*Official* BBCWatcher club

[BBCWatcher]

Defer the payout to 70 and all savings in RA will keep growing till payout starts (highest bequest at 70?). The box in the table shows that All plans will have zero bequest at a certain age - 81, 82 and 92 respectively.

Correct, agreed.

None of the CPF LIFE payout plans assure a bequest — that’s not one of the choices. If you want an assured bequest, then the best way to use CPF LIFE toward that goal is for CPF LIFE to defend your bequest (your other assets) as vigorously as it possibly can. The combination of deferral to age 70, more than BRS-level participation, and the Escalating Plan is the maximum assured bequest defense you can get out of CPF LIFE.

If you want to gamble more on your bequest, then pick some other recipe.

All your SA of 171k will move to RA, even if you chose BRS. In other words, you can't hope that 88.5 move to RA and 88.5 remains in SA. However, you can choose to withdraw 88.5 in any amount at any time from RA with sufficient property pledge. Also note, if you opt for ERS, you forfeit your rights to choose BRS subsequently.

Yes, agreed.

So you’ve really got one key decision if you’re going to raise your CPF LIFE shield to defend most vigorously your bequest (from other assets). Shortly before you reach age 55, try to decide whether FRS-level CPF LIFE will be sufficient (from age 70, Escalating Plan) to support your minimum acceptable lifestyle — a lifestyle you would feel comfortable living in order to preserve and protect your other assets for bequest purposes. If you don’t think that will be enough, then top up your Retirement Account.

Please note that I don’t necessarily endorse trying to assure a particular (or higher) bequest. I’m just describing the optimum ways to use CPF LIFE as a powerful tool to assure a particular (or higher) bequest, if that’s your goal, but I don’t necessarily agree that should be your goal.

 

[henrylbh]

Yes. It’s the only CPF LIFE payout plan that offers some protection against inflation, which makes it the best longevity insurance, which makes it the winner by default.

Who cares? At what age are you guaranteed to die?

CPF LIFE is not a casino, MCKawe.

I agree with you and disagree with Henrylbh about bequests.

What is there to disagree with me when I did not suggest any plan, unless you disagree when I said it is a bet that all are forced into.

You seems to suggest ERS as though all would be winners by default. That a big fallacy. Half must lose for the other half to gain, theoretically, though in reality it is reasonable to suspect that more than half would lose for the system to be continue.

I provided the table with numbers for forumers to decide for themselves which plan to bet on (CPF Life is a casino ) without suggesting which is better whereas you keep harping ERS with no regards that half, if not more, would lose.

Some more, what is there to disagree with me on the bequest? What did I say about it? I merely pointing out the bequest for SP, BP and EP and nothing more (in the box at the top of the table). I could have hinted that those who choose SP and EP would lose big time with no bequest if they up lorry at 82 or thereabout. But that's for them to decide, I don't.

 

[BBCWatcher]

No, you’ve got it exactly backwards. Longevity (length of life) is the casino, the lottery. CPF LIFE is a powerful tool to get at least one foot out of the casino.

IF you want to assure a particular minimum bequest, there’s only one way to play this game best: make sure that you could live on your CPF LIFE payouts alone. That’s the maximum defense of your other assets that CPF LIFE can provide.

As one scenario, if you can hang onto $200K of wealth until age 70, if you’ve topped up your Retirement Account to FRS+25%, and if you can live/actually live on FRS+25%-level CPF LIFE (Escalating Plan) for the rest of your life, well done, you’ve assured your $200K bequest. Simply park that bequest in something safe, like a combination of Medisave, SSBs, and SGSes (as an example), and you’re done. Mission accomplished, securely and safely.

To repeat, I don’t think you necessarily should have an assured bequest goal, but if that’s your goal, that’s how to use CPF LIFE to protect that particular outcome best.

The greater your (age 70, Escalating Plan) CPF LIFE payout amount, the better assured bequest protection you get. Bequests are, by definition, the residuals paid to your heirs upon your demise. You defend those residuals best when you never have to dip into them. And you never have to dip into that pool of wealth you’re trying to protect and defend if your CPF LIFE payouts are enough (or more than enough) to sustain you, no matter how long your body sustains you. Pretty simple!

The other choice IF you want to assure a particular bequest is to buy simple whole life insurance. Then you’re buying the bequest in advance.

 

[MCKawe]

The other choice IF you want to assure a particular bequest is to buy simple whole life insurance. Then you’re buying the bequest in advance.

Talking about whole life insurance. I have one i got one in 1988 and will terminate at 2065. Idk why they got it up till 2065 but...it supposedly have a rate of 6% now. Assuming i don't need this money, should i just transfer ownership to my heir asap to prevent the "in the event of death of the owner" clause that will distribute the sum inside?

 

[BBCWatcher]

Talking about whole life insurance. I have one i got one in 1988 and will terminate at 2065. Idk why they got it up till 2065 but...it supposedly have a rate of 6% now. Assuming i don't need this money, should i just transfer ownership to my heir asap to prevent the "in the event of death of the owner" clause that will distribute the sum inside?

I doubt you’re allowed to do that since the insurance company based its returns on a particular mortality forecast. But in the unlikely event you are allowed a transfer without penalty (e.g. without repricing), and if a reputable, quality insurance company is guaranteeing a 6%/year compounded nominal Singapore dollar yield through 2065, you might consider a partial (if allowed) or full transfer, sure. (Partial transfers would be nice, if allowed, since you could distribute the mortality risk.) Just make sure the recipient is highly likely to outlast you.

From the perspective of 2018, 6%/year nominal in Singapore dollars through 2065 is looking pretty darn sweet. You’re one of the few people who may have obtained a nice investment from an insurance company.

 

[MCKawe]

Just make sure the recipient is highly likely to outlast you.

Ha, of course but the insurance will outlast my recipient's retirement. Bequesting for my grandchildren now

 

[henrylbh]

Ha, of course but the insurance will outlast my recipient's retirement. Bequesting for my grandchildren now

Ha Ha. Pray that the insurer outlives you and your beneficiaries. If you had seen the financial statements of some insurers during the GFC, you will be shocked. Luckily the crisis was short.

 

[MCKawe]

Does the CPFIS-SA require a CDP account?

When contacting the product provider, can i go to any branches if they are a bank?

 

[Muneyzmart]

Hi BBCW, I have the intention of not allowing HDB to wipe off my entire CPF-OA account upon selecting a HDB flat. Through this thread that is dedicated to you, I find the lowest and and most efficient way of doing it is to purchase T-bills. This is so as to prevent any chance of defaulting on my mortgage loan.

- You mention going to 3 banks to compare quotes. How to go about it? I.e can we apply via an ATM machine or Internet Banking?
- What is the estimated timeline taken to deduct those funds from CPF?
- Tenure of T bills are of one year. Does it mean I can redeem those funds exactly one year later?

 

[BBCWatcher]

Does the CPFIS-SA require a CDP account?

Possibly for certain products, such as t-bills, but just go get one. A CDP account is free, and you need one for other purposes such as Singapore Savings Bonds.

When contacting the product provider, can i go to any branches if they are a bank?

That’s entirely up to the product provider and how they go to market.

Hi BBCW, I have the intention of not allowing HDB to wipe off my entire CPF-OA account upon selecting a HDB flat. Through this thread that is dedicated to you, I find the lowest and and most efficient way of doing it is to purchase T-bills.

Well no, it’s not. OA to SA transfers are.

The t-bill “shield” method is not my favorite, but I point it out because it’s the only one that is principal guaranteed by the government. My favorite “shield” is to use a low volatility unit trust (I’ve listed candidates previously) purchased via a zero sales charge platform such as POEMS, Fundsupermart, or DollarDex. If you schedule your key pickup for the middle of a calendar month (or slightly after, e.g. 18th) then you should have enough time to reduce CPF OA interest loss to only one month using a unit trust-based shield. Since the unit trust has low volatility, even if you experience a slight loss of principal, you still come out ahead versus the t-bill shield. The t-bill shield will require a couple months of interest loss.

Please note that OA shields, whether t-bills or unit trusts, incur fees because they go through the mandatory CPF Investment Account. UOB offers the lowest cost CPF Investment Account right now. You can do that now, well ahead of the time you need to raise the shield.

 

[MCKawe]

BBCW,

Curious, assuming one reaches 55 and continues working, the CPF contributions will go into the OA, SA & MA based on the allocation rates right? Since one can withdraw any amount from OA and/or SA after 55 if FRS is hit, is it possible to just transfer from OA to SA monthly after paycheck to earn that extra 1.5% interest?

 

[BBCWatcher]

Curious, assuming one reaches 55 and continues working, the CPF contributions will go into the OA, SA & MA based on the allocation rates right?

Correct. Compulsory contributions continue to stream in according to the normal allocation rules associated with your particular age bracket. Compulsory contribution rates and allocations do change with age, please note.

“All three” voluntary top-ups (CPF Form VC/1 or online equivalent) follow the same allocation rules, and they must fit within the CPF Annual Limit. For many individuals approaching and beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.

Since one can withdraw any amount from OA and/or SA after 55 if FRS is hit, is it possible to just transfer from OA to SA monthly after paycheck to earn that extra 1.5% interest?

OA to SA transfers are only allowed before your 55th birthday, and only up to the Full Retirement Sum.

If you don’t need OA for housing or education, or if you only need a portion of OA for housing or education, you REALLY should transfer at least some OA funds to SA. The earlier, the better.

 

[MCKawe]

OA to SA transfers are only allowed before your 55th birthday, and only up to the Full Retirement Sum.

Oh...that is sad.

beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.

Interesting. With the PayNow method of withdrawal, this seems like a way better place to park cash than banks.

Before 55, any top-ups RSTU or VC to the SA will have a limit of the FRS right? After 55, this limit disappears and it's just based on the allocation based on age?

 

[MCKawe]

Please note that OA shields, whether t-bills or unit trusts, incur fees because they go through the mandatory CPF Investment Account. UOB offers the lowest cost CPF Investment Account right now. You can do that now, well ahead of the time you need to raise the shield.

The fees are only for CPFIS-OA right? Are there any fees for CPFIS-SA? Don't seem to find any anywhere.

 

[Defying_Gravity]

Hi BBCW and the experts here,

My mom is 59 this year with the following balances in her CPF account:

OA: 8200
SA: 300
MA: 22500
RA: 930

At age 55, by default, she claimed, she bought into the standard CPF life plan. To date, she has $10k in unit trust with UOB and about 10k in stocks purchased through CPFIS. She is holding about 20k in cash. I am giving her 500 a month. She does not have an integrates shield plan coz she thinks it's too expensive. What would you guys recommend she should do for retirement?

I was thinking of suggesting to her that she could either do a voluntarily top up into her all three accounts with the 20k or directly to her RA. So far, to date, all her investments and stock picks are losing money. I wanted to convince her to liquidate her holdings.

Looking forward to all your views. Thanks in advance!

 

[Maeda_Toshiie]

Hi BBCW and the experts here,

My mom is 59 this year with the following balances in her CPF account:

OA: 8200
SA: 300
MA: 22500
RA: 930

At age 55, by default, she claimed, she bought into the standard CPF life plan. To date, she has $10k in unit trust with UOB and about 10k in stocks purchased through CPFIS. She is holding about 20k in cash. I am giving her 500 a month. She does not have an integrates shield plan coz she thinks it's too expensive. What would you guys recommend she should do for retirement?

She need the basic Medishield. You get an ISP only if you insist on private patient status. If she doesn't an ISP, she need to be willing to accept B2 and below wards, with no choice of doctors.

I was thinking of suggesting to her that she could either do a voluntarily top up into her all three accounts with the 20k or directly to her RA. So far, to date, all her investments and stock picks are losing money. I wanted to convince her to liquidate her holdings.

Looking forward to all your views. Thanks in advance!

What investments are those?

 

[Maeda_Toshiie]

https://www.businesstimes.com.sg/startups/new-bourse-debuts-to-trade-shares-in-high-growth-startups

CROWDFUNDING platform FundedHere has launched FundedX, a private stock exchange in Singapore to facilitate the trading of shares of high-growth startups and privately held companies in South-east Asia.

 

[AnTiLooP]

BBCWatcher wrote:
beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.

BBCW: can you expand a little more on this? I assume this special piggy bank works on the assumption that the RA account is already created and that you have residual funds left in OA and SA?

on the point re: withdrawals, is there a ceiling/milestone to meet or is it a case of "as long as one has his RA created, that he/she can withdraw monies at anytime from OA/SA". ?

if not, are you simply saying that we can leverage those 2 accounts to simply pump monies in to get interest? in which case those funds deposited + accrued interest can be withdrawn anytime?

thanks.

 

[MCKawe]

https://www.businesstimes.com.sg/startups/new-bourse-debuts-to-trade-shares-in-high-growth-startups

You can buy on that through CPFIS? :O

Recommend she either hold, pray, stop buying and hope for a nice selling point(if even possible) or liquidate immediately.

With CPF LIFE, her earliest payout is at 65. However with just 930 in her RA, I don't think she is getting a lot per month. Unless this amount is after transfer to the Lifelong Income Fund.

She needs enough money to sustain her next 6 years before being able to receive payouts. Thus, do not cash all 20k into RA unless she can sustain on your contributions to her.

She can do a VC to her OA, SA and MA. However, since her MA has not reached the Basic Healthcare Sum, her allocation is skewed towards MA(which she cannot withdraw at all). This scenario isn't the best but I would choose this option. Earning 2.5-4% interest is better than keeping in the bank. Do note that she needs to at least hold atleast 3 months of spending in cash(Emergency Fund) and subscribe to the PayNow(for same day withdrawals from CPF) in case there is a need for cash.

 

[MCKawe]

BBCWatcher wrote:
beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.

BBCW: can you expand a little more on this? I assume this special piggy bank works on the assumption that the RA account is already created and that you have residual funds left in OA and SA?

on the point re: withdrawals, is there a ceiling/milestone to meet or is it a case of "as long as one has his RA created, that he/she can withdraw monies at anytime from OA/SA". ?

if not, are you simply saying that we can leverage those 2 accounts to simply pump monies in to get interest? in which case those funds deposited + accrued interest can be withdrawn anytime?

thanks.

It works if:

1) The RA is created with the FRS inside(or BRS with property pledge).

2) The MA reached the Basic Healthcare Sum(For maximum withdrawal amount - MA allocation will be deposited in the SA)

To withdraw, you need option 1 to happen and hold true.

@BBCW
Do advise whether the following is possible to gain overall interest closer to 4%.

With MA hitting BHS, to withdraw all sum in OA and dump back into CPF via VC. Rinse and repeat until satisfactory.