/8) (PDF, 1.28MB), together with a certified true copy of the annuity policy and its terms and conditions, to the Board.

Upon the approval of your application, the Board will request the insurance company to include the following endorsements in the Policy:

"Where the Annuitant cancels the policy for cash surrender value, the Company is required to refund to the Annuitant’s CPF account an amount determined by the Board in accordance with the laws in force at the time the refund is required to be made.
Where a loan of the cash surrender of the policy is granted to the Annuitant, the Board shall have a first charge on the policy to secure the refund to the Annuitant’s CPF account of an amount determined by the Board in accordance with the laws in force at the time the refund is required to be made. The Company shall not be entitled to use part or all of any annuity payment to repay the outstanding loan."

You will need to submit a certified true copy of the endorsement to the Board. Upon receipt, we will process your exemption application."

 

[maple96]

There’s only 1 way to find out – get confirmation from CPF. I’ll definitely fill you in when I’ve the answers.

.

I am only interested on the name of the annuity and insurer for my research, thanks

 

[maple96]

PS. I have my take on what the (longevity) numbers mean. These are snapshots and not for linear extrapolation. Moore’s law doesn't apply for living things.

I dun use those to make my decisions, it is rubbish to rely on such info. I rely on my family stats, just like lky did for himself

btw, I am going for Basic Plan with some "hacks"

 

[romeo88]

I noticed many here don't, you and me included.

Hack before 55 or after ?

I dun use those to make my decisions, it is rubbish to rely on such info. I rely on my family stats, just like lky did for himself

btw, I am going for Basic Plan with some "hacks"