CPF Full Retirement Sum projection

The CPF Full Retirement Sum (FRS) has been increasing at around 3% per year for quite a number of years so far. I think the 3% increase can safely cover inflation as Singapore's inflation rate is under 3% for most of the years. This should ensure the CPF life payout can cover for some basic level of living after retirement (for Singaporeans that hit the FRS amount). 

Assuming this increase is kept at 3% per annum, we can estimate the FRS for subsequent years. Your FRS will be fixed when you reach age 55.

So far, the official FRS amount has been announced till year 2022.

The projected FRS is as follows:

Year	Full Retirement Sum
2016	161,000
2017	166,000
2018	171,000
2019	176,000
2020	181,000
2021	186,000
2022	192,000
2023	198,000
2024	204,000
2025	210,000
2026	216,000
2027	222,000
2028	229,000
2029	236,000
2030	243,000
2031	250,000
2032	258,000
2033	266,000
2034	274,000
2035	282,000
2036	290,000
2037	299,000
2038	308,000
2039	317,000
2040	327,000
2041	337,000
2042	347,000
2043	357,000
2044	368,000
2045	379,000
2046	390,000
2047	402,000
2048	414,000
2049	426,000
2050	439,000
2051	452,000
2052	466,000
2053	480,000
2054	494,000
2055	509,000

Selling of STI ETF (Sept 2017)

Last week, I have sold off my remaining STI ETF for a small profit. Currently, I do not hold any more STI ETF. Maybe when the STI goes lower, I will buy again to hold it under my CDP account.

Details of all transactions are logged here: STI ETF RSP

Summary of units:

Counter	Total Cost	Total Units	Average cost	Last Done	Unrealized Profit/ Loss	Unrealized Gain / Loss %	Realized Profit / Loss / Dividend
STI ETF	0.00	0	$0.00	$3.27	$0.00	0.00%	$1,107.60
Nikko STI ETF	0.00	0	$0.00	$3.35	$0.00	0.00%	$114.15

How much can you withdraw from CPF at 55?

Earlier today, there was this article indicating that those who turn 54 this year are eligible for a new CPF retirement planning service (CRPS). There will be a one on one session to help the individual to understand the CPF scheme and plan for the options which will be available one year later when they turn 55.

Article at:
http://www.straitstimes.com/business/invest/something-to-plan-for-when-youre-54


In the same article, they also provided a few examples on how much you can withdraw at the age of 55. I feel that this is quite useful and will share here with some of my comments:



SCENARIO 1
Mr Raju's OA savings at age 55 amount to $100,000 while his SA savings are $180,000, which is a total of $280,000.

The Full Retirement Sum of $166,000 will be set aside in his RA, which will provide him with a monthly payout of $1,380 from age 65 for life.

He can withdraw the remaining amount of $114,000 in his OA and SA. If he owns a property with sufficient property charge/pledge, he can also choose to set aside his Basic Retirement Sum of $83,000 in his RA and receive a correspondingly lower monthly payout of $750 from age 65 for life. In this case, he can withdraw $114,000 from his OA and SA, and an additional $83,000 from his RA.

MadStranger: 
This scenario is where the OA + SA exceeds the full retirement sum (FRS). In this scenario, you get to withdraw all balances above the FRS
If you own a property with sufficient pledge, you can set aside half the FRS which is also known as the basic retirement sum (BRS) instead. Your monthly payout will be reduced accordingly. Any amount above this BRS can be withdrawn.



SCENARIO 2
At 55, Mr Ahmad has $45,000 in his OA and $55,000 in his SA, or a total of $100,000.

From this, $95,000 will be set aside in his RA to form his retirement sum which will provide him with $840 monthly from age 65 for life. He can withdraw the remaining amount of $5,000 in his OA.

If he owns a property with sufficient property charge/pledge, he can choose to set aside his Basic Retirement Sum of $83,000 in his RA and receive a correspondingly lower monthly payout of $750 from age 65 for life. In this case, he can withdraw $5,000 from his OA, and an additional $12,000 from his RA.

MadStranger:
This scenario is where your OA + SA is lesser than the FRS but higher than 5k. In this scenario, you get to withdraw 5k.
If you own a property with sufficient pledge, you an set aside half the FRS which is also known as the basic retirement sum (BRS) instead. Your monthly payout will be reduced accordingly. Any amount above this BRS can be withdrawn.



SCENARIO 3
Mr Lim's OA savings are $25,000 while his SA savings are $35,000 - a total sum of $60,000.

An amount of $55,000 will be set aside in his RA to form his retirement sum which will provide him with $530 a month from age 65 for life.

He can withdraw the remaining amount of $5,000 in his OA.

MadStranger:
This scenario is where your OA + SA is lesser than the BHS but higher than 5k. In this scenario, you can only withdraw 5k.


SCENARIO 4
Mr Robert's OA savings at 55 are $3,000 while his SA savings amount to $1,000. As Mr Robert has less than $5,000, he can withdraw all the balances amounting to $4,000.

MadStranger: This scenario is where your OA + SA is lesser than 5k. In this scenario, you can withdraw the entire balance.


 
 

OCBC 360 interests changes again (Apr 2016)

Previously, I posted about the OCBC360 account and its interest revision in May 2015
http://madstranger.blogspot.sg/search/label/OCBC360

Currently, the account has the following interest components:

If we ignore the "invest" component, most account holders can still earn an interest of 2.2% on the first 60k in the OCBC 360 savings account. In addition to this, you also earn an interest of 1% for any incremental balances.

Starting from April 2016, there will be some changes to the interest components. The changes are as follows:

The most important change is the bonus interest can be earned on the first 70k instead of the current 60k.

Other changes are as follows:

1) Payment component:
The interest has been revised from 0.5% to 0.3%
There is now a minimum of $150 for the 3 bills. Previously there is no minimum total to fulfill. There were account holders who paid 3 $1 to 3 different credit cards. They can no longer use this trick.


2) Credit card spending component:
The interest has been revised from 0.5% to 0.3%

3) Invest component:
The interest has been revised from 1% to 1.2%. Also, an additional lower tier has been introduced.

 

 Most people won't qualify this interest component unless they invest with OCBC.

4) Savings component:

There will no longer be bonus interest paid on incremental bonus.

Instead, an additional 1% is earned on the first 70k if you have at least 200k in the OCBC 360 account. This also works out to be a 0.35% across the 200k.

For most people, they will be earning lesser interest.

Comparison between the interests now and the revised interests:

		Average interest per month
	Interest	Now	Interest	Apr-17
Base		60000		70000
Salary	1.2	60	1.2	70
3 bill	0.5	25	0.3	17.5
credit card	0.5	25	0.3	17.5
incremental bonus on 1k	1	0.83		0
TOTAL		110.83		105

Assuming you have 70k in the account, you now earn $5 lesser bonus interest per month on average.

In addition to this, you lose out on he incremental balance interest. For every $1000 of incremental bonus, you get $0.83 lesser on average per month.

However, if you have a full 200k sitting inside the account, you will qualify for the "save bonus interest" and will get an additional $58.33 on average

  

Conclusion:

For some who have larger savings with the bank or do investment with the bank, they can gain more interests.

However, for most people, they will be earning lesser interests from 2.2% to 1.8%. Some have already started looking at alternatives like UOB ONE, BOC smart saver and Citibank maxigain accounts.