question: cpf for elderly

[Thoreldan]

Hello all, my mom is 70++, never worked a job with cpf contribution before.
She has a bit in CPF from various government benefits/topups.

Ordinary Account (OA) = $1k ++
MediSave Account (MA) = $2k ++
Retirement Account (RA) = $400++

She is currently on the old retirement sum scheme (RSS).

a) Other than utilizing Matched Retirement Savings Scheme (MRSS), is there anyway she can take advantage of CPF ? She has appx $150k in cash savings.
b) can I confirm funds in OA can be withdrawn anytime ?

 

[BBCWatcher]

Hello all, my mom is 70++, never worked a job with cpf contribution before.
She has a bit in CPF from various government benefits/topups.
Ordinary Account (OA) = $1k ++
MediSave Account (MA) = $2k ++
Retirement Account (RA) = $400++
She is currently on the old retirement sum scheme (RSS).
a) Other than utilizing Matched Retirement Savings Scheme (MRSS), is there anyway she can take advantage of CPF ? She has appx $150k in cash savings.

Here are 3 typical options (in order of execution, not mutually exclusive)….

• After a $2,000 cash deposit into her RA to win MRSS dollars, she can hand each of her children $8,000. Each child then deposits $8,000 into her RA and thus qualifies for tax relief. Next year each child will also deposit at least half of the tax relief they’ll get into her RA. (Of course outright donations from her children are even better. Children can use their own cash.)
• She can deposit more cash into her RA. Currently she’ll earn 6% interest (since she’s within the first tier of bonus interest). Initially more funds in her RA will mean her classic Retirement Sum Scheme payouts of $350 per month will continue longer. (They’ll end this year with her current RA and OA balances.) If her RA gets quite a bit larger then the $350/month payout will increase. But classic RSS payouts end at some date certain. She also has the option to switch to CPF LIFE with payouts that run for the rest of her life, however long it lasts.
• She can transfer her OA dollars into RA for higher interest.

b) can I confirm funds in OA can be withdrawn anytime ?

She hasn’t met the Full Retirement Sum (or Basic Retirement Sum with property pledge/charge). She might have some ability to make a lump sum withdrawal from CPF, but it can’t be much since she doesn’t have much. And it’s coming out already (except for MediSave) at a $350/month clip.

 

[Thoreldan]

Here are 3 typical options (in order of execution, not mutually exclusive)….

• After a $2,000 cash deposit into her RA to win MRSS dollars, she can hand each of her children $8,000. Each child then deposits $8,000 into her RA and thus qualifies for tax relief. Next year each child will also deposit at least half of the tax relief they’ll get into her RA. (Of course outright donations from her children are even better. Children can use their own cash.)
• She can deposit more cash into her RA. Currently she’ll earn 6% interest (since she’s within the first tier of bonus interest). Initially more funds in her RA will mean her classic Retirement Sum Scheme payouts of $350 per month will continue longer. (They’ll end this year with her current RA and OA balances.) If her RA gets quite a bit larger then the $350/month payout will increase. But classic RSS payouts end at some date certain. She also has the option to switch to CPF LIFE with payouts that run for the rest of her life, however long it lasts.
• She can transfer her OA dollars into RA for higher interest.

She hasn’t met the Full Retirement Sum (or Basic Retirement Sum with property pledge/charge). She might have some ability to make a lump sum withdrawal from CPF, but it can’t be much since she doesn’t have much. And it’s coming out already (except for MediSave) at a $350/month clip.

Thanks for the comprehensive advice.

 

[s0crates]

Here are 3 typical options (in order of execution, not mutually exclusive)….

• After a $2,000 cash deposit into her RA to win MRSS dollars, she can hand each of her children $8,000. Each child then deposits $8,000 into her RA and thus qualifies for tax relief. Next year each child will also deposit at least half of the tax relief they’ll get into her RA. (Of course outright donations from her children are even better. Children can use their own cash.)
• She can deposit more cash into her RA. Currently she’ll earn 6% interest (since she’s within the first tier of bonus interest). Initially more funds in her RA will mean her classic Retirement Sum Scheme payouts of $350 per month will continue longer. (They’ll end this year with her current RA and OA balances.) If her RA gets quite a bit larger then the $350/month payout will increase. But classic RSS payouts end at some date certain. She also has the option to switch to CPF LIFE with payouts that run for the rest of her life, however long it lasts.
• She can transfer her OA dollars into RA for higher interest.

She hasn’t met the Full Retirement Sum (or Basic Retirement Sum with property pledge/charge). She might have some ability to make a lump sum withdrawal from CPF, but it can’t be much since she doesn’t have much. And it’s coming out already (except for MediSave) at a $350/month clip.

Nope. MRSS deposits no longer entitled to income tax relief.

https://www.cpf.gov.sg/member/infoh...tirement-savings-scheme-what-you-need-to-know

 

[BBCWatcher]

Nope. MRSS deposits no longer entitled to income tax relief.

Yes, I’m aware of that. I think you missed the part where I wrote “After a $2,000 cash deposit….”

 

[wutawa]

Hello all, my mom is 70++, never worked a job with cpf contribution before.
She has a bit in CPF from various government benefits/topups.

Ordinary Account (OA) = $1k ++
MediSave Account (MA) = $2k ++
Retirement Account (RA) = $400++

She is currently on the old retirement sum scheme (RSS).

a) Other than utilizing Matched Retirement Savings Scheme (MRSS), is there anyway she can take advantage of CPF ? She has appx $150k in cash savings.
b) can I confirm funds in OA can be withdrawn anytime ?

b) u can link her payout to paynow and withdraw some money to test. hehe

 

[BBCWatcher]

b) u can link her payout to paynow and withdraw some money to test. hehe

Bad idea. That doesn’t tell you anything the CPF online dashboard doesn’t already tell you better. And classic Retirement Sum Scheme payouts are already underway.

This mother has ~$150K in liquid cash and almost nothing in her CPF accounts. What’s the liquidity problem? Is she planning to go on a $153K expedition to Antarctica this November?

 

[Thoreldan]

Bad idea. That doesn’t tell you anything the CPF online dashboard doesn’t already tell you better. And classic Retirement Sum Scheme payouts are already underway.

This mother has ~$150K in liquid cash and almost nothing in her CPF accounts. What’s the liquidity problem? Is she planning to go on a $153K expedition to Antarctica this November?

She has no need for the money because we (the kids) are covering 100% of her expenses.

 

[BBCWatcher]

She has no need for the money because we (the kids) are covering 100% of her expenses.

OK, so it seems she can easily trade at least some of her ~$150K of liquidity for 6% interest (plus matching funds and then tax relief) — the current deal(s) on offer for initial dollars into her RA.

 

[CoffeeDrinker8899]

a) Other than utilizing Matched Retirement Savings Scheme (MRSS), is there anyway she can take advantage of CPF ? She has appx $150k in cash savings.
b) can I confirm funds in OA can be withdrawn anytime ?

Transfer OA to RA if you do not expect any use for it, if she lives in HDB and anticipates HIP or some kind of upgrading coming, then keep the money in OA to pay for it. Interest difference is small.

Generally speaking OA being withdrawable is likely less-than-correct apart from an unconditional $5k at 55yo, if she has never utilised this option before, it is withdrawable up to 5k. After that there is a formula, 20% of RA excluding any cash top-ups, CPF transfers and government grants, less the unconditional $5k.

So you top-up you cannot take out in lump sum liao, it cannot be used as a temporary parking place to earn interest.

If after you utilise MRSS and you still want to top-up, if she is not on Careshield life can consider participating, that would mean considering top-up to MA.

Also keep an eye on the Matched Medisave Scheme, although she cannot qualify now, there is a half chance they remove the age cap after a couple of years.

 

[BBCWatcher]

Transfer OA to RA if you do not expect any use for it, if she lives in HDB and anticipates HIP or some kind of upgrading coming, then keep the money in OA to pay for it. Interest difference is small.

Generally speaking OA being withdrawable is likely less-than-correct apart from an unconditional $5k at 55yo, if she has never utilised this option before, it is withdrawable up to 5k. After that there is a formula, 20% of RA excluding any cash top-ups, CPF transfers and government grants, less the unconditional $5k.

It doesn't really matter. This mother has ~$1,400 in OA+RA combined. That's all coming out in ~4 months ($350/month classic RSS scheme). And she has ~$150K sitting in cash.

I appreciate everyone's concern for this mother's liquidity position. But...come on.