today is the last day for topping up CPF/SRS and Jan 1 is the first day to top up again

[NYY1]

We are in the last 8 work days for the year.

One thing to consider if you're over 55 is putting aside $10,500 cash for an immediate RSTU contribution and possibly a full $37,400 VC in Jan. With closure of the SA in mid Jan (and the subsequent move of the SA funds to RA) there is some concern in my mind that I cannot get to the new ERS by 65. Using RSTU and the VC puts and approximate $20k into the RA this way. Without EE or ER contributions over 55's will be limited to the RSTU or VC for topping up the RA. There is mention a few times that we can "move OA to RA for top up the RA to FRS" but no mention of how we can up to the new ERS limit of $426,000.

I think this clarifies that you can top up the RA to ERS?

https://www.cpf.gov.sg/member/infohub/e ... owcpfworks

[PNGMK]

I agree that the statement "Members can top up their RA to the Enhanced Retirement Sum (ERS), transfer CPF savings to their loved ones, or have the flexibility to withdraw or invest the CPF savings in their OA." on the face of it implies I could, for example, transfer 100k from OA to RA to top up to ERS. However the devil will be in the details - for example how long will this deal remain in place? Can we do this ALL in one top up in Jan 2025 or will we be forced to top up annually with the RSTU at $10,500 only up to the ERS? I suspect the latter.

[NYY1]

How does it work now? If you are >55, at any point in time you can top up the RA to the ERS (currently $308,700)?

[PNGMK]

How does it work now? If you are >55, at any point in time you can top up the RA to the ERS (currently $308,700)?

Ah good point. I've hit ERS already so I can't go.above it but yes, you're correct in that OA can be used if RA under ERS to full ERS.

[NYY1]

How does it work now? If you are >55, at any point in time you can top up the RA to the ERS (currently $308,700)?

Ah good point. I've hit ERS already so I can't go.above it but yes, you're correct in that OA can be used if RA under ERS to full ERS.

I think you'll be able to top up all at once, but I guess we'll see.

For example, I think someone that is currently 54 and sitting at the FRS in the SA, should see the same ERS - FRS top up amount available once they hit 55 and the RA is created. It's only that they've changed the definition of the ERS.

We discussed this before, but the other thing to check is that interest/grants are still excluded when calculating the available top-up.

[PNGMK]

How does it work now? If you are >55, at any point in time you can top up the RA to the ERS (currently $308,700)?

Ah good point. I've hit ERS already so I can't go.above it but yes, you're correct in that OA can be used if RA under ERS to full ERS.

I think you'll be able to top up all at once, but I guess we'll see.

For example, I think someone that is currently 54 and sitting at the FRS in the SA, should see the same ERS - FRS top up amount available once they hit 55 and the RA is created. It's only that they've changed the definition of the ERS.

We discussed this before, but the other thing to check is that interest/grants are still excluded when calculating the available top-up.

I don't think it will be excluded unfortunately which is unfair to those who worked hard to build up their RA

[NYY1]

Ah good point. I've hit ERS already so I can't go.above it but yes, you're correct in that OA can be used if RA under ERS to full ERS.

I think you'll be able to top up all at once, but I guess we'll see.

For example, I think someone that is currently 54 and sitting at the FRS in the SA, should see the same ERS - FRS top up amount available once they hit 55 and the RA is created. It's only that they've changed the definition of the ERS.

We discussed this before, but the other thing to check is that interest/grants are still excluded when calculating the available top-up.

I don't think it will be excluded unfortunately which is unfair to those who worked hard to build up their RA

You may be correct. On the other hand, I don't think they mind people accumulating larger amounts here / earning a higher interest rate. I think the challenge was the liquidity profile of the SA, and this became a bigger deal as the population aged.

Like above, time will tell. I know you will be happy if you can make a big top up in Jan 2025 and keep doing about $15k in each of the subsequent years!

[NYY1]

I noticed the SA top-up amount does not exclude interest; it is only the current FRS - account balance (it looks like this has always been the case though).

Why is interest excluded for the RA top-up? I think it is because there are (or were) charts showing how much you need at 55 and what this will grow to with interest / what payments this total balance will generate at 65. If the amounts (FRS/ERS) keep increasing each year, you need to be able to add the principal as well (this may not hold true for the grants, which are also excluded, but just seem like extra money in the RA/higher future payments).

Let's see what they do in the coming days (or about a month from now)...

[NYY1]

I saw the following posted online elsewhere (the exact message was different but the underlying is the same). Based on the CPF Life Payment estimator, if you plug in the FRS and 2x the FRS (next year's ERS) for an account balance, the estimated monthly payment for the latter is not 2x that of the former.

I'd guess this is how they are pricing adverse selection. However, it doesn't help those who just have high balances and want more payments.

[malcontent]

I saw the following posted online elsewhere (the exact message was different but the underlying is the same). Based on the CPF Life Payment estimator, if you plug in the FRS and 2x the FRS (next year's ERS) for an account balance, the estimated monthly payment for the latter is not 2x that of the former.

I'd guess this is how they are pricing adverse selection. However, it doesn't help those who just have high balances and want more payments.

The difference in monthly payment as a percent of the sum used to generate it when comparing FRS and ERS is not significant. Considering this, I have always viewed anything above FRS as just “another helping” of the same stuff.

BRS has a significantly higher estimated monthly payment as a percent of the sum. I have always believed that this is due to the bonus interest paid on lower amounts in the CPF machinery, but I could be wrong.

It’s the same story when it comes to how much payments increase if you wait from 65 to 70, which they say is “up to” around 7% more each year — that really only holds true for BRS, and is significantly lower % increase for FRS/ERS.

My personal belief is that the Basic plan will be obsoleted in the coming years, so I’m not counting on that being an option. I am glad that the SA shielding loophole is being closed now, before my wife reaches 55… otherwise I’d have shielded her SA for nothing.

If we return to Singapore by the time CPF LIFE payments start for my wife, I expect to choose the escalating plan (or basic, in the unlikely event it’s still around). Not sure if I’d top up from FRS to ERS though. Maybe.

[NYY1]

I saw the following posted online elsewhere (the exact message was different but the underlying is the same). Based on the CPF Life Payment estimator, if you plug in the FRS and 2x the FRS (next year's ERS) for an account balance, the estimated monthly payment for the latter is not 2x that of the former.

I'd guess this is how they are pricing adverse selection. However, it doesn't help those who just have high balances and want more payments.

The difference in monthly payment as a percent of the sum used to generate it when comparing FRS and ERS is not significant. Considering this, I have always viewed anything above FRS as just “another helping” of the same stuff.

BRS has a significantly higher estimated monthly payment as a percent of the sum. I have always believed that this is due to the bonus interest paid on lower amounts in the CPF machinery, but I could be wrong.

It’s the same story when it comes to how much payments increase if you wait from 65 to 70, which they say is “up to” around 7% more each year — that really only holds true for BRS, and is significantly lower % increase for FRS/ERS.

My personal belief is that the Basic plan will be obsoleted in the coming years, so I’m not counting on that being an option. I am glad that the SA shielding loophole is being closed now, before my wife reaches 55… otherwise I’d have shielded her SA for nothing.

If we return to Singapore by the time CPF LIFE payments start for my wife, I expect to choose the escalating plan (or basic, in the unlikely event it’s still around). Not sure if I’d top up from FRS to ERS though. Maybe.

I assumed the same on the BRS as well (but never tried to work it out). I think the difference between the FRS and ERS (even at 2x the FRS) is still due to the additional interest on the initial balances (my initial post above probably isn't correct).

I wasn't thinking about the add'l interest adding to the balance both from age 55 to age 65 and from age 65 onwards (I think this is what they do). If so, both FRS and 2x FRS look like they would run out of money (if this interest was paid to you directly) at about the same time.

Edit: I think if you take the BRS at 55 and roll it forward to age 65 with the actual interest (including the bonus/additional interest on the initial balances), it looks like the annual payment / balance is closer to the FRS annual payment / balance. If you just estimated the year 65 balances by multiplying the year 55 balances by 1.04^10 (or roughly 1.5), the BRS balance is underestimated by the greatest amount.

[malcontent]

Yes, the RA balance from 55 to 65 should be expected to increase by around x1.5. After considering that final sum at 65, the annual payout rate on the CPF LIFE annuity is roughly 6.3% for standard, with roughly a half percent reduction for basic (5.8%) and another half percent less for escalating (5.3%).

Some might assume standard is best in this case, but I’ve found that escalating and standard are nearly identical in terms of value received at each point over a lifespan.

Basic is far superior over most points of any given lifespan (until the late 80’s or even 90’s for females), considering the value extracted collectively from the annuity. The peak value differential occurs around the 15 year mark, right when the bequest on standard and escalating disappears. Again, I don’t hold out any hope that basic will be available when my wife turns 65.

[PNGMK]

Today received total of $27,365 in interest. Total in CPF today is $835,123. I will make a RSTU contribution in cash today. Not sure of my VC plans this year. I may hold off until the SA > RA move is done and also need to see how much tax benefit I need. I'm on track to 1M by 63 if I stay the course however. IF I had contributed the RSTU in cash prior I'd be at 1M by 61 or 62 but never mind.

[NYY1]

Does the retirement dashboard show how much you can top up the RA?

[PNGMK]

Does the retirement dashboard show how much you can top up the RA?

NYY1 - good point.

1. Retirement dashboard shows you can now top up to ERS of $426,000.
2. A subnote says you can top up to ERS of $426,000 from age 55.
3. Right now SA still exists.
4. I can top up now for the full difference between RA and new ERS in cash($117,301).
5. I can also do a full CPF transfer from OA to RA for the new ERS - RA difference. ($117,301) - I have moved over 107k right now and my new RA i now $483,533 (which means that I have already exceeded the ERS limit of $426,000!). However SA is now 0 - IF YOU ARE SHIELDING this has some implications.