FRS vs ERS

[BBCWatcher]

actually 4% is not 4%. this is because 20% of your initial amount does not earn interest.

This is so tiresome. Once again, the CPF Lifelong Income Fund earns all interest, including yours in your pro-rata longevity insurance share.

You are going to deplete your principal as you draw down. the amount that does not earn interest remains the same. it means that your interest will gradually decrease to 0

Yes, this part is correct. All good things must come to an end, but at least you can make this good thing last longer than it would if you were to withdraw $88K (2019 figure) at age 65.

 

[maple96]

This is so tiresome. Once again, the CPF Lifelong Income Fund earns all interest, including yours in your pro-rata longevity insurance share.

How many times must we keep repeating the CPF rules to u?

Yes, we all know the CPF Lifelong Income Fund earns all interest, but it is not yours to give to your estate if u choose Standard/Escalating Plans should u die at 66 (I quote u) after u joined CPF Life!!!

CPF Lifelong Income Fund earns all your 4% plus extra 1% plus extra 1% if you choose Standard/Escalating Plans, all makan by the fund if u die earlier than expected, at 66 per your eg.

Under Basic Plan, it only makan 4% of the 10-20% premium.

 

[henrylbh]

Question is:
1) can I top up from FRS to ERS at 55yo by transferring my OA to RA w/o first depleting SA (assuming SA still got remaining money after creation of RA)? I think we can only do so using cash top up. Even if we want to withdraw money from cpf above FRS after 55, money will be taken out from SA first, then OA.

2) After topping up to ERS, can I later at 65 yo choose cpf life basic plan with only FRS and start withdrawing the remaining money inside my RA monthly under the retirement sum scheme?

You can top up RA from FRS to ERS by (a) cash and/or (b) transfer of SA followed by OA to RA.

If what maple96 said is correct, you can still withdraw the difference between FRS and BRS, excluding cash top-ups, with property charge/pledge at anytime before commencing life payout. And you need to make application each time you wanna make a withdrawal from the difference. In other words, you can make partial withdrawal.

When life payout commences, only basic plan got RA balance and the withdrawal amount will be affected by payouts.

 

[maple96]

You can top up RA from FRS to ERS by (a) cash and/or (b) transfer of SA followed by OA to RA.

If what maple96 said is correct, you can still withdraw the difference between FRS and BRS, excluding cash top-ups, with property charge/pledge at anytime before commencing life payout. And you need to make application each time you wanna make a withdrawal from the difference. In other words, you can make partial withdrawal.

When life payout commences, only basic plan got RA balance and the withdrawal amount will be affected by payouts.

I caution all those who intend to do BRS, to write to CPFB to confirm about this partial withdrawal and that u can do multiple withdrawals thereafter. CPF website FAQ is silent on this, people deduce this from the withdrawal form.

Below is another part of the reply to my Q5 which I posted earlier:

"Generally, the withdrawal via property pledging has to be done before you join CPF LIFE. This is because CPF LIFE will take into account all available cash in your RA."

(disclaimer: I am not going for BRS)

 

[BBCWatcher]

Yes, we all know the CPF Lifelong Income Fund earns all interest, but it is not yours to give to your estate if u choose Standard/Escalating Plans should u die at 66 (I quote u) after u joined CPF Life!!!

Where did I claim that it was?

All CPF LIFE payout plans have big residuals at age 66, by the way.

CPF Lifelong Income Fund earns all your 4% plus extra 1% plus extra 1% if you choose Standard/Escalating Plans, all makan by the fund if u die earlier than expected, at 66 per your eg.

Under Basic Plan, it only makan 4% of the 10-20% premium.

Yes, but dork32 asserted that 4% (plus bonus) interest isn't 4% interest. That's completely false. Interest is always fully paid, both on your balances and on your longevity insurance share of the Lifelong Income Fund. How that interest (and principal) is distributed varies, but the interest is always paid to all living CPF members, no exceptions.

 

[maple96]

Where did I claim that it was?

All CPF LIFE payout plans have big residuals at age 66, by the way.


Yes, but dork32 asserted that 4% (plus bonus) interest isn't 4% interest. That's completely false. Interest is always fully paid, both on your balances and on your longevity insurance share of the Lifelong Income Fund. How that interest (and principal) is distributed varies, but the interest is always paid to all living CPF members, no exceptions.

An incomplete statement of facts could mislead the layman, so I merely elaborate what will happen to the interest paid for all forumers to understand.

dork32 is very calculative in his maths, he is talking about effective interest, complicated, not false, only I can understand I think

We all know it will always be paid, but we all cannot account for it unlike when it is in RA, how much will be paid/lost to the bene.

I dun wish to waste time on this with u!

 

[BBCWatcher]

dork32 is very calculative in his maths, he is talking about effective interest, complicated, not false, only I can understand I think

It's false. His "calculation" assumes the CPF Lifelong Income Fund is lost to the ether -- just completely chucked out the window, and with 0% interest.

 

[maple96]

It's false. His "calculation" assumes the CPF Lifelong Income Fund is lost to the ether -- just completely chucked out the window, and with 0% interest.

It is the basics of accounting. If dork32 dun think he can live beyond 90, it is correct of him to write-off the 4% interest on his 10-20% premium of his CPF Life Basic. Should he live beyond 90-93, he can start to count the "bad debt" he had written off earlier, as a recovery in his mthly payout. Accounting 101, it is correct.

Ok no more wasting people's time here debating on this basics of accounting

 

[kelhot2001]

Where did I claim that it was?

All CPF LIFE payout plans have big residuals at age 66, by the way.

But the residual differ alot from age 70 - 81 between std/ec and basic plan and from 81 - 90 of age, both std/esc will have no residue, while you still get a lot of left behinds from basic withdrawal plan isnt it?

 

[BBCWatcher]

Accounting 101, it is correct.

No, it's simply not correct. I disagree.

But the residual differ alot from age 70 - 81 between std/ec and basic plan and from 81 - 90 of age, both std/esc will have no residue, while you still get a lot of left behinds from basic withdrawal plan isnt it?

Yes, and I did not claim otherwise.

 

[henrylbh]

I caution all those who intend to do BRS, to write to CPFB to confirm about this partial withdrawal and that u can do multiple withdrawals thereafter. CPF website FAQ is silent on this, people deduce this from the withdrawal form.

Below is another part of the reply to my Q5 which I posted earlier:

"Generally, the withdrawal via property pledging has to be done before you join CPF LIFE. This is because CPF LIFE will take into account all available cash in your RA."

(disclaimer: I am not going for BRS)

The Form "Withdraw Retirement Account Savings with Sufficient CPF Property Charge" (Form RW/PTY-WDL 03/2018) allows -

I would like to withdraw the amount above my BRS in my RA:
(a) the full amount that I am entitled to.
(b) partial amount of $xxx.

I take it to mean that if one makes a partial withdrawal, he can still make further withdrawal up to the full amount in (a).

 

[henrylbh]

actually 4% is not 4%. this is because 20% of your initial amount does not earn interest. so 4% is actually 3.2%. You are going to deplete your principal as you draw down. the amount that does not earn interest remains the same. it means that your interest will gradually decrease to 0

If you are referring to basic plan, the statement may be erroneous

Even if 20% is moved to life fund, it still earns the stated interest.

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.

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.

 

[kelhot2001]

If you are referring to basic plan, the statement may be erroneous

Even if 20% is moved to life fund, it still earns the stated interest.

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.

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.

Which lead to a question again, if I withdraw 1.3k per mth, from my RA amt based on 278k,FRS is at 181k. I would be able to draw until 100 years old. But with CPF Life ,it is package that that i will draw until 90 fr9m my RA, and from then on, I would draw from LIF until I die. Of course argument will be that if I would live to 101 years old, i will be assure of my monthly livong cost

 

[henrylbh]

Which lead to a question again, if I withdraw 1.3k per mth, from my RA amt based on 278k,FRS is at 181k. I would be able to draw until 100 years old. But with CPF Life ,it is package that that i will draw until 90 fr9m my RA, and from then on, I would draw from LIF until I die. Of course argument will be that if I would live to 101 years old, i will be assure of my monthly livong cost

Too bad, whether like or not, all are forced to take a bet and some $$$ must be lost for some $$$ to be gained, and that's assuming the pool is not building kiasu reserves.

 

[henrylbh]

Your 88k plus interest earned cannot be taken out. But you still can take out your RA 88k based on the mount from your FRS, not from your topup, if I am not wrong

FRS = 176k
Top-up = 88k
ERS = 264k

Withdrawal under BRS = FRS - BRS - top-up = 0?

 

[henrylbh]

CPF Lifelong Income Fund does not belong to you, why are you counting the interests it is getting? In this respect, how much interest it is getting has nothing to do with you isn't it?

You dunno meh?
He thinks everyone will live to at least 95yo?

 

[tangent314]

The interest earned in the Lifelong Income Fund matters, and it matters A LOT, because the interest earned is calculated into your monthly payout. If the LIF does not earn any interest, your monthly payout will be much lower.

It's completely false and misleading to claim that the interest in the LIF does nothing for you, because you definitely get the benefits out of the interest earned.

 

[henrylbh]

The interest earned in the Lifelong Income Fund matters, and it matters A LOT, because the interest earned is calculated into your monthly payout. If the LIF does not earn any interest, your monthly payout will be much lower.

It's completely false and misleading to claim that the interest in the LIF does nothing for you, because you definitely get the benefits out of the interest earned.

Yes interest is imputed in life payouts for all 3 plans. Otherwise, FRS would exhaust in about 16 years to age 81/82.

Isn't it a coincide that SP and EP has zero bequest around that time? However, BP would still have bequest of about 140k plus at that time.

Conclusion?

 

[maple96]

FRS = 176k
Top-up = 88k
ERS = 264k

Withdrawal under BRS = FRS - BRS - top-up = 0?

Your formula is only valid if your RA is at FRS, and your topup monies from SA => BRS.

With ERS, u topup monies in RA from FRS to ERS, the formula should be :

Withdrawal = FRS - BRS, as reflected in CPFB reply to my Query.

(edit: after u take FRS- BRS, then if u have topup monies from SA, u deduct)

 

[maple96]

The interest earned in the Lifelong Income Fund matters, and it matters A LOT, because the interest earned is calculated into your monthly payout. If the LIF does not earn any interest, your monthly payout will be much lower.

It's completely false and misleading to claim that the interest in the LIF does nothing for you, because you definitely get the benefits out of the interest earned.

All the comments on this topic (ie false and misleading) are like "chicken and duck" talk.

I need to put up a WOT later to explain the maths and accounting 101