Saturday, 15 July 2017
Contributing or Topping CPF MA???
Our CPF MA has immediate use when necessary. It will NEVER be enough based on Uncle8888's personal experience with his older close relatives so it is right thing to top up our CPF MA. Never enough!
This is only CPF account that Uncle8888 will advocate topping up.
Other voluntarily topping up. Hmm .... case by case hor!
Don't be seduced by social media loud voice. What good for some may be poison for some in later part of their life journey when sudden unplanned sharp needs for liquidity arises! Don't be caught in asset rich. cash poor before 55 and 65. Life sucks!
Uncle8888 has been doing monthly contribution of $50 to his CPF MA as self-employed and may be can qualify for Workfare next year.
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Purpose of MA has changed...
ReplyDeleteMain purpose of MA is pay for Shield (H&S) insurance and Eldershield (LTD) insurance, and help to cover any deductible & co-insurance.
Secondary purpose of MA is for regular outpatient followups of certain chronic illnesses, certain vaccinations, and some limited scans.
1 blogger just wrote about hidden risk of topping up SA.
https://heartlandboy.com/money-withdraw-from-your-cpf-at-55/
If your CPF contributions from EMPLOYMENT cannot meet the Full Retirement Sum, you may not be able to take out all or part of your top-ups to SA.
For a 30-yr old today, the FRS in 25 years time may be $348,000 (using 3% annual increase).
So if you want to use CPF as a very long-term bond or FD, and expect to take out your SA top-ups at 55, you need to make sure your CPF contributions from employment to the OA & SA can hit the FRS by 55.
There's this paragraph in the CPF website under the Withdrawal of CPF Savings From 55 page which I'm still not able to fully understand the reach of it's implication:
ReplyDeleteFrom 55:
After setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient CPF property charge/pledge, you can choose to withdraw the remaining CPF balances (excluding top-up monies, government grants, and interest earned in your Retirement Account), or continue to keep your savings in CPF to earn attractive interest.
https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/withdrawals-of-cpf-savings-from-55#Item1556
ReplyDeleteQuote : "remaining CPF balances (excluding top-up monies, government grants, and interest earned in your Retirement Account)"
We can choose to withdraw interests from CPF SA, CPF OA and CPF MA if reach current limit.
For this; I will test it on Dec 2017 with real withdrawal
Quote : excluding top-up monies
DeleteIt means no free lunch as top-up monies got tax relief. Right?
Govt officials not so stupid
CPF states that SA top-ups will not be able to be withdrawn, and instead will go towards CPF Life. Some more this top-up money will be the last to be used in the monthly disbursements of CPF Life from 65.
ReplyDeleteThose who are thinking of using this SA top-ups like a piggy bank taking advantage of the 4%-5%, and thinking of withdrawing the "gains" after 55 will be sorely disappointed.
The vital info somewhere in middle of below link:-
https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme
How can top-up monies be used?
DeleteTop-up monies are set aside specifically for retirement needs and will be streamed out as monthly payouts under the Retirement Sum Scheme, or CPF LIFE1. It cannot be used for other purposes such as education, investment, insurance premium payments, housing, be withdrawn via a property with sufficient CPF property charge or pledge, CPF transfers and/or exemption.
Top-up monies also do not form part of the BRS in computing how much RA savings2 above the BRS that can be withdrawn through sufficient CPF property charge or pledge, as well as how much RA savings2 above their BRS that can be used for participation in the following CPF schemes:
Members who wish to withdraw RA savings above their BRS for housing
Members who wish to transfer RA savings above their BRS to their spouse’s CPF account, under the Retirement Sum Topping-Up scheme
1 Note that non top-up monies will be used first before top-up monies.
2 RA savings refers to the cash set aside in the RA (excluding amounts such as interest earned, any government grants received and top-ups received under the Retirement Sum Topping-up scheme), plus amounts withdrawn such as monthly payouts and payout eligibility age lump sum withdrawal.
Please click on Top-up monies in RA (PDF, 0.2MB) for an example.
Read? Top up monies in RA
DeleteIt says it cannot be withdrawn via a property with sufficient CPF property charge or pledge. The examples cited used BRS. If FRS is met, money above FRS can be withdrawn?
ReplyDeleteHi Caelitus,
ReplyDeleteYes, anything in SA/OA above the FRS can be withdrawn at 55+ if you want. The FRS amount will be put into RA account.
For those who want to minimize $$$$ stuck in RA / CPF Life, they can pledge property & further take out half of FRS, leaving half FRS (i.e. BRS) in RA/CPF Life.
But for those who have done top up to SA in order to quickly build up FRS and higher, then chances is that the full FRS will be stuck in RA/CPF Life. They cannot use property pledge to take out the top up $$$ which was used to build up FRS.
In other words, when you top up SA now, you need to be very clear that this is for CPF Life ... in order to hit the FRS. And not to be able to withdraw at 55+.
temperament,
ReplyDeleteI put more weight on our 5,000 years of collective wisdom:
Far water cannot save near fire ;)