FRS vs ERS

[kelhot2001]

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.

Mike, if you will to ask me, it is a shot in the dark, they probably will not allow it. Even if they allow, I am checking on something else, they probably will need a reputable custodian to hold and release the funds (not sure what is the correct term) or like a trust funds.

It does say many things on CPF life

1) They did not give ample time for market to be ready , they allow exemption but no one can match.

2) They should allow an opt out option for those who can readily provide proof of plan in the RA

3) They say can opt out with private annuities but they cant say who are the ones acceptable

4) They should allow the market(Aviva, NTUC, Manulife) to offer a proposal before 54/55, upon signatory of the funds, we can use our CPF saving to purchase the annuities funds. Yes your argument can be no one can match.
But isn't this a better way to show the member , look I open up the market , no one can match my plan. Using cash, CPF effectively lock majorities inside CPF life

My opinion again

 

[Mecisteus]

Let's face it. You may not like CPF Life. But it gives the best payouts in the market so far.

No insurance company can match the payouts simply because they don't have a pool big enough like CPF Life.

Kelhot I'm sure you are wealthy enough. And you said you were a gambler.

So just treat CPF Life as a small insurance in case you squander the bulk of your wealth. If that happens, at least your CPF Life is intact.

 

[kelhot2001]

Let's face it. You may not like CPF Life. But it gives the best payouts in the market so far.

No insurance company can match the payouts simply because they don't have a pool big enough like CPF Life.

Kelhot I'm sure you are wealthy enough. And you said you were a gambler.

So just treat CPF Life as a small insurance in case you squander the bulk of your wealth. If that happens, at least your CPF Life is intact.

LOL, I am not wealthy person. And yes, I dislike it very much and trying to worm my way out from the scheme. That is exactly I am a gambler, this is exactly why the bet is never worth the return.

Maybe is the character of mine, I rather lose that "interest" than to be force into an unbalance bet . There isnt much to do as just to creat awareness of the so call pitffall of CPF life. Maybe if more will to feedback, they might come out with a opt-out option Maybe... just maybe... I never like to keep quiet , as I always tell my staff, if you dont voice it out, I take it as you are happy with it

 

[Mecisteus]

LOL, I am not wealthy person. And yes, I dislike it very much and trying to worm my way out from the scheme. That is exactly I am a gambler, this is exactly why the bet is never worth the return.

Maybe is the character of mine, I rather lose that "interest" than to be force into an unbalance bet . There isnt much to do as just to creat awareness of the so call pitffall of CPF life. Maybe if more will to feedback, they might come out with a opt-out option Maybe... just maybe... I never like to keep quiet , as I always tell my staff, if you dont voice it out, I take it as you are happy with it

It's an irony. You are a gambler. The expected payouts from CPF Life is way higher than the expected payouts from gambling.

But you still prefer gambling to CPF Life.

 

[BBCWatcher]

It's an irony. You are a gambler. The expected payouts from CPF Life is way higher than the expected payouts from gambling.

But you still prefer gambling to CPF Life.

Also interesting that it hasn’t occurred to him yet that CPF LIFE allows him to gamble that much more and/or more aggressively, if he wishes, without falling below a certain income level — always non-lavish, and flat nominal except for the Escalating Plan.

....But maybe the “thrill” of possible elder destitution is entertaining and pleasurable? That’d be odd, but it’s not unheard of.

 

[Mecisteus]

Gambling and no insurance. I would say that is a reckless approach.

Some people don't want CPF Life but at least they don't gamble. This one I can understand.

 

[kelhot2001]

It's an irony. You are a gambler. The expected payouts from CPF Life is way higher than the expected payouts from gambling.

But you still prefer gambling to CPF Life.

A gambler weight the odds of winning. table games like Blackjack or Bacarrat offer odd around 52/48 with banker on the higher edge, payout are even.
Other game that offer payout 1 pay 7 or 1 pay 11 or even jackpot 1 in a million are games I would never bet. If my bet/risk to lose $100,000. I would expect a gain of at least $500,000 for uneven odds.

The bet you take is for 1 hand, win you take , lose you passed on. If CPF life will to break-even at say 82 for men, I am keen to take it on as stats shown man expectancy is 80.7 of age (50% percent passed on), female at 85, not at the age of 89. So to say the payout is higher than expect will be yours interpretation (you are not wrong), but not mine

Also interesting that it hasn’t occurred to him yet that CPF LIFE allows him to gamble that much more and/or more aggressively, if he wishes, without falling below a certain income level — always non-lavish, and flat nominal except for the Escalating Plan.

....But maybe the “thrill” of possible elder destitution is entertaining and pleasurable? That’d be odd, but it’s not unheard of.

Let not go to the region of elder destitution again. I might have 2 million in my bank or maybe 100 dollars in my whole asset. Who is to judge?

Lastly, dont gamble,

 

[henrylbh]

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

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.

Answer like no answer better than got answer in the above case.

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.

The answer given is not wrong but not complete

 

[swathe]

Based on the basic plan for COF Life, the FRS monthly payout is lower than BRS. This means BRS is more cost effective.

And then with BRS, you can’t withdraw the amount you top up.

My conclusion is that topping up SA/RA is not optimal since the money is either stuck or you are forced to take the FRS which is less cost effective to be able to withdraw.

Is it correct?

 

[tangent314]

Based on the basic plan for COF Life, the FRS monthly payout is lower than BRS. This means BRS is more cost effective.

Highly doubt that this is correct.

 

[swathe]

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-life

Under “How much my CPF Life Payout Will Be”,

BRS ($88k), basic plan max payout $790
FRS ($176k), basic plan max payout $1450

While the cost is double but the payout is not proportionately double.

 

[Mecisteus]

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-life

Under “How much my CPF Life Payout Will Be”,

BRS ($88k), basic plan max payout $790
FRS ($176k), basic plan max payout $1450

While the cost is double but the payout is not proportionately double.

https://www.cpf.gov.sg/members/FAQ/...group=CPF LIFE&folderid=11673&ajfaqid=2238125

 

[SKenny]

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-life

Under “How much my CPF Life Payout Will Be”,

BRS ($88k), basic plan max payout $790
FRS ($176k), basic plan max payout $1450

While the cost is double but the payout is not proportionately double.

The incremental payout from BRS to FRS is definitely lower than the payout from BRS. However this incremental payout is still far superior to virtually all the annuity schemes you can find.

 

[BBCWatcher]

Based on the basic plan for COF Life, the FRS monthly payout is lower than BRS.

This sentence is not correct.

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-life

Under “How much my CPF Life Payout Will Be”,

BRS ($88k), basic plan max payout $790
FRS ($176k), basic plan max payout $1450

I'm quite sure that 1,450 is a bigger number than 790.

I think you meant to write something like this:

"Based on the CPF LIFE Basic Plan, the FRS-level monthly payout per premium dollar is lower than at BRS-level."

To which I would reply, "So what?" You simply evaluate the deal on offer. If it's still the best available deal, and if you're in a position to take it, you take it. Likewise, if ERS-level CPF LIFE is the best available deal, and if you're in a position to take it, you take it. If some other deal that you've already maxed out is already maxed out (e.g. BRS-level CPF LIFE), so what, who cares?

The incremental layout from BRS to FRS is definitely lower than the payout from BRS. However this incremental payout is still far superior to virtually all the annuity schemes you can find.

Exactly, thumbs up. You evaluate the (incremental) deal on offer on its own terms, that's all.

 

[swathe]

https://www.cpf.gov.sg/members/FAQ/...group=CPF LIFE&folderid=11673&ajfaqid=2238125

Thanks. Direct answer.

 

[lifeafter41]

The incremental layout from BRS to FRS is definitely lower than the payout from BRS. However this incremental payout is still far superior to virtually all the annuity schemes you can find.

Spoken like a professional investor......

 

[lifeafter41]

Answer like no answer better than got answer in the above case.



The answer given is not wrong but not complete

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

With all the extra interest, whether on SA, RA or MA, what’s the actual interest in the first place, and with the amount 20,000 or 60,000 or on top on whatever..

Can somebody help to figure out which is what? Thanks!!

 

[romeo88]

The priority of the first 60k afaik has never been properly described by CPFB or not properly phrased (as in most cases for advanced topics). I'm also trying to nail this down, let me try...

Before RA, only 1 additional percent goes for the first 60k, starting from OA, up to 20k, then MA/SA combined to make up to 60k. Anyways, this additional interest is credited to the SA account rather then the respective account where the additional interest is earned. Why MA/SA combined is because they both earn the same interest rate. For most cases, it really doesn't matter the order of the accounts, unless you have lots of OA but not much of SA/MA combined. For example, OA is 60k and MA/SA is 30k, then you'll only get 1% of 20+30k to be credited into SA.

If RA is created, then the additional interest earned will go to RA instead of SA. In addition, the first 30k gets another additional 1%.

If LIFE has started, then the additional interest earned I believe goes to the LIFE pool.

Here's the reference.

Here are some CPFB examples.

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

With all the extra interest, whether on SA, RA or MA, what’s the actual interest in the first place, and with the amount 20,000 or 60,000 or on top on whatever..

Can somebody help to figure out which is what? Thanks!!

 

[BBCWatcher]

Before RA, only 1 additional percent goes for the first 60k, starting from OA, up to 20k, then MA/SA combined to make up to 60k.

No, it’s the other way around. If you have $60K in MA+SA+RA, even with nothing in OA, you’re earning maximum bonus interest. OA is only ever counted for bonus interest purposes if MA+SA+RA is less than $60K. If OA is counted in that event, a maximum of $20K of OA is counted toward hitting the $60K.

For example, if you have OA=$70K and MA+SA+RA=$10K, then you’re getting bonus interest only on $30K.

On edit: Yes, I know CPF counts up to $20K in OA “first,” then moves onto MA and SA. That’s more complicated than it needs to be. “Got $60K or more in your MA+SA+RA? Great, you’re definitely earning maximum bonus interest. But if you don’t, then.....” If you do it that way then lots of people don’t even have to look at OA, figure out how the $20K applies, etc. But I didn’t write this part of CPF’s literature.

 

[maple96]

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

With all the extra interest, whether on SA, RA or MA, what’s the actual interest in the first place, and with the amount 20,000 or 60,000 or on top on whatever..

Can somebody help to figure out which is what? Thanks!!

If u dig through the whole CPF website, u will be able to find the information

Below are Key extracts from the CPFB website: (those in red are my comments)

The priority of the accounts that make up the $60,000 and $30,000 is as follows:

1st: Retirement Account (RA), including balances used to pay for the annuity premium under CPF LIFE

(above apply if you are above 55. So u will get extra 2% on first 30k of RA/CPF Life premium and extra 1% on next 30k of RA/CPF Life premium, until you have depleted the CPF Life premium., ie if less than 60k, the rest will be taken from next item # below)

Below applies if you are below 55 or above 55 (see comment above):

2nd : Ordinary Account (OA), up to $20,000

3rd : Special Account (SA)

4th: MediSave Account (MA)

(So if you have more than 20k in OA, only 20k earn extra 1%, then the next 40K will come from SA then MA to earn the extra 1% if you are below 55)

The extra interest received on the OA will go into the member's SA if he is below 55 years old or RA if he is 55 and above to enhance his retirement savings.

For a member who has joined CPF LIFE*scheme, the extra interest earned will be paid into his RA (for Basic Plan) or the CPF LIFE Annuity Fund (for Standard and Escalating Plan). Please refer to the*CPF LIFE scheme*for more information on CPF LIFE.