Read? CPF Shifting Goal Posts. Did Merdeka Generation See It Coming???
Uncle8888 has never voluntary top up a single cent into his CPF as he kena CPF shifting goals from CPF withdrawal from 55 to 60; 60 to 62, and 62 to 65. How to trust CPF when he kena so many time!
2022; kena again! Luckily; thank to reader's alert for me to check with CPF!
It will be a SHOCK and WTF if he is not aware of new rule change and continue to withdraw $24K on Dec 2022 like past 5 year as retirement income for life! $24K outright from CPF SA instead of 11 months of earned interests! WTF!
Did Uncle8888 really miss out that communication of CPF's latest administrative practices that are aligned with the market practice in CPF News alert email to him?
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Why change?
Hmm .. previously; we can just withdraw 11 months of CPF SA earned interests and then compounding the remaining 1 month in CPF SA at 4% rate! Now, ZERO compounding rate in CPF SA if you choose to withdraw earned interests! Hmm ...
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CPF's next reply to my question
As part of the Board’s ongoing efforts to ensure our administrative practices are aligned with the market practice, we have revised our practice such that only the savings in your CPF accounts can be withdrawn.
This means that while interest is earned every month, it is only credited into your CPF accounts to form part of the account balances at the beginning of each year, and withdrawable from then on. If you make a withdrawal, savings from your Special Account (SA) will be paid first followed by your Ordinary Account (OA).
Based on your example given, as at December 2022, if your SA balance is equal to or more than the withdrawal amount of $24,000, the full amount will be withdrawn from your SA. If your SA balance is less than the withdrawal amount, your OA savings will be withdrawn to make up the balance.
As of today, your SA balance is sufficient for the full withdrawal of $24,000.
You have not replied to my questions. If you don't have answers, pls help to escalate to your experts to answer.
Every month of Dec since 2017; I have been withdrawing $24K. from CPF. Last year; the withdrawal from CPF SA and CPF OA is as followed : CPF SA : $1,545 and CPF $22,455.
Please help to confirm if there any changes when I withdraw $24K from CPF in Dec 2022
How much withdrawal from CPF SA and CPF OA? Pls help to provide the numbers as follows:
CPF SA = ? and CPF OA = ? Total withdrawal from CPF = $24K
Thank you!
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CPF's reply to my question:
As part of the Board’s ongoing efforts to ensure our administrative practices are aligned with the market practice, we have revised our practice such that only the savings in your CPF accounts can be withdrawn.
While CPF interest is earned every month, it is only credited into your CPF accounts to form part of the account balances at the beginning of each year, and withdrawable from then on. This is similar to market practice, where your bank interest is only withdrawable after it has been credited into your bank accounts. Hence, if you make a partial withdrawal, savings from your SA will be paid first followed by savings from your OA.
Posts
1M65 to 1M67 to 1M70 to 1M75 to 1M80 to Legacy? Leave your CPF for your Children or Charity? LOL!
ReplyDeleteCW, real reason for the change is dishing out "risk free" 4% is not sustainable under the current environment. This is in line with the private annuities market, with many providers already told policy holders on cut in projected payout (my Manulife Signature 1 is one of them, your Signature 2 has not been affected yet). Wide public knowledge of SA "shielding" aggravates the matter for CPF. CPF's "new policy" is to deplete SA. Have called up Manulife & was told that payout could be adjusted upwards if % goes up (long duration bonds are the main holdings for annuities portfolios, returns will be better if bond yields improve). But don't think CPF will adopt similar approach.... So, have to rely on OA for regular payout,
ReplyDeleteunless CPF is in accumulation phase for life.
Have to rely on OA for retirement?
DeleteFor most people in sg, already calculated properly your "safety" net.
Typical sg guy grad in university, come out work age 25/26.
Getting married and bto within 5 years or slight more due to covid now ( wait for flat to
build up and move in) age 30/31
Take 25 years hdb loan @ 2.6% p.a and pay your dues in cpf OA. Some have to use cash top up.
By age 55, paid finished loan, swee swee Retirement account open for you, OA and SA excess funds deployed to RA account, and wait until retirement age and get monthly pay out.
CW,
ReplyDeleteIts not a surprise to us old fogeys right?
See?
When big daddy has his hands on your baxxs, can do whatever he likes!
If big daddy needs to inform or ask you for permission, then its you that have your hands on big daddy's baxxs ;)
What a shocker! You mean CPF has not been aligned with "market practice" all this while!?
You mean the private sector is the actual Indian Chief influencer all along?
CPF is just a "yalor, yalor" follower?
LOL!
Uncle8888,
ReplyDeleteThe elephant market practice in the room that CPF is not following is the CPF interest rates themselves. Based on CPF's own market-driven formulas, OA interest should be 0.09%. SA, MA & RA interest should be 2.55%.
(OA interest based on 3-month average of local banks' FD and savings rates. MRSA interest based on 12-month average yield of SG govt 10-year bonds + extra 1%.)
They'll lose big time at elections though, so CPF should be continuing to disregard market practice when it comes to interest rates LOL.
2 other market practices to consider:
1. Plugging of SA-shielding (goes against the spirit of SA intent & original purpose).
2. Raising of payout age beyond 65, as life expectancy increases (already being done by other countries).
Never mind, more challenges for personal finance to keep dementia at bay! Shiok! 😂
Headache. How to plan fir retirement with so many goal posts to shift? If mati early then no chance to spend after slogging for decades.
ReplyDeleteHi CW,
ReplyDeleteToo bad this comment section does not allow me to attach a graph to show you the impact of this withdrawal rule change, in terms of "lost" interest.
I did a simulation for your case to compare the impact of the interest earned / lost between the old rule that allow you to withdraw only the interests from your SA & OA versus the new rule that said withdrawal will come out from your SA first. In the new rule, your SA of around $45,000 will be depleted in 2 years based on a yearly withdrawal of $24,000.
For our case, under the old rule where we could withdraw 11 months of interest without affecting the principal, the principal amounts in our OA & SA still continue to grow, and correspondingly increases the interests available for withdrawal in the following year.
So under the old rule, our 11 months interest that we can withdraw is $58,000 (combined for wife & I). In new rule, the $58,000 will now come out from our SA first which will be depleted in 5 years. And then the withdrawal will come out from our OA.
Over 25 years, we will lose out over $80,000 in interests under the new withdrawal rule. It is nearly one year's worth of our projected retirement expenses. Ouch!
New protest shout out - Return My CPF SA Interests! LOL!
DeleteCW and mysecretinvestment,
DeleteBig daddy not stupid to fetch water with a leaking bucket...
What's the point of cheerleading voluntary contributions to CPF if money comes in but leaks out through "smart" people gaming the system?
Of course must plug out the leaking holes!
Especially those loopholes that get too popular in the community ;)
(Remember the curry puff seller who brags about his revenue?)
Want to bet big daddy got people taking notes in the telegram group?
Smol,
DeleteEvery country monitors social media & dark web for their own purposes. Large corporations too. It's the lowest hanging fruit of so-called open intelligence.
I'd be surprise if SAF & MHA didn't already have such units for the past 20 years. Especially since 9/11.
Think quite a few will be sniggering at the triggered CPF members lol. ¯\_(ツ)_/¯
And if you want to keep up with the latest changes to the CPF rules and policies, why not join the 1M65 telegram group where there are 25,000 members "keeping watch" on the CPF and sharing tips. Someone is bound to catch a new change to any rule.
ReplyDeleteA lot of repetitive discussion there but you can skip all of them and read only the relevant stuff 😀