Questions: CPF, Minimum Sum & CPF LIFE

[myhomemas]

some questions bothers me for sometime.

What happened if you simply do not have the cpf monies to meet Minimum SUM/CPF LIFE? (when you reach 55)

what would happen?

I cannot withdraw my cpf monies at all?

assuming, i dont have hdb property to pledge.

thanks

 

[teerance85]

some questions bothers me for sometime.

What happened if you simply do not have the cpf monies to meet Minimum SUM/CPF LIFE? (when you reach 55)

what would happen?

I cannot withdraw my cpf monies at all?

assuming, i dont have hdb property to pledge.

thanks

If the min sum is not met, you are still entitled to withdraw the first $5000. Eg,
Ordinary Acct - $20k
Special Acct - $80k
Medisave Acct - $40k

Upon turning 55, the board would add up the OA and SA balances. On the above illustration, total would be $100k. So the 1st $5k can still be withdrawn, meaning to say, after turning 55, your account would look like this.

Ordinary Acct - $0
Special Acct - $0
Medisave Acct - $40k
Retirement Acct - $95k
*withdrawn $5k cash.

To add on, the $95k sitting in your RA would be used to join CPF LIFE.

 

[tiny]

The current minimum sum is $148k. So what happens until we hit that amount?

 

[teerance85]

The current minimum sum is $148k. So what happens until we hit that amount?

For those turning 55 this year, it is advisable to have this amount. So meaning to say, in the board's context, saving for retirement starts from an early age, as early as you start working. Topping up to one's SA is actually a good move. Just imagine it to be a Fixed Deposit, just so with a long long tenure.

 

[henrylbh]

For those turning 55 this year, it is advisable to have this amount. So meaning to say, in the board's context, saving for retirement starts from an early age, as early as you start working. Topping up to one's SA is actually a good move. Just imagine it to be a Fixed Deposit, just so with a long long tenure.

Elaborate your "good move" and are you doing what you said?

Top up with what?

Top up with Cash or transfer OA to SA?

 

[teerance85]

Elaborate your "good move" and are you doing what you said?

Top up with what?

Top up with Cash or transfer OA to SA?

Top up to Special Account, and yes i've been doing so too. However, im not a high income earner so i don't do the max $7k top up and i do it progressively.

Transfer OA to SA is highly discouraged if there's a housing loan or in the midst of buying a ppty. Cash top up can reduce income tax. I would rather see my top up in my Special Account then pay tax to the government.

Just my 2 cents.

 

[tiny]

What happens if minimum sum cannot hit and the person is jobless / physically weak at the age of 55. Cannot withdraw monthly payouts to survive?

 

[teerance85]

What happens if minimum sum cannot hit and the person is jobless / physically weak at the age of 55. Cannot withdraw monthly payouts to survive?

If I'm not mistaken, monthly payouts usually commence when one turns 65 ( correct me if I'm not wrong).

 

[FP_IFA]

What happens if minimum sum cannot hit and the person is jobless / physically weak at the age of 55. Cannot withdraw monthly payouts to survive?

Permanently Unable to Work - Ministry of Social and Family Development

 

[myhomemas]

hmm, so if at 55, i do not have the minimum sum, i can still participate in CPF life with the remaining of my RA? and my monthly payout will be lesser depending on my RA balance, am I right to say so?

so i will still get back my money even if i have lesser money to meet MS/RA/CPF Life.

i saw one requirement in CPF life, you must have minimum of $60k in RA when reach 65 in order to be eligible for CPF LIFE. how is that going to work for ppl, like a house wife who works only partially of their life? or they have only 40k at 65yrs old?

 

[teerance85]

hmm, so if at 55, i do not have the minimum sum, i can still participate in CPF life with the remaining of my RA? and my monthly payout will be lesser depending on my RA balance, am I right to say so?

so i will still get back my money even if i have lesser money to meet MS/RA/CPF Life.

i saw one requirement in CPF life, you must have minimum of $60k in RA when reach 65 in order to be eligible for CPF LIFE. how is that going to work for ppl, like a house wife who works only partially of their life? or they have only 40k at 65yrs old?

Yes you are right, as long as your balance in your RA at 55 is >$40k or >$60k at 65, you will be automatically be placed in CPF life, albiet a lesser amt then those who has the full min sum.

The 1st 5k is still withdrawable at age 55, regardless of whether you meet MS.

I guess those housewifes who stop working or works partially are at a disadvantage. Thats why the board is encouraging top ups to boost your retirement savings. But as i've said before, CPF payouts must only be used to compliment your retirement plan. Every individual should have some sort of retirement planning/savings or whats not, and should start from a young age.

 

[FP_IFA]

Just like to add you will also get tax relief for topping up to your or your loved ones CPF SA account.

 

[henrylbh]

Just like to add you will also get tax relief for topping up to your or your loved ones CPF SA account.

There also tax relief for topping up MA.

Total reliefs can go up to 19k

 

[henrylbh]

Top up to Special Account, and yes i've been doing so too. However, im not a high income earner so i don't do the max $7k top up and i do it progressively.

Transfer OA to SA is highly discouraged if there's a housing loan or in the midst of buying a ppty. Cash top up can reduce income tax. I would rather see my top up in my Special Account then pay tax to the government.

Just my 2 cents.

Topping up your SA or your parent RA gets tax reliefs as well as the earns 4% interest (5% on first 60k). That's good if you can comfortably park the money in those accounts. Instead of directly giving your parents cash allowance, the cash can be deposited in their RA to earn 4% and from which they can drawdown.

 

[tiny]

What happens if minimum sum cannot hit and the person is jobless / physically weak at the age of 55. Cannot withdraw monthly payouts to survive?

Although some suggested cash topup. What if the person cannot afford cash topup. The not-here-not-there amount will be stuck inside CPF? And cannot be withdrawn?

 

[myhomemas]

i saw this from cpf website.

If you have less than $40,000 in your RA at 55 or less than $60,000 in your RA at 65, you can apply to join CPF LIFE; otherwise you will be on the Minimum Sum Scheme.


So even have lesser amount required for CPF LIFE, still can join? is there any difference from minimum sum scheme?

 

[lzydata]

So even have lesser amount required for CPF LIFE, still can join? is there any difference from minimum sum scheme?

Yes you can still join CPF LIFE even with less than $40k in RA at age 55 or $60k in RA at age 65, just that I suppose the monthly payouts will be very low, so it doesn't look good.

The Minimum Sum Scheme will give monthly payouts for only about 20 years starting from the DDA. If you outlive that, too bad. That's the main difference from CPF LIFE.

 

[ahbear82]

Hmm.. my question would now be, what if you do really meet the minimum sum, what will happen?

 

[teerance85]

Hmm.. my question would now be, what if you do really meet the minimum sum, what will happen?

If can meet, good. Put aside $148,000, and the rest can be withdrawn in cash.

 

[henrylbh]

If can meet, good. Put aside $148,000, and the rest can be withdrawn in cash.

One must Also meet the medisave min sum before the rest can be withdrawn. In addition, if one do not meet the medisave required amout, the account need to be top up from the other accounts before one can withdraw the rest. Bloody confusing rules.