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Boost elderly parents' CPF-RA or CPF-MA?

Thursday, July 13, 2017

Since reading your blog last year (if i only had done so when i first started working years ago!) i have transferred some of my OA to SA and did some cash top up to my SA.

Would appreciate if you can advice on a a dilemma i am facing with regards to whether i should top up CPF for my mum. 

My mum is 63 yro and has almost nothing in her CPF. I had asked CPF Board for advice but it would take a very significant top up (>$50k) to even reach BRS.

i) should i top up my mum CPF's RA? I will not be able to help her reach BRS before she's 65.

ii) Should i top her Medisave instead? My consideration is that this can help go towards MediShield premiums and for any possible medical bills in the future.

I am thinking whether i should put the money in investment say REITs to obtain a potentially higher return than 4% (albeit with higher risks)

If we do have some spare cash, topping up our elderly parents' CPF accounts (whether RA or MA) is a good idea. 

We can think of this as making the government help us do a better job of taking care of our parents or that the government is helping to lessen the weight on our shoulders.

If you do not have ample resources to top up both the RA and MA, I would imagine that the MA has priority over the RA. 

We do fall sick and this is likely to get more serious with age. 

Having the cost of insurance covered and then some will give peace of mind.

For the elderly with limited financial resources, it should not be about what they could potentially gain. 

It should be about securing returns which are guaranteed. 

Peace of mind is priceless and more so for them.

Related post:

Upsizing parents' retirement adequacy.
You might want to see this recent blog:


AK71 said...

David Poh:
I agree with AK that it will be more beneficial to top up your mum's MA rather than RA given her age. I think your mum will be very comforted to know you have her best interests at heart. Two key takeaways for me:

1. When we do financial planning, we do need to consider everyone (parents, spouse, children). Do not do it in silos.

2. Never late, only later. Quote fr Guru Assi AK but do start early so we can enjoy the benefits of compounding effect.

Anonymous said...

hi ak/reader...
Agreed MA first.

RA seems still doable but CPF advise is 50k by 65?

I checked CPF LIFE website.

"If you do not have the stated Retirement Account balances or if you are born before 1958, you can still apply to join CPF LIFE. You can make your application to join CPF LIFE plan at any time between your payout eligibility age and age 80.​"

2017 - 63 = 1954 (yr of birth), so definitely b4 1958, so shld still be able to join
b/w 64.5 and 80? That's what I read, confirm with CPF again? If this is correct,
then still got abit bit more time to think/decide.

Now the amount, I would assume if joining later, the amount required would
be adjusted...

click on FAQ (tab) the "Other Questions You May Have on CPF LIFE"
Q Is there a minimum amount I need before I can join CPF LIFE?

A There is no minimum amount for joining CPF LIFE. However, the amount of retirement sum which you have set aside in your Retirement Account for CPF LIFE would affect your monthly payout amount. If you join with more savings, you will receive a higher payout.

I suppose going by the same logic (under "CPF LIFE Payouts" -
"Why are the monthly payouts for Basic Retirement Sum (BRS), Full Retirement Sum (FRS) and Enhanced Retirement Sum (ERS) not proportional?")

1st 30k earns 6%, next 30k earns 5%, so should top to 30k,
if cannot reach 60k, but the amt would be low but proportionally higher.

IMHO, should show 1st 30k, next 30k projected payouts.

Do remember investment must beat 5.5 to 6%, not 4%, bcos the interest is higher
for amounts < 60k.

the above is what i read, and what i interpret, which may be wrong, so
best to clarify with CPF.


AK71 said...

Hi fc,

5% to 6% interest rate on savings is impossible to beat. For those of us who have parents who are not taking full advantage of their CPF membership, if possible, we should really help them to do so. Doing this will also help us. ;)

Cory said...

Hi AK, I read a few times that MA money not easy to claim. Assume if so, will my next gen able to get my "MA" in cash after I ... ?


AK71 said...

Hi Cory,

I am not sure where you read that but I can tell you for a fact that all your CPF money, no matter which sub account it is in, will go to your beneficiaries once you say your final good bye to this world.

It is all pretty simple except for any money which might be left in CPF Life if it has been activated. That is an annuity and will have its own calculations.

DavidP said...

Hi Cory,

I believe this post on CPF Facebook book will be very helpful. Do help spread the message and debunk the myth and rumors.

Q5: There were rumours that Medisave savings go to the Government after death as they are not included in CPF Nominations. Is this true?
This is not true. When you make a nomination, monies in all your CPF accounts will be paid to your nominees when you pass away. This includes your Medisave savings and discounted SingTel shares.
Source: CPF FaceBook Page

Spur said...

If got CPF nomination, then pretty straightforward & automatic. CPF will write to you within 1.5 to 2 months, & usually within 2 months of death, the deceased's CPF monies will go into your bank account. Any discounted SingTel shares will be transferred to your CDP account, in proportion to the deceased's nomination.

If no CPF nomination, CPF will also write to you, but Public Trustee Office will take over CPF monies to distribute according to Intestate Succession Act. And PTO will charge a small "service" fee for this. Hahahaha!!!

So please get your loved ones (& yourself too) to do CPF nomination.
Note that any CPF nomination is automatically revoked after every marriage (but not divorce!! Hahaha).

Oh BTW, don't think anybody (maybe 1 or 2) will opt for the "Enhanced" Nomination! ;)

AK71 said...

Thanks for the valuable comments, guys. :)

Government confiscates our CPF-MA savings when we die.

AK71 said...

On my FB wall.

Irene Peh:
My dad passed away in 2014. A few months after his death, my brother received a cheque from CPF board as my dad had nominated him to be the beneficiary.
To be more precise, there were monies from my dad's MA.
*they were

foolish chameleon said...

if our parent has the MA and RA maxed out.
where can we top up to?

AK71 said...

Hi fc,

If their MA and RA are both maxed out, I don't think we need to worry about topping up their CPF accounts anymore. ;)

AK71 said...

Reader says...
Recently, parliament approved the transfer of cpf balances to parents' account, as long as one meets the BRS with sufficient property pledge. Previously the balance has to be above FRS before the transfer is allowed.

AK71 said...

Mervyn Lim says...
If the medisave account is topped up to the max $54k for a 70 years old, since the government is giving medisave top up yearly, will it be affected I.e Can’t receive the government top up as the medisave account is full. Anyone know?

AK says...
Will still receive. Overflow into RA and if RA full, overflow into OA lor. ;)

AK71 said...

Resistor said...
My parents are retired, have RA and drawing a little from it each month. Can I top it up and increase the payout? does it make sense? thanks!

AK said...
Yes, you can top up your parents' CPF-RA.

More in the CPF-RA means more interest income.

6% on the first $30K.

5% on the second $30K.

4% for the rest. :)

Your parents will have more retirement savings to draw upon. :)

AK71 said...

HnGDreams said...
Does it make sense to top up parents CPF who are already retired and >70, they don't have much $200/month on the annuity drawn currently. If top up this amount will increase slightly i guess?

Blogger AK said...
You will be topping up their CPF-RA which is used to help fund retirement.
It will definitely help them and at the same time you will enjoy income tax relief. :)

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