FRS vs ERS

[henrylbh]

Which cap are you referring to about LIFE ?

In post#359, BBCW asked you -

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

But he thinks many, many like him

 

[kelhot2001]

In post#359, BBCW asked you -



But he thinks many, many like him

Well Henry, in long run, if more people say 50% now have FRS at 500K,
they will go for 500K but then again the cap will still be at 750K. Again, CPF are not risk taker, even the odds at 70/30 with them winning at 70, they will not take the risk of unbalance bet or unbalance weight-age if that sound nicer.

 

[henrylbh]

Well Henry, in long run, if more people say 50% now have FRS at 500K,
they will go for 500K but then again the cap will still be at 750K. Again, CPF are not risk taker, even the odds at 70/30 with them winning at 70, they will not take the risk of unbalance bet or unbalance weight-age if that sound nicer.

CPF places caps for reason different from yours. Since inception, the caps exist.

 

[romeo88]

The entire portfolio GLC manages (although they think they own it) no one knows what is happening there. Anyone who claims they know will subject to the convenient OSA law.

Any investment nut would tell you 2.5% is way below any sound investment house could earn, over the long run. Given that, 2.5% is below market rate, members are being "short-changed". Most good insurers and good asset management houses have a track record of a smooth-out returns of no less than 5% over the years.

Then came the SA and MA, well I must say 4% on a continuous basis is pretty good. In order not to bear too much liability, this is why there are caps. Each member will not be allowed to deposit more than what has been calculated so as not to exceed what they want to bear. These calculations do not need advanced algebra. What you and I don't have is the entire data. I’d never see this as generosity on the part of the government of the day (or the last 0.5 century). If you average out the 2.5% and 4% CPF portfolio, it’s close to a fair return.

Then came RA. Well compared to before, you now have an opportunity to extend the 4% bucket very slightly (88k to be precise for 2019 and some OA upgrade), ignoring the additional 1% for 30k and the hack. Am I thankful, not really. Don’t forget I’ve been saying I don’t want and I don’t need the longevity insurance. Besides, with the kiasu mentality, there’s quite a high chance there will be lots of excess out of the pool. What will be absolute is there won’t be any disclosure on this, unless GE results flip in the coming years. You’re a gambler so good exercise for you – what’s the probability of that happening, with and without the fake law.

Perhaps the people who loiter around here are already well aware of above. The cap is there to make sure that the government that I know so well stay that way - no free lunch. Like they say, give you a left wing, take back the right one (or is it the whole chicken).

The cap refer to why cap at 3x ERS and not allowing unlimited CPF life

 

[romeo88]

Nice try Henry. I'm not taking the bait, and I'll try not to put any more bait too.

ha ha.

In post#359, BBCW asked you -



But he thinks many, many like him

 

[henrylbh]

The entire portfolio GLC manages (although they think they own it) no one knows what is happening there. Anyone who claims they know will subject to the convenient OSA law.

GIC and TH appears to be holding most of the nation's reserves and they are considered SWF. Besides these, MOF has MAS as well as other exempt companies which nobody knows their wealth, not even the President

 

[dork32]

Nah, it doesn't work this way. the odds remains the same no matter how long you stay. How Casino earns is in this way. Most table games are 52% to 48% with the casino of the higher edge. Meaning the casino will win 4% of every bet made. Hence casino prefer gambler to play long hours (and hence the membership point) . A hardcore gambler will normally play around 10-20 hours with minimum bet of $100.00 roughly 20hrx100betx50games (1hr normally abt 50 games) $100,000 worth of bets , casino gain only $4000 per gambler. (In addition, most table have those other bet that pay 1 to 11, that is a sure lose bet for gambler, this increase casino earning ratio)
Multiply with numbers of gambler per day, increase those high roller bet, you can see their earning. There are also other earning from other methods but not in Singapore. In other casino, there are ATM inside casino which the earn 3% when you withdraw, foreign currency exchange earning etc etc.

Casino never like short term players, always gamblers addict. As for cap limit is to prevent unbalance bet and also prevent doubling up. If you want to bet big amount, there is also a high limit table or VIP table to ensure your minimum bet is always high.

Imagine, the $100 minimum table, they gain $500,000 commission on 2% in 20 hrs and then one lucky gambler came and bet $1 mil for 1 hand and win and leaves.

Same with soccer betting, the bookies dont earn from the bets itself but rather the commission from the bet. bet A you win 0.95 , a 100 bet you win 95, 5 dollars goes to bookies. IF the match A and B, A is overloaded, the bookie will alway balance up the bet by throwing bet to other bookie willing to take bet for B. They will always win.

Same with CPF life and hence the cap. Lastly, I quitted gambling already and advise against gambling, long run you lose. The only people who win are very strong will person who know how to leave ( I am not one of them lol)

you should not be trying to teach me maths.

if i use your numbers 52% win and 48% lose, on a roulette and bet on red and black

I you bet once you have 48% chance of losing and 52% chance of winning.

if you bet twice, your outcome is as follows
ww 23% Win
wl 25% draw
lw 25% draw
ll 27.%


if you bet 3 times your
www 11.05% win
wwl 11.98% win
wlw 11.98% win
wll 12.98% lose
lww 11.98% win
lwl 12.98% lose
llw 12.98% lose
lll 14.06% win
Total win =47% total lose = 53%

comparing betting once and betting 3 times, you will realize that the probablity of winning has dropped by 1% just because you bet 3 times.
You continue to bet, the probability of winning continues to drop. This is how statistics works.

the expected x for every dollar bet is lose 4 cents. the more times you bet, the higher the probability you will get to the lose 4 cents.

you are right that the odds for every bet remains same at 52% win and 48% lose.

you are completely wrong in that the chances of winning remains the same, regardless the number of times you bet.

 

[kelhot2001]

you should not be trying to teach me maths.

if i use your numbers 52% win and 48% lose, on a roulette and bet on red and black

I you bet once you have 48% chance of losing and 52% chance of winning.

if you bet twice, your outcome is as follows
ww 23% Win
wl 25% draw
lw 25% draw
ll 27.%


if you bet 3 times your
www 11.05% win
wwl 11.98% win
wlw 11.98% win
wll 12.98% lose
lww 11.98% win
lwl 12.98% lose
llw 12.98% lose
lll 14.06% win
Total win =47% total lose = 53%

comparing betting once and betting 3 times, you will realize that the probablity of winning has dropped by 1% just because you bet 3 times.
You continue to bet, the probability of winning continues to drop. This is how statistics works.

the expected x for every dollar bet is lose 4 cents. the more times you bet, the higher the probability you will get to the lose 4 cents.

you are right that the odds for every bet remains same at 52% win and 48% lose.

you are completely wrong in that the chances of winning remains the same, regardless the number of times you bet.

Agree, now my stand is dont bet lol

 

[kelhot2001]

The entire portfolio GLC manages (although they think they own it) no one knows what is happening there. Anyone who claims they know will subject to the convenient OSA law.

Any investment nut would tell you 2.5% is way below any sound investment house could earn, over the long run. Given that, 2.5% is below market rate, members are being "short-changed". Most good insurers and good asset management houses have a track record of a smooth-out returns of no less than 5% over the years.

Then came the SA and MA, well I must say 4% on a continuous basis is pretty good. In order not to bear too much liability, this is why there are caps. Each member will not be allowed to deposit more than what has been calculated so as not to exceed what they want to bear. These calculations do not need advanced algebra. What you and I don't have is the entire data. I’d never see this as generosity on the part of the government of the day (or the last 0.5 century). If you average out the 2.5% and 4% CPF portfolio, it’s close to a fair return.

Then came RA. Well compared to before, you now have an opportunity to extend the 4% bucket very slightly (88k to be precise for 2019 and some OA upgrade), ignoring the additional 1% for 30k and the hack. Am I thankful, not really. Don’t forget I’ve been saying I don’t want and I don’t need the longevity insurance. Besides, with the kiasu mentality, there’s quite a high chance there will be lots of excess out of the pool. What will be absolute is there won’t be any disclosure on this, unless GE results flip in the coming years. You’re a gambler so good exercise for you – what’s the probability of that happening, with and without the fake law.

Perhaps the people who loiter around here are already well aware of above. The cap is there to make sure that the government that I know so well stay that way - no free lunch. Like they say, give you a left wing, take back the right one (or is it the whole chicken).

Agree to all your point except that you put it more eloquently than I could.

Except for the part of RA 4%, it will be a fact only if you live pass 90 years old

 

[BBCWatcher]

Govt can easily borrow from market at less than rates it pays cpf. But it were to borrow 300b?

It looks like the government has S$129 billion in outstanding Singapore Government Securities alone, not counting agency general obligation debts (LTA, HDB, Temasek, etc.) If the government wanted to double that figure you might see the yield creep up by a very few basis points, if that.

I've said this before, but I'd like to see the MAS start issuing real return 10 year bonds, probably in a new November or December auction since there isn't any bond or t-bill auction scheduled in the last two calendar months of the year at present. Such bonds would serve an important, useful role for many investors and institutions. A new bond should increase that S$129 billion figure by a few billion.

 

[The_Davis]

CPF rules fyi

Originally Posted by*maple96:
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.

Wt... i wonder if cpf is our money...

 

[kelhot2001]

Interest on -
RA - 6+5+4
SA - 4
OA - 0
MA - 4

Interest on MA in excess of MA goes into RA, if FRS is not met.
Interest on MA in excess of MA goes into OA, if FRS is met.

In addition, government's top-ups to MA will follow above rule.

CPF reply me on this

Seem correct except that for BHS, the interest still goes to SA if FRS not full, while full goes to OA. CPF mail not working so cannot cut and paste here

 

[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

Here is the reply

Thank you for your enquiries of 15 April 2019 regarding exemption from CPF LIFE.

Members aged above 55 can apply to be exempted from setting aside a retirement sum in their Retirement Account (RA), if they are receiving lifelong monthly payouts from a pension or a private annuity (bought using cash or under the CPF Investment Scheme).

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 applicable to you based on when you are born.

The payout benchmark applicable to you is not available yet.

It will be determined nearer to your 55th birthday and announced once available. You may contact us then to obtain more information on exemption.

The payout benchmark that we currently have can be found in this link.

The Board does not maintain a list of approved annuities. Please note the following when applying for exemption:

1. You must be age 55 and above.
2. The use of investment instruments such as endowments and bonds for exemption are not allowed.

3. You must be in receipt of the monthly lifelong payouts from your private annuity/pension.

4. You must be the policy holder and the sole insured person of the annuity policy.

5. You can use multiple annuity policies and/or pensions to apply for exemption.

6. The amount you may withdraw from your RA excludes any top-up monies under the Retirement Sum Topping-Up Scheme and the interest earned on it.

7. Upon exemption, you will not be eligible to receive top-ups under the Retirement Sum Topping-Up Scheme unless you opt to join CPF LIFE.

8. The RA savings that is payable to you upon exemption will be fully paid to you in a lump sum.

9. If you surrender or terminate your annuity policy used for exemption, you will be required to refund to your RA, an amount up to the Full Retirement Sum applicable to you plus the accrued interest.

For more information, please click here.

We would be glad to assist if your require further clarifications.

Yours sincerely

The benchmark for last 5 years


Birth Date
Payout Benchmark for
Male Female
Jul 1950 to Jun 1951 $613 $569
Jul 1951 to Jun 1952 $644 $598
Jul 1952 to Jun 1953 $715 $664
Jul 1953 to Jun 1954 $843 $785
Jul 1954 to Jun 1955 $975 $906
Jul 1955 to Jun 1956 $1,019 $948
Jul 1956 to Jun 1957 $1,079 $1,003
Jul 1957 to Jun 1958 $1,139 $1,059
Jul 1958 to Jun 1959 $1,206 $1,121
Jul 1959 to Jun 1960 $1,258 $1,169
Jul 1960 to Dec 1961 $1,302 $1,211
Jan 1962 to Dec 1962 $1,381 $1,286
Jan 1963 to Dec 1963 $1,417 $1,320
Jan 1964 to Dec 1964 $1,454 $1,354
Jan 1965 to Dec 1965 $1,490 $1,388

INcrease by 30 to 50 per year

 

[kelhot2001]

This email explicitly explain alot of things especially on the extra interest which is being argue



We refer to your enquiry of 15 April 2019.
The current CPF base interest rates are as follows:

CPF Account Interest Rate
Ordinary Account (OA) 2.5%
Special Account (SA) 4%
MediSave Account (MA) 4%
Retirement Account (RA) 4%
An extra 1% interest per annum will also be paid on the first $60,000 of a member's combined balances (with up to $20,000 from OA). Members can therefore earn up to 3.5% in the OA and 5% in the SA, MA and RA.

Members aged 55 and above, will earn an additional extra interest of 1% per year on the first $30,000 of their combined balances, as part of the Government’s efforts to enhance retirement savings. This is in addition to the 1% paid on the first $60,000.

The priority of accounts to make up the first $60,000 and $30,000 are:

RA, including balances used to pay for the annuity premium under CPF LIFE
OA, up to $20,000 (extra interest earned on OA will be paid to your RA)
SA
MA
Based on your example provided

OA $0
SA $60,500
MA $57,200
RA $90,500

Monies in your SA would earn an interest of 4% per annum. If your RA balance is more than $60,000, the extra interest and the additional extra interest would only be earned in your RA.

The MA balances would be built until it reaches the prevailing Basic Healthcare Sum (BHS). When your MA is built to the prevailing BHS, any excess contribution would be transferred to your SA. Members who have met the prevailing Full Retirement Sum (FRS) of $176,000, their excess would be transferred to their OA.

 

[lifeafter41]

This email explicitly explain alot of things especially on the extra interest which is being argue



We refer to your enquiry of 15 April 2019.
The current CPF base interest rates are as follows:

CPF Account Interest Rate
Ordinary Account (OA) 2.5%
Special Account (SA) 4%
MediSave Account (MA) 4%
Retirement Account (RA) 4%
An extra 1% interest per annum will also be paid on the first $60,000 of a member's combined balances (with up to $20,000 from OA). Members can therefore earn up to 3.5% in the OA and 5% in the SA, MA and RA.

Members aged 55 and above, will earn an additional extra interest of 1% per year on the first $30,000 of their combined balances, as part of the Government’s efforts to enhance retirement savings. This is in addition to the 1% paid on the first $60,000.

The priority of accounts to make up the first $60,000 and $30,000 are:

RA, including balances used to pay for the annuity premium under CPF LIFE
OA, up to $20,000 (extra interest earned on OA will be paid to your RA)
SA
MA
Based on your example provided

OA $0
SA $60,500
MA $57,200
RA $90,500

Monies in your SA would earn an interest of 4% per annum. If your RA balance is more than $60,000, the extra interest and the additional extra interest would only be earned in your RA.

The MA balances would be built until it reaches the prevailing Basic Healthcare Sum (BHS). When your MA is built to the prevailing BHS, any excess contribution would be transferred to your SA. Members who have met the prevailing Full Retirement Sum (FRS) of $176,000, their excess would be transferred to their OA.

Seem you are turning 55 next year.
What’s your plan?
FRS with basic?
Or go for exemption with annuity? Pte or Co.....

 

[kelhot2001]

Seem you are turning 55 next year.
What’s your plan?
FRS with basic?
Or go for exemption with annuity? Pte or Co.....

I still have 7 years to go, worst to worst BRS with Basic withdrawal. If possible , will be private annuties. Never like to force into something that I am not willing. I maybe a gambler, but with that kinds of odds at 70/30, and payout is so lousy. I rather not bet.

 

[lifeafter41]

I still have 7 years to go, worst to worst BRS with Basic withdrawal. If possible , will be private annuties. Never like to force into something that I am not willing. I maybe a gambler, but with that kinds of odds at 70/30, and payout is so lousy. I rather not bet.

Kind of exploring private annuity but don’t see any that give payout for life very similar to CPF Life to circumvent it.

Having said that 7 years is not too long, hopefully not too many patterns after 2019 GE

 

[kelhot2001]

Kind of exploring private annuity but don’t see any that give payout for life very similar to CPF Life to circumvent it.

Having said that 7 years is not too long, hopefully not too many patterns after 2019 GE

I think if you follow this should be safe, minimum payout per year plus life payout till death

Jul 1960 to Dec 1961 $1,302 $1,211
Jan 1962 to Dec 1962 $1,381 $1,286
Jan 1963 to Dec 1963 $1,417 $1,320
Jan 1964 to Dec 1964 $1,454 $1,354
Jan 1965 to Dec 1965 $1,490 $1,388

 

[culture_counter]

To put it even simpler, you leave more money in there (ERS), you get higher CPF LIFE payouts starting age 65. You don't want to lock up that money, then go with the FRS, or even the BRS.

Yes,it seems FRS should be enough, leave the balance for liquidity or emergency use.

 

[Mecisteus]

kelhot it's funny that CPF did not consider the quality or background of the company issuing the private annuity as a CPF Life replacement.