Dear @JoshuaLearnTrading, Thank you for taking the time to leave a question for us. At age 55, RA will be formed with FRS, which will be transferred from SA first, and if not enough then transferred from OA. When you prevent SA money from going into RA, the main bulk of FRS will be transferred from OA, effectively transferring from a 2.5% interest rate account to a higher 4~6% account. To receive firsthand wealth insights from our team of experts, we invite you to subscribe to our weekly newsletter: providend.com/#newsletter-subscribe We hope this answer is useful and have a wonderful day ahead.
Hi 猪猪, this link would be helpful for you - www.cpf.gov.sg/member/faq/growing-your-savings/cpf-investment-schemes/how-do-i-use-my-cpf-to-apply-for-singapore-government-bonds-and
Hi Sir , I will be 55 years old in sept 2023 . would like to ask the option of CPF shielding , use SA to buy 1 year t-bill now better or do short term investment 1 month before 55 better . appreciate your advise.
Dear Choo Wee Hong, thank you for your question. Both are good options. Since the objective of SA Shielding is to allow more of your CPF OA or cash to form your new RA balance and leave a larger CPF SA balance, the most important thing to remember when doing it is to use safe instruments, to make sure that the money has enough time to leave your SA before your 55th birthday and to put it back once the process is complete. If you are using short-term cash funds, you will want to be sure to factor in transaction processing times, while being mindful that you should not do it too early as well because you will forfeit CPF interest in the months when the money is not in the SA, and more importantly, subject the money to some risk while it remains invested. If you decide to use Singapore Government Treasuries, you will need to ensure that you get allocated what you need in time. This can be challenging if you are bidding competitively, and if you are submitting non-competitive bids, then you cannot be sure of the final subscription amount until after each auction is complete. Applications for this can also only be made in person at a bank. Given the above, it would probably be best to use whichever you are more confident of executing smoothly. I hope this helps. -- Bryan Chan, Client Adviser of Providend
Hi, the low risk investment that was mentioned in video in mandarin is it referring to SGS Bonds or SGS T-bills? But SGS bond need to hold minimum 2 years & T-bills minimum 6 months, so we cannot sell them immediately after we turned 55. Can help to clarify on this question?
Hi Gillian, The low-risk investment is referring to Singapore Government T-Bills. You are correct about the time frame needed to hold the T-Bills (6 months). The main priority is to invest SA and OA monies into something that is very safe, to minimise the risk of capital loss before being transferred back into SA and OA. Singapore Government T-bills are rated AAA by S&P, therefore, they fit the criteria of being very safe. The 6-month holding period is generally considered a short time frame but individuals should still need to feel comfortable about it before deciding to use this instrument. As additional information, particularly for SA shielding, we also consider funds that are low risks which include Lion Global Short Duration Bond Fund, United SGD Fund, Schroder Singapore Fixed Income Fund or the Nikko AM Shenton Short Term Bond SGD Fund. The use of such funds would not be subject to any minimum withholding period. However, as the funds may suit different people at different stages of life, we strongly encourage you to seek advice from a licensed adviser before buying it. Hope this helps! -- Ray Zheng, Associate Adviser of Providend
@@ProvidendSG Besides SGS T-bills, any other recommended short-term bond funds which we can invest for the short term of 1-2 months that are fairly stable & not affected by rising interest rates which are happening now?
Hi Gillian, as long as it is a bond fund, it will always be exposed to changes due to the interest rate environment. The funds that were mentioned previously are all short-term bond funds that belong to the approved list under CPF-SA and are deemed to be stable enough to hold for 1-2 months. That being said, their values can still fluctuate within that time frame and it is imperative that investors intending to use them are prepared to withstand the changes. -- Ray
Hi shui bao Wang, thank you for your questions. Let us recap the example given in the video: Before Age 55: CPF OA $200k CPF SA $200k Cash $132k After Age 55 Without Shielding: CPF OA $200k CPF SA $8k CPF RA $192k Cash $132k After Age 55 With SA & OA Shielding: CPF OA $180k CPF SA $160k CPF RA $192k Cash $0 Comparing the above 2 scenarios after age 55, we can see how shielding affects the CPF savings: 1. CPF OA has reduced from $200k to $180k, a decrease of $20k. 2. CPF SA has increased from $8k to $160k, an increase of $152k. 3. CPF RA stayed the same at $192k. 4. Cash has dropped from $132k to zero. Basically, we have put more money ($152k) into CPF SA to earn the higher 4% interest rate. The additional money we put into CPF SA is not locked in because it can be freely withdrawn since CPF RA has already hit Full Retirement Sum (FRS). I hope this helps. -- Choong Hwee, Solutions Specialist of Providend
the better way to do it is to leave 40k in SA, DONT touch OA just let OA be emptied as much as possible into RA. then no need cash top up. providend probably trying to be "nice" cos it doesnt wanna offend govt
Hi Daniel's World, After 55, you can do cash top-up to RA up to the prevailing Enhanced Retirement Sum (ERS, $298,200 in 2023), but cannot do cash top-up to SA directly anymore. You can do Voluntary Contribution to 3 Accounts (VC3AC) to contribute cash into OA, SA, and MA according to the allocation ratio for your age groups, and it is subjected to an annual limit of $37,740 less Mandatory Contribution (MC) from employment. You can do Voluntary Housing Refund (VHR) to refund cash to OA up to the CPF amount withdrawn for Housing plus accrued interests. Hope this helps. -- Choong Hwee, Solutions Specialist of Providend
@@ProvidendSG thank you for Ur info... Some further questions: After RA is created and FRS formed, what happens if there is surplus in SA and OA? Will member be able to withdraw? Also what if member cannot accumulate even BRS at age 55, does it mean no CPF Life for the member?
@@LeakyBucketsg, apologies for the delayed response. After RA is created with FRS at age 55, any surplus in SA and OA can be freely withdrawn, first from SA and then from OA after SA is depleted. Member will be automatically included in CPF LIFE if he/she has at least $60,000 in RA when he/she wants to start monthly payout anytime from age 65 to 70. Even if his/her RA savings is less than $60,000, he/she can still opt in for CPF LIFE albeit with a lower monthly payout. -- Choong Hwee, Solutions Specialist of Providend
May I ask for your enlightenment? the RA itself also has 4~6%, why do we need to prevent the SA money from going into RA?
Dear @JoshuaLearnTrading,
Thank you for taking the time to leave a question for us.
At age 55, RA will be formed with FRS, which will be transferred from SA first, and if not enough then transferred from OA. When you prevent SA money from going into RA, the main bulk of FRS will be transferred from OA, effectively transferring from a 2.5% interest rate account to a higher 4~6% account.
To receive firsthand wealth insights from our team of experts, we invite you to subscribe to our weekly newsletter: providend.com/#newsletter-subscribe
We hope this answer is useful and have a wonderful day ahead.
Hi thanks you very much I learn alot from yor video 感恩
Thank 👍👍👍❤
Thank you too :)
Hi, how to use cpf in sa account to buy short term bond before 55?
Hi 猪猪, this link would be helpful for you - www.cpf.gov.sg/member/faq/growing-your-savings/cpf-investment-schemes/how-do-i-use-my-cpf-to-apply-for-singapore-government-bonds-and
@@ProvidendSG thank you 🙏
Hi Sir , I will be 55 years old in sept 2023 . would like to ask the option of CPF shielding , use SA to buy 1 year t-bill now better or do short term investment 1 month before 55 better . appreciate your advise.
Dear Choo Wee Hong, thank you for your question.
Both are good options. Since the objective of SA Shielding is to allow more of your CPF OA or cash to form your new RA balance and leave a larger CPF SA balance, the most important thing to remember when doing it is to use safe instruments, to make sure that the money has enough time to leave your SA before your 55th birthday and to put it back once the process is complete.
If you are using short-term cash funds, you will want to be sure to factor in transaction processing times, while being mindful that you should not do it too early as well because you will forfeit CPF interest in the months when the money is not in the SA, and more importantly, subject the money to some risk while it remains invested.
If you decide to use Singapore Government Treasuries, you will need to ensure that you get allocated what you need in time. This can be challenging if you are bidding competitively, and if you are submitting non-competitive bids, then you cannot be sure of the final subscription amount until after each auction is complete. Applications for this can also only be made in person at a bank.
Given the above, it would probably be best to use whichever you are more confident of executing smoothly.
I hope this helps. -- Bryan Chan, Client Adviser of Providend
Hi, the low risk investment that was mentioned in video in mandarin is it referring to SGS Bonds or SGS T-bills? But SGS bond need to hold minimum 2 years & T-bills minimum 6 months, so we cannot sell them immediately after we turned 55. Can help to clarify on this question?
Hi Gillian,
The low-risk investment is referring to Singapore Government T-Bills. You are correct about the time frame needed to hold the T-Bills (6 months).
The main priority is to invest SA and OA monies into something that is very safe, to minimise the risk of capital loss before being transferred back into SA and OA. Singapore Government T-bills are rated AAA by S&P, therefore, they fit the criteria of being very safe. The 6-month holding period is generally considered a short time frame but individuals should still need to feel comfortable about it before deciding to use this instrument.
As additional information, particularly for SA shielding, we also consider funds that are low risks which include Lion Global Short Duration Bond Fund, United SGD Fund, Schroder Singapore Fixed Income Fund or the Nikko AM Shenton Short Term Bond SGD Fund. The use of such funds would not be subject to any minimum withholding period.
However, as the funds may suit different people at different stages of life, we strongly encourage you to seek advice from a licensed adviser before buying it.
Hope this helps! -- Ray Zheng, Associate Adviser of Providend
@@ProvidendSG Besides SGS T-bills, any other recommended short-term bond funds which we can invest for the short term of 1-2 months that are fairly stable & not affected by rising interest rates which are happening now?
Hi Gillian, as long as it is a bond fund, it will always be exposed to changes due to the interest rate environment. The funds that were mentioned previously are all short-term bond funds that belong to the approved list under CPF-SA and are deemed to be stable enough to hold for 1-2 months. That being said, their values can still fluctuate within that time frame and it is imperative that investors intending to use them are prepared to withstand the changes. -- Ray
So what is the benefit by doing this? U are lock in more money to CPF ?
Hi shui bao Wang, thank you for your questions.
Let us recap the example given in the video:
Before Age 55:
CPF OA $200k
CPF SA $200k
Cash $132k
After Age 55 Without Shielding:
CPF OA $200k
CPF SA $8k
CPF RA $192k
Cash $132k
After Age 55 With SA & OA Shielding:
CPF OA $180k
CPF SA $160k
CPF RA $192k
Cash $0
Comparing the above 2 scenarios after age 55, we can see how shielding affects the CPF savings:
1. CPF OA has reduced from $200k to $180k, a decrease of $20k.
2. CPF SA has increased from $8k to $160k, an increase of $152k.
3. CPF RA stayed the same at $192k.
4. Cash has dropped from $132k to zero.
Basically, we have put more money ($152k) into CPF SA to earn the higher 4% interest rate. The additional money we put into CPF SA is not locked in because it can be freely withdrawn since CPF RA has already hit Full Retirement Sum (FRS).
I hope this helps. -- Choong Hwee, Solutions Specialist of Providend
the better way to do it is to leave 40k in SA, DONT touch OA just let OA be emptied as much as possible into RA. then no need cash top up.
providend probably trying to be "nice" cos it doesnt wanna offend govt
讲得太棒了，头一次听说啊！就怕政府把这个漏洞给堵住了啊
So after 55, can do cash top up to RA? But cannot do cash top up for OA and SA?
Hi Daniel's World,
After 55, you can do cash top-up to RA up to the prevailing Enhanced Retirement Sum (ERS, $298,200 in 2023), but cannot do cash top-up to SA directly anymore.
You can do Voluntary Contribution to 3 Accounts (VC3AC) to contribute cash into OA, SA, and MA according to the allocation ratio for your age groups, and it is subjected to an annual limit of $37,740 less Mandatory Contribution (MC) from employment.
You can do Voluntary Housing Refund (VHR) to refund cash to OA up to the CPF amount withdrawn for Housing plus accrued interests.
Hope this helps. -- Choong Hwee, Solutions Specialist of Providend
@@ProvidendSG thank you for Ur info... Some further questions: After RA is created and FRS formed, what happens if there is surplus in SA and OA? Will member be able to withdraw? Also what if member cannot accumulate even BRS at age 55, does it mean no CPF Life for the member?
@@LeakyBucketsg, apologies for the delayed response.
After RA is created with FRS at age 55, any surplus in SA and OA can be freely withdrawn, first from SA and then from OA after SA is depleted.
Member will be automatically included in CPF LIFE if he/she has at least $60,000 in RA when he/she wants to start monthly payout anytime from age 65 to 70. Even if his/her RA savings is less than $60,000, he/she can still opt in for CPF LIFE albeit with a lower monthly payout.
-- Choong Hwee, Solutions Specialist of Providend