FRS vs ERS

[BBCWatcher]

Also perhap,you die early, you lose around $200k in bequest into LIF

The 2019 Enhanced Retirement Sum is only $264,000. I don't think you understand how this math works.

....Leaving aside the fact that dead people don't lose anything monetary. They're dead, and money has literally zero value to dead people.

 

[Geeezz]

let me check if me ish correct or nt.

if i top up to ers then half way i dunwn wn withdraw till frs. i will “forfeit” the int.

but the monthly payout i will get ish more than the frs amount. tio bo?

 

[kelhot2001]

The 2019 Enhanced Retirement Sum is only $264,000. I don't think you understand how this math works.

....Leaving aside the fact that dead people don't lose anything monetary. They're dead, and money has literally zero value to dead people.

Well, i am using 2020 FRS at 272k
At 65, year old , it will be 417K, if you pass on say at 81, your losses for bequest is at 200k

Leaving aside death, I always say how CPF package a deal, repack it , today if cpf will to remain all monies in the RA accts , you get all interest into RA, you still get to choose , std withdrawal, basic withdraw and escalating withdraw. Only upon death your monies will be transfer to LIF

So when you pass on at 81, CPF will send your beneficiary a letter saying that because the deceased had chosen std withdrawal, all the remaining funds of 200k will now be withdrawn into the LIF and nothing to them because of the plan. It will definitely means nothing to the decease

Or another decease at 89 on basic withdrawal plan, cpf will send a letter to informed the beneficiary that although he had 149k balance of which 86k of interest had to be transfer to LIF because he had chosen the basic withdrawal plan. It literally means nothing to the dead

 

[Tiger9119]

The 2019 Enhanced Retirement Sum is only $264,000. I don't think you understand how this math works.

....Leaving aside the fact that dead people don't lose anything monetary. They're dead, and money has literally zero value to dead people.

With all due respect, yes, money is zero value to dead people but it is still very useful to their spouse especially if the spouse has no money or just a little in CPF or other form of savings. Unless you want his/her spouse to become destitute?

 

[iMac]

I don't know where did you get those statements.

If you read the following FAQ from CPF Life, I can summarise that CPF Life Basic is a combination of:
1) 80-90% old RSS (evidence from underlined statement in Blue)
2) 10-20% deferred Standard Plan (evidence from underlined statement in Red)

But 1 CPF expert said I am talking rubbish.

Q Will my savings used to join CPF LIFE (i.e annuity premiums) continue to earn interest?
A Your savings used to join CPF LIFE (i.e. annuity premiums) will continue to earn interest like your Retirement Account (RA) savings, which is currently at 4% per year. 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.

Q What happens if I choose the CPF LIFE Basic Plan?
A When you join the CPF LIFE Basic Plan, we will deduct about 10 - 20% of your Retirement Account (RA) savings for the annuity premium at the point of policy issuance. The actual percentage will depend on your age and gender. We will inform you on the amount deducted when your policy is issued. The premium deducted will be paid into the Lifelong Income Fund. The rest of your RA savings will stay in your RA.

You will receive monthly payouts from the savings in your RA from your payout start age until one month before you reach 90 years old. Once you reach 90 years old, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live.

Payouts under your CPF LIFE Basic Plan will be reduced when the combined balances in your CPF accounts, including the amount committed to CPF LIFE, falls below $60,000.This is due to the reduction in any extra interest earned and paid to you.

To ordinary folks would doesn't have financial background ...CPF rules is really confusing...

 

[BBCWatcher]

Well, i am using 2020 FRS at 272k
At 65, year old , it will be 417K, if you pass on say at 81, your losses for bequest is at 200k

And what happened to the 16 years of monthly payouts?

With all due respect, yes, money is zero value to dead people but it is still very useful to their spouse especially if the spouse has no money or just a little in CPF or other form of savings. Unless you want his/her spouse to become destitute?

You’re quite missing the point.

“You” is not the correct pronoun. Money has literally zero value to corpses, and that’s you in this particular discussion, a dead body. Your survivor, your heir, your beneficiary — that’s who receives whatever residual wealth there is from your estate. You don’t get anything that’s left over. You cannot take any of it with you.

Language matters here; let’s be more careful and precise. Kelhot2001 is being quite sloppy in pronoun/noun choice, and it’s not helpful.

 

[kelhot2001]

BBCWatcher;120219376]And what happened to the 16 years of monthly payouts?

With all due respect, being a active financial advisor in HWZ, you taught alot of people on investment but yet the prospect of losing out $200K, your point was looking at the 16 years of payout taken without looking at the whole amonut here

“You” is not the correct pronoun. Money has literally zero value to corpses, and that’s you in this particular discussion, a dead body. Your survivor, your heir, your beneficiary — that’s who receives whatever residual wealth there is from your estate. You don’t get anything that’s left over. You cannot take any of it with you.

Language matters here; let’s be more careful and precise. Kelhot2001 is being quite sloppy in pronoun/noun choice, and it’s not helpful.

You cant see the sarcasm in the message, it would means my english is really bad. If CPF is really to do what they say, paying you your interest and giving back what you are entitle, not asking you to bet when you pass away. Let me put in perspective, what left behind MATTERS to me/us even when dead. These monies are for my spouse or son or daughter or even parents if they are still alive.

Well, I always ready to admit that my English is never good, that doesn't mean my math poor. Usually, I would like to point out whenever someone is losing the point, they start pointing at language. Hopefully and respectfully you are not one to do so. I will try to brush my language in the forum. Thanks again.

As mention, if CPF will to do what I mention, all monies still remain in RA, all rules as per CPF life, only after death will monies be move into LIF. You will see an immediate reaction with member knowing what they lost

 

[henrylbh]

The brain is blocked. There is only one way and practically everyone wins

 

[henrylbh]

Reply from CPFB

Using your example above, your $1,000 monthly (which include premium interest) start from day 1 when I start to withdraw from my RA, or this $1,000 (which include premium interest) start only at age 90 when I start to draw from LIFE

ANS
Under the CPF LIFE Basic Plan, the monthly payout will be paid to you from your RA at your payout eligibility age of 65 to approximately age 90. This payout includes the interest earned on your RA savings.

From age 90 onwards, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live. As shared previously, the interest earned on the annuity premium is paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants. The interest earned on the annuity premium will be paid as part of your annuity payout from age 90 onwards.

Underlined statements should have been left unsaid and it serves no purpose except to confuse readers.

 

[kelhot2001]

The brain is blocked. There is only one way and practically everyone wins

Funny things, you put in 417K into your RA, after 16 years, I drawout 2.1k a month for 16 years total $403k. Sound legit, suddenly you convenient forget the interest gain over 16 years.EffectiVely, you would have $240k
balance in your RA. This balance goes into LIF, and it is a good investment?

 

[henrylbh]

Yes, you can top up your RA to the ERS immediately after your RA is created, and wait until Payout Eligible Age to apply to start CPF Life with the plan of your choice.

I would recommend topping up to ERS immediately after 55 instead of waiting until nearer PEA, because the interest rate of RA grows faster than the FRS/ERS growth rate.

You assuming everyone will live passed 90? You need to add that if died before 90, 10% to 20% of ERS and interest thereon is gone, to let readers decide.

 

[henrylbh]

Ha ha looks like you like to go after his tail.

 

[BBCWatcher]

Funny things, you put in 417K into your RA, after 16 years, I drawout 2.1k a month for 16 years total $403k. Sound legit, suddenly you convenient forget the interest gain over 16 years.EffectiVely, you would have $240k
balance in your RA.

Your math is way off, even if you make the ridiculous assumption that some other AAA-rated government is paying >4% annually compounded interest on Singapore dollars.

Hint: Funds are streaming out for 16 years, including principal.

And, OK, if you don’t like the Standard Plan, choose another plan. That’s your choice. Nobody is forcing you to choose the Standard Plan. Likewise, nobody is requiring you to start payouts at age 65. If you’re trying to maximize a bequest you shouldn’t do that anyway.

 

[maple96]

As mention, if CPF will to do what I mention, all monies still remain in RA, all rules as per CPF life, only after death will monies be move into LIF. You will see an immediate reaction with member knowing what they lost

I like the way u explain the concept in another way, but yet still people dun get it

As "consultants", regardless of how good or bad a "client" expresses himself, be it in writing or verbal, we have to try our best to understand and seek clarifications to help out. Singaporeans learnt how to understand singlish or accept others who cannot write well and how to interprete or seek clarifications.

If really so bad and cannot understand, then just ignore or seek clarifications, or wait for clarity. I dun respond to every single post, I choose what I like to respond to, be it right or wrong. We dun have to be last to post to win or wait for confirmation/assurance

If we are only interested in Basic Plan, just ignore the rest, otherwise it would become another "broken record" again

(past 2 weeks, when I sense the other party cannot understand despite my detailed explanations and going into "chicken and duck debate", I stop posting. Just giveup)

 

[maple96]

Can one also assume if one chose to top up to ERS at age 55 after the creation of RA. Ie, 55 and 2 weeks years old, RA at 264K, interest will be paid to RA even though one has not decide to go for basic, or standard or escalating, till age 65.?

So much noise but your question is not directly answered?

Interest of 4% and extra interest will still be paid to RA until u start payout at 65 or anytime until 70. When u start payout and choose the CPF Life Plan, the interest will be posted differently depending on the CPF Life Plan chosen.

 

[maple96]

let me check if me ish correct or nt.

if i top up to ers then half way i dunwn wn withdraw till frs. i will “forfeit” the int.

but the monthly payout i will get ish more than the frs amount. tio bo?

Are u asking: After 55, u topup RA to ERS, then later u want to pledge property to withdraw 50% of FRS?

If so, and if u meet all the CPF requirements to withdraw 50% of FRS, your balance in RA will be equivalent to FRS plus interest. When u start payout at 65 or before 70, your mthly payout will likely be higher than someone with normal FRS (ie no ERS topup) depending on when u do the withdrawal.

 

[dork32]

With all due respect, being a active financial advisor in HWZ, you taught alot of people on investment but yet the prospect of losing out $200K, your point was looking at the 16 years of payout taken without looking at the whole amonut here

it just confirms one thing right? ang moh cant count

 

[kelhot2001]

BBCWatcher;120222465]Your math is way off, even if you make the ridiculous assumption that some other AAA-rated government is paying >4% annually compounded interest on Singapore dollars.
Hint: Funds are streaming out for 16 years, including principal.

Let check my assumption here, I will be using from this site

To Calculate my saving in 10 yrs
https://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx

To calculate my remainder fund in drawout
https://www.bankrate.com/calculators/investing/annuity-calculator.aspx

For the sake of others, let use math to define logic. ERS IN 2020 IS $272,000.00. At the age of 65, this amount balloon to $417,000.00, key in the figure in annuities calculator, it will show at 192 months (or age 81), your balance is $239,000.00.

Using your so call AAA bond, let me use the previous methodology of RSS, I am going to use 4% as fixed rate(forget about 4+5+6). Based on 4% of ERS at $272,000, I would get $405,000.00 , based on $2100.00 per month. At age 81, I am still getting a $200,000.00 remainder if I passed on

Effectively, at age 65, based on ERS now at $417,000.00,CPF effectively give zero interest till 81 age. You are just drawing down $2100.00 p/mth from your own pool. (Dont believe me, go try the link above, key in $417,000, draw out $2100.00 per month, int@0.00001, you get approximately 16.55 years. In exchange, they will pay you these fixed amount of $2100.00 till you pass on

And, OK, if you don’t like the Standard Plan, choose another plan. That’s your choice. Nobody is forcing you to choose the Standard Plan. Likewise, nobody is requiring you to start payouts at age 65. If you’re trying to maximize a bequest you shouldn’t do that anyway.

It is not about what plan, it is just educating people of the pitful against what are the benefit. When I was 25, CPF was about saving for retirement, they raise the retirement, I am fine, they raise agin, I am fine. they raise the Minimum sum, I think is a good idea, but when they came out CPF LIFE, that is what I am against.

It has shown either they failed in planning, or CPF had somehow flawed and now they are trying to remedy. Else, otherwise, they are trying to shortchange.

 

[BBCWatcher]

It is not about what plan....

Oh really?

You’re complaining that CPF LIFE doesn’t provide your heir(s) with a bequest you desire, and then you make the worst possible voluntary choices in order to minimize any residual, plus you toss in an assumption of dying years earlier than today’s median Singaporean. And you got the math wrong anyway.

That’s all just dumb. That’s like hitting your own head with a hammer then criticizing the hammer for causing headaches. *If* you want to try to maximize a residual(*), don’t start payouts at age 65, and don’t choose the Standard Plan. Everybody should know that, and CPF tells you that.

(*) N.B. CPF LIFE never guarantees any particular residual. Simply live long enough, and the residual falls to zero. MediSave provides a better assurance of a residual, if that’s your goal.

 

[kelhot2001]

Oh really?

You’re complaining that CPF LIFE doesn’t provide your heir(s) with a bequest you desire, and then you make the worst possible voluntary choices in order to minimize any residual, plus you toss in an assumption of dying years earlier than today’s median Singaporean. And you got the math wrong anyway.

That’s all just dumb. That’s like hitting your own head with a hammer then criticizing the hammer for causing headaches. *If* you want to try to maximize a residual(*), don’t start payouts at age 65, and don’t choose the Standard Plan. Everybody should know that, and CPF tells you that.

(*) N.B. CPF LIFE never guarantees any particular residual. Simply live long enough, and the residual falls to zero. MediSave provides a better assurance of a residual, if that’s your goal.

Oh my..... CPF in the first place was about retirement funds and monies I would had left behind, it is all about how much I draw out and how much I leave behind. Correct my math, I am here to learn what is wrong with it.

I am not trying to maximize my residual, I am trying to say with $405,000.00 and when I pass away I need my monies back with interest that CPF promise when I am at 25.

I give you another example for your benefit. At age 65, with ERS now standing at $417,000.00. I appeal to CPF Life to withdraw $1390.00 per month. With that I am able to bequest a $417,000.00 at any point I die. Why cant it be allow ? Or if I am to withdraw $1500.00 per month, It will last me till I am age 129 years old (good enough to cover my whole life time)
At age 81 I pass on, I leave behind $384,000.00
At age 91, I pass on, I leave behind $352,000.00
Why not, it does not make sense that CPF allows FRS AT $181,000 to withdraw $1400.00 per month, but does not allow ERS at $272,000.00 to withdraw $1500.00 per month.

Those are seriously brainwashed to think otherwise. Whip out your calculators, go find out your figures, you will find you are short-changed by it ? You are being condition by CPF life to dedicate how much you draw need to draw out per month.
CPF life never guarantee residual because CPF LIFE is taking those 70% residual to subside those 30% alive

Dumb? Seriously, don't get too personal, you are losing the plot when name calling starts