FRS vs ERS

[maple96]

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

Hack before 55 or after ?

sorry so much I can share.

Additional info from CPF website for u:

Q How much monthly payout from my pension or annuity should I be receiving to be fully exempted from setting aside a retirement sum in my Retirement Account?
A
You may be fully exempted from setting aside a retirement sum if the lifelong monthly payout from your pension or annuity is at least the payout benchmark (PDF, 0.3MB) applicable to you based on when you are born.

If your lifelong monthly payout from pension or annuity payout is lower than the payout benchmark, you may still qualify for partial exemption.

 

[The_Davis]

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

thumbs up!!!
anyone in SG setting up such a company?

 

[romeo88]

Absolutely.

For my case, this is in addition to LIFE, and the policy I took up a few years back gives me the option to withdraw lumpsum or convert to annuity at 65. I had lots of faith on LIFE previously, until I realised it is not what it seems to be, when recently a buddy suggested that he’s gone for BRS because of the loss of money to the pool.

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!

 

[The_Davis]

if I have shares or unit trust paying dividends does it count towards exemption?

 

[maple96]

Absolutely.

For my case, this is in addition to LIFE, and the policy I took up a few years back gives me the option to withdraw lumpsum or convert to annuity at 65. I had lots of faith on LIFE previously, until I realised it is not what it seems to be, when recently a buddy suggested that he’s gone for BRS because of the loss of money to the pool.

Pte annuity can only supplement/complement but not replace CPF Life. The
committee already done research and made that comment, unless any insurer is kungho in future.

Because members were never "educated" on these "factors" until early this mth when oppo questions mom in parliament that they reveal the "risk pooling". It took me more than a year in 2015 to discover the loss of interests after reading into every line in the CPF website which are badly organised but lots of improvements now.

I also have whole life, lumpsum withdraw which I can convert into annuity, but I am not going for it cos the returns are likely to be worst than my policy and CPF 4%. My policy now earning 4-5% compounded

 

[romeo88]

Direct answer will be no.

Giving-hope answer will be, if you can prove that you're going to receive these dividends lifelong, why not ?

if I have shares or unit trust paying dividends does it count towards exemption?

 

[romeo88]

If my buddy's bare minimum of BRS strategy makes sense, I'm not sure if what I did really makes sense.

Anyways, I ran some numbers. If the cash that you get to keep instead of topping up to ERS can generate more than 5%, it's a better return. But than again, Basic plan and balance in RA earns 4% (and 1+1), is supposedly low risk. So still hard to beat.

wow u hack and successful? or u done many other hacks? congrats

 

[BBCWatcher]

The government does not need to spend money and yet may end up with surplus – more than 2 birds here.

That's mathematically impossible. There's no "surplus" when the government is paying 4% plus bonus interest on all retirement funds, and with zero income tax on most contributions. This government can raise as many billions as it wants by paying only 2.X% on income taxed dollars. That's the actual cost of capital to this government, and any surplus/deficit determinations derive from that cost.

Many, many wealthy people would love to see the Enhanced Retirement Sum cap raised or eliminated. (Did you ever wonder why that cap exists? )

It's possible the deficit (not surplus) attributable to CPF might be a little variable, but there's absolutely no evidence that CPF is doing anything except basic risk pooling using actuarially sound life tables and fund management principles.

 

[maple96]

if I have shares or unit trust paying dividends does it count towards exemption?

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.

CPF rules fyi

 

[maple96]

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.

.

I heard gahmen earn 6%, only pay 4%

 

[kelhot2001]

I heard gahmen earn 6%, only pay 4%

LOL, hearsay is not fact anymore, but it can be phrase as in my opinion that govt earn 6%

 

[maple96]

LOL, hearsay is not fact anymore, but it can be phrase as in my opinion that govt earn 6%

that why u see the emoji

my ntuc policy, my insurer earns more but pay me 4-5% compounded, I am happy, they are happy, win win. Same with "gahmen"?

 

[kelhot2001]

romeo88 wrote:

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.

Despite what other say, it is definitely possible to made surplus especially if more people will to do ERS. An ERS of $272K, will be around $407K at 65, if that person passed on at 81, total drawout is $433K with bequest is zero (Std Plan), so much for your (6+5+4 interest)

I always use math to calculate the possibilites, say 10 person do ERS with 7 dying at 81, while 3 live to 101 years old

The 7 pax losses of bequest compare to basic plan is around $211K x 7
To support the 3 alive after age 89, to age 101 is another 12 years at $2250 per month, you need additional 972K , while with bequest losses , you get around $1,447K (exclude int earn for the next 8 years)

It is still anyone bet as govt is not god, they are just mathematician. But not matter whats, they still save alot of money in the end

 

[henrylbh]

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 ?



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



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

You only can choose BRS after RA is created.

My earlier post was not correct as I assumed 100k in SA at 65. If it is 100k at 55, the withdrawal of $604 would last well beyond age 105.

Excess of MA including government top-ups would flow to OA once you have FRS.

 

[henrylbh]

LOL, hearsay is not fact anymore, but it can be phrase as in my opinion that govt earn 6%

Government's assets including money from CPF are mainly vested in GIC and TH and the government pays CPF about the rates CPF pays to its members.

How much the government makes is not clear, but clearly quite good over the years, after paying CPF. Otherwise, it would not be able to contribute billions to the annual budget.

 

[henrylbh]

Despite what other say, it is definitely possible to made surplus especially if more people will to do ERS. An ERS of $272K, will be around $407K at 65, if that person passed on at 81, total drawout is $433K with bequest is zero (Std Plan), so much for your (6+5+4 interest)

I always use math to calculate the possibilites, say 10 person do ERS with 7 dying at 81, while 3 live to 101 years old

The 7 pax losses of bequest compare to basic plan is around $211K x 7
To support the 3 alive after age 89, to age 101 is another 12 years at $2250 per month, you need additional 972K , while with bequest losses , you get around $1,447K (exclude int earn for the next 8 years)

It is still anyone bet as govt is not god, they are just mathematician. But not matter whats, they still save alot of money in the end

Using maths not good enough. You need actuarial back background or you assumptions are reasonable.

Only about half is able to meet FRS for the time being. Also how many would go for BRS/ERS? etc etc etc.

Whatever, cpf life is meant to be a zero sum game, but government never say so explicitly But it did mention you will get back what you put in whatever the plan you select.

Zero sum is impossible and to err on the wrong side is to have reserves. How much

 

[romeo88]

Sounds like absolutely no absolute.

Born, raised here and did my time in career military and the years after as "reservists", I'd say there's a lot you don't know about this government. Yes, from a "fishing village" to a first-world in 30 years - amazing, period. Pure faith by reading and hearing on the surface will soon run out.

You already said why there's a cap to everything.

With the entire Tamasek and the government intertwined beyond your imagination, with no transparency whatsover, based on what you are so absolute there's no evidence of anything ? You've no idea how much the cost of capital in running the entire machinery (and neither do I), and LIFE is just a tiny fraction of it, and with all the caps to boot.

With due respect, I can understand people who seek ecnomic refuge here would think otherwise.

Look, I've ploughed through the other threads, I'm not prepared to repeat them here.

That's mathematically impossible. There's no "surplus" when the government is paying 4% plus bonus interest on all retirement funds, and with zero income tax on most contributions. This government can raise as many billions as it wants by paying only 2.X% on income taxed dollars. That's the actual cost of capital to this government, and any surplus/deficit determinations derive from that cost.

Many, many wealthy people would love to see the Enhanced Retirement Sum cap raised or eliminated. (Did you ever wonder why that cap exists? )

It's possible the deficit (not surplus) attributable to CPF might be a little variable, but there's absolutely no evidence that CPF is doing anything except basic risk pooling using actuarially sound life tables and fund management principles.

 

[romeo88]

My pov is you know very well there's no free lunch with this government. The entire machinery has a cost of capital. But it's a secret only a few know - for sure it's not you and me.

I heard gahmen earn 6%, only pay 4%

 

[kelhot2001]

Using maths not good enough. You need actuarial back background or you assumptions are reasonable.

Only about half is able to meet FRS for the time being. Also how many would go for BRS/ERS? etc etc etc.

Whatever, cpf life is meant to be a zero sum game, but government never say so explicitly But it did mention you will get back what you put in whatever the plan you select.

Zero sum is impossible and to err on the wrong side is to have reserves. How much

It can go either way, but no means that government will "win" or this.
If in that particular cohort, many more pass on before 89 of age than the norm. Then, no mattter what plan, what actuarial , the result is surplus for that year

But if in that particular cohort suddenly all become healthy and live pass 90
then LIF is going to be deficient in that year

Getting back what you put in, exclude what you entitle to earn
But the point to made : nothing is impossible. That is my statement

 

[kelhot2001]

Sounds like absolutely no absolute.

Born, raised here and did my time in career military and the years after as "reservists", I'd say there's a lot you don't know about this government. Yes, from a "fishing village" to a first-world in 30 years - amazing, period. Pure faith by reading and hearing on the surface will soon run out.

You already said why there's a cap to everything.

With the entire Tamasek and the government intertwined beyond your imagination, with no transparency whatsover, based on what you are so absolute there's no evidence of anything ? You've no idea how much the cost of capital in running the entire machinery (and neither do I), and LIFE is just a tiny fraction of it, and with all the caps to boot.

With due respect, I can understand people who seek ecnomic refuge here would think otherwise.

Look, I've ploughed through the other threads, I'm not prepared to repeat them here.

There is also a cap in everything not because of the reason given. Even in Casino there is always a cap of the bet limit, that is to prevent possibilities of them losing, even their chances of winning is higher