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What happens to our CPF money at age 55?

Thursday, June 11, 2015

A conversation with a reader:

Dear AK,
I have been following your blog regularly for the past two years. I found it very educational and useful for me - an ordinary worker trying to strive for financial freedom.

Among the discussion, I had also paid close attention on those mentioning taking advantage of the 4% interest in CPF-SA. Over the last two years, I had made a substantial amount of transfer from my OA to SA account. With this and my continued contribution, I'm quite confident that I will be able to meet the enhanced retirement sum at 55 years old. This year, I'm also considering voluntary top up to my CPF-SA account.

My question for you is that should i still perform voluntary top up to my CPF-SA given the new regulations ie only $5000 withdrawal allowed at 55 years old and 20% at 65 years old? In the event that I continue to perform voluntary top up, amount of funds in CPF-SA will exceed enhanced retirement fund at 55 years old however withdrawal of only $5000 is allow. Will the balance in the CPF-SA in excess of enhanced retirement sum be unnecessarily locked up without me having access to it?

thank you.

Warmest regards

My reply:

Hi C,

Welcome to my blog. :)

My understanding is that at age 55, we will be allowed to withdraw a lump sum that is in excess of the prevailing minimum sum at that point in time. Those who are not able to meet the minimum sum will get only $5,000 at age 55.

You might want to double check with the CPF Board to be sure. ;)

Best wishes,

Who are the right people to ask?

Reader's reply:

Dear AK,
Thank you for the very prompt reply. I finally managed to get through to the cpf board today. You are right! :) Lump sum withdrawal in excess of the prevailing minimum sum still holds true with the new changes although the staff I spoke to couldn't provide me more info on the 20% withdrawal at 65 yo.

Will have to wait for more info on the latter as more announcements are being made.
Thanks once again for your help! :)

Warmest regards

Always the best to hear from the horse's mouth. Make sure it is the right horse. ;)

Related posts:
1. Tea with EY: CPF questions.
2. Videos on reaching 55 and CPF Life.


pf said...

Yes. Withdrawl if excess over the prevailing sum at 55. That's the part to drive me to pump up the SA. :)

AK71 said...

Hi pf,

I agree with your approach. If we believe that we should have investment grade bonds in our portfolio, the CPF is the best there is for the average Singaporean. What is even better about the CPF than a regular bond is that it morphs into an annuity at 65 which will pay us a monthly income for life. ;)

Francis Chin said...

You better read the fine print again.
The excess you can withdraw excludes top up monies and interest earned

Francis Chin said...

After setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge and the current MMS of $43,500, 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.

Francis Chin said...

You better read the fine print - taken from the Cpf web site - ' excluding top up Monies'
You top up past the min sum. You won't be able touch those or the interest it accrues

AK71 said...

Hi Francis Chin,

This is new to me. I refer to the booklet published by the CPF Board "Reaching 55" and they did not mention anything like this.

"You can withdraw $5,000 and any excess CPF savings after setting aside the MS of $155,000 and the current MMS of $43,500." Page 5 of the booklet.

AK71 said...

Hi Francis Chin,

Oh, I think I know where you might have misunderstood.

"After setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge and the current MMS of $43,500, you can choose to withdraw the remaining CPF balances (excluding top-up monies, government grants, and interest earned in your Retirement Account)..."

The portion in brackets refers to our RA. Money in our RA cannot be withdrawn, be it top ups, government grants or interest. They are meant to fund CPF Life which will give us a monthly income for life from age 65. :)

pf said...

Yes...if it goes into the retirement account. Then cannot 55 is THE time to do so, out of SA.

AK71 said...

Hi pf,

At 55, only what is required by the MS will be transferred to the RA. Then, there is what is required by the prevailing MMS. Apart from these, the rest of our CPF money can be withdrawn at any time after we turn 55 if we are no longer gainfully employed. Otherwise, it is allowed once a year.

We could choose to do partial withdrawals from 55 to 64 years old but what is in the RA, we cannot touch. I think this is what Francis could be confused about. :)

betta man said...

An extraction from the link below:

"Top-up monies are meant for the recipient’s retirement needs. Therefore, he cannot apply to withdraw the top-up monies:
(a) under any CPF schemes for payment of education, investments, insurance, housing, etc;
(b) by pledging his property in lieu of the retirement sum; and
(c) via exemption from the Retirement Sum Scheme."

Through clarifications with CPF board, I understand that cash top ups to CPF SA cannot be withdrawn even if you meet the BRS or FRS. They will be locked into the CPF Life scheme. Monies from VC or transfer from OA to SA is not subjected to this regulation.

Hence, I have serious reservations on topping up SA using cash, which I used to support in the past. As the payout eligibility age keeps postponing, I am not sure how long my monies will be locked up in the future. I would rather use the monies to buy into private annuity plans where I can define my own drawdown age or even dividend stocks.

AK71 said...

Hi betta man,

MS Top Ups to the SA is for retirement purposes. That has always been the understanding.

If we do MS top up of $7K a year to our SA (to enjoy the income tax relief at the same time), assuming 30 years of working life, that would work out to $210K. If this amount plus interest goes to the RA at age 55, we would have a rather comfortable retirement income from CPF Life at age 65. If this amount happens to meet or exceed the minimum sum requirement, we would be able to withdraw the rest of our CPF savings (after satisfying the MMS requirement). I don't think this is a bad thing. :)

Do you mind sharing your correspondence with the CPF Board on this issue here with us? It will be appreciated, I am sure. ;)

betta man said...



Regarding topping up of SA, I read the following clauses on CPF website:

"The top-up monies are meant for his retirement needs. Therefore he cannot apply to withdraw the top-up monies:
i. under any CPF schemes for payment of education, investments, insurance, housing, etc; pledging his property in lieu of the Minimum Sum (MS); and
iii. via exemption from the MS Scheme "

Suppose I am 55 this year and have $161K in my SA and this includes my SA top-up of $10K some years ago. I decide to pledge my property.

Therefore, the amt I can withdraw from my RA would be = $161K - $80.5K - $10K = $70.5K ?

ANS from CPF Board:

Yes, your understanding is absolutely correct.

AK71 said...

Hi betta man,

I find this very odd because money cannot be withdrawn from the CPF-RA in a lump sum. I guess you meant to say the CPF-SA?

So, in the example you gave, $90.5K will go from your CPF-SA to your CPF-RA which later on becomes an annuity that pays you a monthly income for life from age 65. If you are thinking of getting an annuity to help fund your retirement, wouldn't this be a good thing?

betta man said...

Hi AK,

Sorry, I mean CPF-SA.

Looking at how the payout eligibility age (PEA) has been increasing from 60, then 62 and now 65, I am quite sure that when I reach 55, the PEA would be > 65.

If I have set my mind to retire at 65, I want my cash flow from 65 to be more certain. That certainty would probably come from a private annuity plan and dividend stocks, although dividends then to fluctuate.

AK71 said...

Hi betta man,

We are not allowed to do MS Top Up beyond the prevailing MS. So, not much money will get "stuck" anyway.

If we restrict our MS Top Up to $7K a year (to get the full benefit of income tax relief), then, I see this as a good thing in that the Top Up money + interest will eventually go to our CPF RA to fund CPF Life. :)

1871e1fc-10c3-11e5-a794-7f9fad27c9b8 said...

Hmmm... to top up or not?
I think its still gd.

The clause is there to prevent pple to treat it like a 4% FD.
E.g. no CPF contribution, just do 7k/yr contribution for 20 odd years.

I looked @ equation.
161k (Minimum Sum includes Top up)
- 80.5k (50% Minimum Sum (due to pledged pty)
- Top up

You can only hope to withdraw 80.5k max when you can
meet minimum sum iff you dont need top up to meet it
in first place.

key decision to top up or not, is whether you can be
sure to meet minimum sum w/o top up. If yes, top up.
If no, better not, as you are unlikely to get any back
by age 55. Make sense?

first time commenting... paiseh...

AK71 said...

Hi 1871,

I shortened your name. ;p

Whether to top up the SA or not should depend on whether we want to make the CPF an important part of our retirement funding strategy. If this is what we are after, then, having more money in our CPF-RA when we turn 55 is a good thing. To me, it is quite simple. :)

MaoMao said...

I bought a private annuity plan that will pay me *guaranteed* handouts from age 60 onwards (for life as well). It also has surrender and death benefits. Unfortunately this plan has been pulled out by the insurance company.

This goes to show that payouts for life is NOT sustainable for the organisation. A lot of newer private annuity plans in the market only promise to pay you for 15 to 20 years... not for life.

pf said...

I think can just go ahead to put in the money lah. Out of sight, out of mind. Then we have to learn to make do with what we have. Also, less chance of squandering away the money.

starlight said...

One can explore using CPF as another source for retirement funds. If we dont get to use it (due to death), the funds will be passed to our beneficiaries.

AK71 said...

Hi MaoMao,

An annuity is an insurance product. It is about risk sharing. So, I guess when the pool of resources is big enough and if we have a paternalistic entity managing the fund, a lifetime monthly income for all members from age 65 is not hard to imagine. Private insurance companies are profit driven. So, they have different priorities.

AK71 said...

Hi pf and starlight,

I always ask people if they cannot accept the CPF as a cornerstone in their retirement funding strategy, then, can they offer alternatives which have similar levels of risk, volatility and returns? That usually puts things in perspective for them.

AK71 said...

At 65, we can withdraw up to 20% of our RA savings (including the first $5K withdrawn at age 55 for those who do not meet the MS requirement). With CPF Life, we also have the option to receive monthly payouts when we reach 65.

We could opt to defer our payouts to start at age 70. This will allow us to earn higher interest of up to 7% for every year of deferment. :)

pf said...

Yup. Indeed, it's not easy to find a alternative. But normally ppl r not rational when comes to money. Too much emotional attachment.


Hi all,

Personally, an alternative is to do DRP on a quality stock from now till 65, then switch to cash income.

Of course, it would be riskier compared to AAA Singapore CPF :) but with higher risk comes more flexibility.

MaoMao said...

After reading my own comment, I realised that it may not be clear. I would like to add that the private annuity plan that I had purchased is still being honoured. However, the plan is no longer available to new customers as it is not sustainable to provide payouts for life. I am happy to look forward to the guaranteed payouts at age 60 for life while the CPF LIFE criteria is still evolving over the next few decades. Both CPF LIFE and private annuity plans are key to complement each other to a comfortable retirement.

apex property investment said...

Hi AK, 7% for every year of deferment is very good. I think we still must generate enough passive income to cover our living expenses before this deferment can occur.

Also, pls sign the nominations for your CPF money, else it becomes a hassle it it goes under state distribution.

AK71 said...

Hi MaoMao,

CPF Life starts paying from age 65, not 60. I think you know this but made a typo. Anyway, just in case. ;)

AK71 said...

Hi Apex.

Well, it is "up to" 7% which means not all CPF members will get this. It is really to encourage CPF members who could not or could only meet the BRS at 55 to start withdrawing from CPF Life later so that they could receive a bigger monthly payout for life at age 70. For people with more in their CPF-RA, for example, someone who has the ERS, it won't be as much as 7%.

thomas tan said...

I am seriously thinking of topping up 7k yearly to CPF SA. I am motivated by the tax saving mainly. It will save me about $700 per year. It will also build up more money for bigger payout at age 65 since the top up, even if it exceed FRS at age 55, cannot be taken out. One thing I am not sure is whether we can still top up if the amount in SA already more than 161k? If still can top up, whether the amount use for the top up still tax deductible?

MaoMao said...

Hi AK,

The age 60 stated in my sentence was referring to the private annuity that I had purchased. Not a typo. Hehe.

AK71 said...

Hi Thomas,

Unfortunately, once your CPF-SA has hit the prevailing minimum sum (MS), you won't be allowed to do any MS-Top Ups anymore.

You could do a voluntary contribution (VC) if your annual mandatory contribution does not hit the limit. The annual contribution limit this year is $31,450.00, I believe. However, there is no income tax relief for this.

You might be interested in this:
Another step towards retirement adequacy taken.

AK71 said...

Hi MaoMao,

Ah, I see. Thanks for clarifying.

So, you will have monthly income from your private annuity from age 60 and CPF Life from age 65. That is a good plan. :)

AK71 said...

Hi AK71,

I have started to follow your blog last month. Better late than never.

I saw the following blog comment:

and became rather confused on the discussion between you and betta man, regarding the topic of cash top of SA account and what's eligible for withdrawal.

Thus i decided to ask CPF and seek their advice... below is my enquiry and cpf's reply.

The formation of RA account is using first the SA account then OA account. In my example, it shows that cash top up can also be withdraw at age of 55 as long as FRS is met.

Letter from CPF:

When a CPF member turns 55, a Retirement Account (RA) will be created for him. Savings from his Special Account (SA) and then Ordinary Account (OA) will be transferred to his RA, up to the Full Retirement Sum (FRS).

You will be able to withdraw the balances that are left in your Special and Ordinary Accounts in one lump sum only after setting aside the FRS in your Retirement Account (RA) and Medisave Minimum Sum (MMS) in your Medisave Account. You can continue to withdraw the first $5,000 in your CPF accounts even if you have not met the FRS.

Based on the amount given:

OA: $50,000

SA: $230,000 (Includes top-ups of $170,000)

MA: $45,000

Assuming if the FRS applicable to you is $155,000.

(a) Your estimate withdrawable amount: $50,000 (from OA) + $75,000 (from SA) + $1,500 (cash in excess of the Medisave Minimum Sum of $43,500) = $126,500

(b) The estimate FRS aside in your Retirement Account: $155,000

When you join CPF LIFE, your entire savings in your Retirement Account ($155,000) will be committed to CPF LIFE.

I would be pleased to help you if you need clarification or further assistance on CPF matters. Alternatively, you can call us on 1800- 227-1188 from Monday to Friday, 8am to 5.30pm.

Thank you.

Yours sincerely
Sarah Wong (Ms)
Customer Service Associate
Customer Correspondence Unit
Central Provident Fund Board

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