FRS vs ERS

[starfish.starfish]

Hi all, I have a question on the above.
Assuming I have 300k (OA+SA) and am 55 yrs old, what's the advantage of opting for the 249k ERS vs 166k FRS with the difference remaining in either the OA or SA account for withdrawal as and when you like? Is it just for the 6% vs 5% interest rate difference between RA and OA/SA? Wouldn't leaving the rest in OA/SA gives more needed flexibility, you can withdraw when needed?

Abit confused, or maybe, very confused. Lol

 

[elnewbie]

Lol, you've just answered your own question.

Hi all, I have a question on the above.
Assuming I have 300k (OA+SA) and am 55 yrs old, what's the advantage of opting for the 249k ERS vs 166k FRS with the difference remaining in either the OA or SA account for withdrawal as and when you like? Is it just for the 6% vs 5% interest rate difference between RA and OA/SA? Wouldn't leaving the rest in OA/SA gives more needed flexibility, you can withdraw when needed?

Abit confused, or maybe, very confused. Lol

 

[starfish.starfish]

Lol, you've just answered your own question.

Haha am confused mah.
So it's really additional 1% interest vs flexibility of leaving in OA/SA?

 

[lzydata]

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.

 

[henrylbh]

Hi all, I have a question on the above.
Assuming I have 300k (OA+SA) and am 55 yrs old, what's the advantage of opting for the 249k ERS vs 166k FRS with the difference remaining in either the OA or SA account for withdrawal as and when you like? Is it just for the 6% vs 5% interest rate difference between RA and OA/SA? Wouldn't leaving the rest in OA/SA gives more needed flexibility, you can withdraw when needed?

Abit confused, or maybe, very confused. Lol

CPF Life is a bet. Theoretically, half must lose for half to gain and how much the manager is keeping and how much buffer is needed to cushion error in estimates.

Hence you either win, draw or lose, depending on the age you uplorry as well as others in the pool. So you decide how much you want to bet. But your loss, if any, may be covered by the additional yield if OA is used for ERS. Those who got substantial SA after meeting FRS should leave the excess in SA instead of going for ERS..

 

[Mecisteus]

CPF Life is a bet. Theoretically, half must lose for half to gain and how much the manager is keeping and how much buffer is needed to cushion error in estimates.

Not really correct. Everyone must lose. The winner must be the provider.

Basically if you are hoping to be the longest living human in Guinness World Records, then opt for ERS.

 

[Wood41]

I will be in this situation.
Keep in SA ( for higher interest ) & withdraw $
like saving account /ATM ?

Those who got substantial SA after meeting FRS should leave the excess in SA instead of going for ERS..

 

[a4973]

at age 55, if OA + SA <$166K how would the set aside to RA be implemented in what order?
1. empty OA then get balance from SA to make up FRS
2. empty SA then get balance from OA to make up FRS
thanks

 

[dork32]

assume oa 100k, sa 206k

brs
oa 100k
sa 40k
ra 83k
cash 83k

ers
oa 100k
sa 40k
ra 166k
cash 0

frs
oa 57k
sa 0
ra 249k
cash 0

oa = 2.5%, sa = 4%, ra = kena stuck, cash = you say how many %, then how many %

choose the one that is suitable for you

 

[a4973]

assume oa 100k, sa 206k

brs
oa 100k
sa 40k
ra 83k
cash 83k

ers
oa 100k
sa 40k
ra 166k
cash 0

frs
oa 57k
sa 0
ra 249k
cash 0

oa = 2.5%, sa = 4%, ra = kena stuck, cash = you say how many %, then how many %

choose the one that is suitable for you

are your ers & frs examples upside down?

 

[starfish.starfish]

are your ers & frs examples upside down?

yah, I think it's just his typo error. Am just surprised that BRS difference must be withdrawn into cash and not able to continue to stay in OA/ SA based on his example?

 

[henrylbh]

yah, I think it's just his typo error. Am just surprised that BRS difference must be withdrawn into cash and not able to continue to stay in OA/ SA based on his example?

With BRS, the amount is withdrawn from RA, not OA/SA.

Dunno what to do with the amount withdrawn, then recycle back to OA/SA until the time you need it, if CPF annual limit is not met.

Or let the amount remain in RA and earn the interest until you need it, then pledge your assets. But the interest earned cannot be withdrawn.

 

[a4973]

With BRS, the amount is withdrawn from RA, not OA/SA.

Dunno what to do with the amount withdrawn, then recycle back to OA/SA until the time you need it, if CPF annual limit is not met.

Or let the amount remain in RA and earn the interest until you need it, then pledge your assets. But the interest earned cannot be withdrawn.

but is it funds to make up RA taken from OA then SA or SA then OA?

 

[elnewbie]

SA, followed by OA if SA is not enough.

but is it funds to make up RA taken from OA then SA or SA then OA?

 

[BBCWatcher]

Dunno what to do with the amount withdrawn, then recycle back to OA/SA until the time you need it, if CPF annual limit is not met.

I think you mean that if you don't have a specific, better purpose for funds that could be withdrawn, then leave them alone. Let them keep earning interest. Any CPF funds you withdraw are at least very difficult to redeposit, and even if you could redeposit you'd lose some interest.

By the way, before your 55th birthday it's well worth considering moving Ordinary Account funds to the Special Account.

CPF publishes their age 55 retirement booklet here, and it's well worth reading before turning 55.

 

[elnewbie]

I wonder if you were to opt for the BRS, can you withdraw the excess funds as and when you like ? Or must withdraw the excess from RA in one lump sum ?

If one can withdraw as and when, then can just leave the money in there to earn 4%, then slowly slowly take out.

I think you mean that if you don't have a specific, better purpose for funds that could be withdrawn, then leave them alone. Let them keep earning interest. Any CPF funds you withdraw are at least very difficult to redeposit, and even if you could redeposit you'd lose some interest.

By the way, before your 55th birthday it's well worth considering moving Ordinary Account funds to the Special Account.

CPF publishes their age 55 retirement booklet here, and it's well worth reading before turning 55.

 

[Project_Xco]

I would still withdraw and forgo the interest. CPF system changes every other year and they are not consistent. Who knows they suddenly came up with new rules that probibit you from withdrawing.

 

[dork32]

I would still withdraw and forgo the interest. CPF system changes every other year and they are not consistent. Who knows they suddenly came up with new rules that probibit you from withdrawing.

i think our present garmen not so bad. if they change their system, they will give you some time to react. doing the withdrawal with announcement of the changes is still possible.

 

[BBCWatcher]

You are not required to withdraw excess funds. If you do withdraw funds, you can withdraw eligible funds at any time, fully or partially. If partially, you can withdraw any partial amount as often as you like.

In other words, excess funds become just like an on demand savings account when you reach age 55. A very high interest savings account with AAA rated Singapore government backing. The smart play is to leave those funds right where they are if you don't need them for immediate consumption needs and you don't have other, lower yielding funds available.

 

[Wood41]

Typical thinking of some perpetual suspicious Sinkies who think PAP would take your $$.

BTW CPF will still pay you 4-6 % & may withdraw once above 55 except RA.

Many Sinkies would blow the withdrawal like this man :
Man blew $147k CPF money in 6 mths & then insult public officer Ms Aw
http://forums.hardwarezone.com.sg/showthread.php?t=5629256

I would still withdraw and forgo the interest. CPF system changes every other year and they are not consistent. Who knows they suddenly came up with new rules that probibit you from withdrawing.