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i am also 62 years old, retired and stopped working 3 years ago. upon checking my CPF statement i found that the bulk of my balance are locked up in the OA (about 90%) and a small portion in SA (Medisave) and an even smaller amount in the RA. i am wondering why this is so, could someone enlighten me? so far i have not withdrawn any amount from cpf balance as i have some cash savings of my own.
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Hi Mrs Angie,
When you reached 55, the required minimum sum amount would be set aside in the RA. 7 years ago, that was about $70k with a minimum of $30k cash component.
That amount will be slowly drawn down now in the form of monthly payouts now. ie from age 62.
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i thought once you are over 55, all your money automatically goes into Retirement account earning 4% floor?
no more OA/SA once you are over 55.
ReplyHi Intheknow,
Only the required minimum sum goes into the RA.
Furthermore, if someone continues to work at 55, he will still continue to receive CPF into his OA/SA/Medisave.
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Hi lioninvestor
You mentioned “From now until end 2009, the CPF retirement account offers a floor rate of 4% p.a.” but my said CPF balance are in the OA/SA (which earns 2.5%, right?). I did not make any withdrawal since I reached 55 years of age till now (except the minimum sum of $70K then to purchase an annuity with AIA).
When I heard about the higher yield (4%) for the Retirement Account I thought of moving part of my CPF balance to the RA but was deemed disqualified as I have already attained the age of over 55 years. I stopped working and ceased contributing to CPF when I was 59 years old.
neuretiree
ReplyHi Neuretiree,
Sorry for the confusion.
The OA and SA will earn interest at the prevailing CPF interest rate. ie 2.5% for OA and 4% for SA.
http://mycpf.cpf.gov.sg/CPF/my-cpf/reach-55/Reach55-1.htm
If you had wanted to keep your money in the RA, one thing you could have done is to withdraw money from the OA and use it to buy the annuity instead. But that is not an option now.
ReplyI turned 62 two weeks ago. I have been leaving my CPF money with the board all these while (more than 400K) as I have no immediate use of it except for some 50K for investment purposes. Do you think it is prudent for me to do so as I reckon that parking the funds in FD would not yield as much as the CPF current 2.5 per cent. I fell victim to the Lehman Minibonds for 50K and am now very vary of investment products offered by the banks.
Do you think I would have difficulties withdrawing my money as and when I required it later; what are the restrictions? I have just begin to receive my modest monthly payout from my annuity bought when I was 55.
neuretiree
ReplyHi KW Yue,
From now until end 2009, the CPF retirement account offers a floor rate of 4% p.a.
So, in a way, you are right to say that withdrawing the funds and leaving them in FD will get a lower return.
The restrictions on withdrawals are spelt out in the FAQ on the CPF website:
http://ask-us.cpf.gov.sg/explorefaq.asp
under “Your Retirement Savings And Withdrawals”.
It says that if you have previously withdrawn money from CPF, then you may do so subsequently on your birthday. Exemptions from this rule if you are not earning an income is possible.
As to how much to withdraw (other than the Minimum Sum which is set aside), it is for you to strike a balance between liquidity and getting the higher returns in CPF.
The higher returns come with a risk:
1) Liquidity risk – No immediate access to your funds.
2) Political risk – Gov changing the withdrawal rules subsequently.
You should also weigh your current cash on hand and monthly cashflow needs to determine how much you want to withdraw. Having some money on hand to deal with the unexpected emergency would be prudent.
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