Retirement account question

[BBCWatcher]

Hmm... lets say i hv ERS in OA+SA, and i prefer to minimise the CPFLife amt to BRS level. With a property pledge, i intend to leave the excess and draw down regularly as and when required.
In the past, we could transfer the full amount to RA (to earn the 4%) and do a AMP. But with the recent rule change, seems like any transfer to RA will auto add to CPFLife premium.

What can be done nw.. to achieve BRS level CPF Life and a FRS level (at 4%) of AMP?

You cannot, not really.

Hypothetically, under current rules, you could "shield" both SA and OA just before your 55th birthday, allow your RA to be funded only to the BRS (through some combination of SA, OA, and/or cash), and then have a property pledge/charge in place so that SA and OA dollars can be withdrawn (in that order) at any time in any increments. But why? Honestly too many of y'all are fighting hard to avoid...a very good deal! RA earns 4.0% interest for 15 years (age 55 to 70, assuming you choose 70 which you should if you want juicy interest), and then it feeds into Singapore's #1 best life annuity. You just can't beat that offer in terms of total value. Of course SA shielding makes sense (well funded RA/CPF LIFE plus a liquid 4.0% interest earning account), but OA shielding and BRS-level participation realky don't, or at least that's rare.

I don't know what planet you're living on if you think a $1,300/month (or whatever) retirement income stream is "too much," and you want to go out of your way to drop it well below $1K/month. That planet is definitely not Singapore, even today's Singapore never mind tomorrow's. I can DEFINITELY find room in my financial plan for a FRS-level retirement income stream. NO PROBLEM, happy to do it -- and sign me up for more, as a matter of fact. I tend to accept good offers.

 

[reddevil0728]

You cannot, not really.

Hypothetically, under current rules, you could "shield" both SA and OA just before your 55th birthday, allow your RA to be funded only to the BRS (through some combination of SA, OA, and/or cash), and then have a property pledge/charge in place so that SA and OA dollars can be withdrawn (in that order) at any time in any increments. But why? Honestly too many of y'all are fighting hard to avoid...a very good deal! RA earns 4.0% interest for 15 years (age 55 to 70, assuming you choose 70 which you should if you want juicy interest), and then it feeds into Singapore's #1 best life annuity. You just can't beat that offer in terms of total value. Of course SA shielding makes sense (well funded RA/CPF LIFE plus a liquid 4.0% interest earning account), but OA shielding and BRS-level participation realky don't, or at least that's rare.

I don't know what planet you're living on if you think a $1,300/month (or whatever) retirement income stream is "too much," and you want to go out of your way to drop it well below $1K/month. That planet is definitely not Singapore, even today's Singapore never mind tomorrow's. I can DEFINITELY find room in my financial plan for a FRS-level retirement income stream. NO PROBLEM, happy to do it -- and sign me up for more, as a matter of fact. I tend to accept good offers.

Maybe the planet is also singapore where there are other types of income stream in addition to this 1.3k you are talking about?

 

[yoongf]

The objective is to earn the 4% while minimising participation in CPF Life. The principal amount earning the 4% could be AMP to makeup the difference for the lesser guaranteed payout.
This variable amount can be useful if there are sudden unexpected large expenses.
However, with the recent rule change that all topups to RA will be used to add to the CPF Life annuity, this AMP option may not be available anymore.
I am assuming a life expectancy of 75, so an annuity may not be that useful.

 

[Moonwalker0921]

The objective is to earn the 4% while minimising participation in CPF Life. The principal amount earning the 4% could be AMP to makeup the difference for the lesser guaranteed payout.
This variable amount can be useful if there are sudden unexpected large expenses.
However, with the recent rule change that all topups to RA will be used to add to the CPF Life annuity, this AMP option may not be available anymore.
I am assuming a life expectancy of 75, so an annuity may not be that useful.

Under the CPF life estimator , there is a second slider on the amount u can choose to join CPF Life . u mean cannot choose already ?

if we not choose the max amount , where is the remain go ?

 

[Abide.]

logged in recently into cpf and saw cash tops and interest into SA are reserved for transfer to RA at age 55.

I thought previously any amount above the frs at 55 can be withdrawn, including cash top ups but this doesn’t seem the case now.

besides tax reduction and growing RA, is there any benefit to cash tops for Retirement scheme still as seems like can’t be lump sum withdrawn at 55 now?

 

[reddevil0728]

logged in recently into cpf and saw cash tops and interest into SA are reserved for transfer to RA at age 55.

I thought previously any amount above the frs at 55 can be withdrawn, including cash top ups but this doesn’t seem the case now.

besides tax reduction and growing RA, is there any benefit to cash tops for Retirement scheme still as seems like can’t be lump sum withdrawn at 55 now?

The amount you topped up is earmarked. but since money is fungible, u can treat the amount you topped up as as the amount that will be reserved for FRS. then any additional amount not reserved can be withdrawn lor.

 

[iMac]

CPF...too much rules..... very confusing.

 

[yoongf]

Under the CPF life estimator , there is a second slider on the amount u can choose to join CPF Life . u mean cannot choose already ?

if we not choose the max amount , where is the remain go ?

Monies in RA not earmarked for CPF Life can be dripped out from AMP.

CPF Life estimator is for ppl whose $ are not in CPF yet. To help them plan based on target monthly payout.. hw much principle is required. But if $ already in, seems getting less flexible nw.

 

[Moonwalker0921]

Monies in RA not earmarked for CPF Life can be dripped out from AMP.

CPF Life estimator is for ppl whose $ are not in CPF yet. To help them plan based on target monthly payout.. hw much principle is required. But if $ already in, seems getting less flexible nw.

what u mean by "can be dripped out from AMP" ?

 

[reddevil0728]

what u mean by "can be dripped out from AMP" ?

Paid additional via AMP

 

[BBCWatcher]

Maybe the planet is also singapore where there are other types of income stream in addition to this 1.3k you are talking about?

OK, so "make it work" -- and it's not hard, actually. For example, give away more wealth earlier than you expected. Give it to loved ones, or give it to charity, or some of both. Or spend it. Or all of the above.

The objective is to earn the 4% while minimising participation in CPF Life. The principal amount earning the 4% could be AMP to makeup the difference for the lesser guaranteed payout.

I understand your objective, but the CPF Board doesn't allow it, effective November 1, 2021.

However, with the recent rule change that all topups to RA will be used to add to the CPF Life annuity, this AMP option may not be available anymore.

That's correct.

I am assuming a life expectancy of 75, so an annuity may not be that useful.

Whether you deem it useful or not, you're (effectively) required to have one in Singapore. And Singapore was an outlier until circa 2009 on this score, as it happens.

Under the CPF life estimator , there is a second slider on the amount u can choose to join CPF Life . u mean cannot choose already ?

You usually have some choices available, typically ranging from the Basic Retirement Sum to the Enhanced Retirement Sum. But you no longer have the choice to deposit dollars in a CPF Retirement Account and expect them to come out as Additional Monthly Payouts (AMPs). This choice ended effective November 1, 2021. CPF members with existing AMP streams will continue to receive them.

if we not choose the max amount , where is the remain go ?

You can make a lump sum withdrawal from your CPF RA if you wish, assuming you can make (or have) a property pledge/charge.

Of course if you die before CPF LIFE payouts start (which can be as late as age 70) then your CPF nominee(s) receive(s) every penny of your CPF balances, including your RA balance -- and with no CPF LIFE payouts. Also, there are still the expatriation possibilities. For example, you could hypothetically go buy a Caribbean island nation's citizenship, move there, and withdraw all dollars from CPF.

Monies in RA not earmarked for CPF Life can be dripped out from AMP.

Not any more.

Paid additional via AMP

Not any more. AMPs are gone, except for "grandfathered" current recipients.

 

[reddevil0728]

OK, so "make it work" -- and it's not hard, actually. For example, give away more wealth earlier than you expected. Give it to loved ones, or give it to charity, or some of both. Or spend it. Or all of the above.

Was just addressing your qns about which planet. not so much about opinion of whether which is better.

Not any more. AMPs are gone, except for "grandfathered" current recipients.

yea poster wonder what it meant

 

[celtosaxon]

Honestly, I don’t see why this is such a hotly debated topic.

To the extent CPF is your largest asset, you NEED the longevity insurance - you shouldn’t care about eking out 4% and should appreciate the income security.

To the extent CPF is not your largest asset, you may not appreciate the longevity insurance, but it is not a significant part of your overall retirement portfolio… losing out on the full 4% should not have a major impact, and you can minimize it if desired.

The Standard, Basic and Escalating also give you flexibility. With Basic you and your beneficiaries are assured to get more than 3% throughout, no matter how long you live. But you have to remember, not everyone cares about that - some are genuinely relying on that payment to live on, others appreciate the value of a little lawsuit proof longevity insurance mixed in their portfolio.

 

[celtosaxon]

I am assuming a life expectancy of 75, so an annuity may not be that useful.

In that case, delay until age 70 and minimize it by choosing only BRS and Basic?

Alternatively, you max out your CPF and before age 70 take up a cheap citizenship by investment scheme, renounce and withdraw the whole thing before CPF LIFE kicks in. St. Lucia is a popular one, you can get your passport in 3-4 months. It’s not a bad passport too, visa free access to 145+ countries!

 

[andyhtc]

If the objective is to maximise the returns from CPF Life to build up a larger bequest, and if one has no use for CPF Life due to having other passive income, I find that the best is to:

1. Select FRS, then top up cash to ERS (SA and OA shieldings are not considered due to investment risks).

2. Delay the withdrawal until 70 years old to earn more interest and get a higher payout.

3. Opt for the Basic plan if one is healthy and life expectancy is 85 years old (Singapore's average is 83.5).

4. Use the CPF Life payout for any OA housing loan refund for the 2.5% interest rate or contribute to SRS to minimise tax on any passive income (e.g. rental).

 

[Value.Matrix]

If the objective is to maximise the returns from CPF Life to build up a larger bequest, and if one has no use for CPF Life due to having other passive income, I find that the best is to:

1. Select FRS, then top up cash to ERS (SA and OA shieldings are not considered due to investment risks).

2. Delay the withdrawal until 70 years old to earn more interest and get a higher payout.

3. Opt for the Basic plan if one is healthy and life expectancy is 85 years old (Singapore's average is 83.5).

4. Use the CPF Life payout for any OA housing loan refund for the 2.5% interest rate or contribute to SRS to minimise tax on any passive income (e.g. rental).

1. SA and Oa shielding have investment risk. But what's the worst drawdown? A lost of 2% portfolio in 1 month and a perpetual 4% interest in SA and 2.5% in OA is not a small matter, compared to a lost of 2.5% interest and 4% interest forever... hmm.

The worse is you uplorry right after finishing the shielding. Still a good risk reward.

2. Agree.

3. Agree. But also depends on your objective for standard or escalating.

4. Housing refund is the last resort when you are super cash rich, and in this case, 1 in fact helps a lot. You do have the annual limit, BHS top up yearly and RSTU (RA top up by cash). Before even considering housing refund.

Why would I want to earn 2.5% whereby I can earn blended 2.89% (split OA and SA/MA for VC) and also RSTU cash top up.

 

[Moonwalker0921]

Not any more. AMPs are gone, except for "grandfathered" current recipients.

then what happen to the 10k in the CPF RA account if we choose only $490k instead of $500k to join CPF life @70 ?

 

[zoneguard]

then what happen to the 10k in the CPF RA account if we choose only $490k instead of $500k to join CPF life @70 ?

Choose the LIFE plan: basic, standard or escalating and age to start payout (latest 70). For standard/escalating plans, all of RA is deducted as LIFE premium.

If you don't choose anything, standard plan to start payout at 70 is the default.

 

[Froggyman]

Choose the LIFE plan: basic, standard or escalating and age to start payout (latest 70). For standard/escalating plans, all of RA is deducted as LIFE premium.

If you don't choose anything, standard plan to start payout at 70 is the default.

So if said I topup $93k cash to have ERS in RA.
At age 65, the RA will be probably have $410k.
Then can we choose Basic Life plan?
Asking about this because heard that the top up cash have to use for LIFE premium.
Understand that for the Basic plan,10% to 20% from the RA will be deduct as LiFE premium which means about $41k to $82k.
Since the top up amount is $93k , which is more than $41k to $82k, then what is the outcome then?
Hope I have the wrong understanding on the new changes.
Thanks.

 

[Atrina_Boy]

This thread super chim for me
So confusing about the CPF