Heartland Boy often hears that the Central Provident Fund (‘CPF’) is way too complex and confusing. Such reactions can be empathised as there are indeed many rules governing different aspects of Singapore’s unique social security system. New policies designed to improve the CPF are regularly rolled out which makes it even more difficult for CPF members to keep up to date. Therefore, Heartland Boy has always been extremely supportive of CPF’s initiatives to raise public awareness. None comes more appropriate than CPF Retirement Planning Roadshow which are typically held at the heartlands to maximise outreach. Interactive activities, coupled with digestible infographics, have made it easy to learn amazing tips at CPF’s Retirement Planning Roadshow 2018. Heartland Boy experienced the first roadshow of 2018 held at Toa Payoh HDB Hub on 12 August 2018 and here is his review. For those who missed out, fret not as there are 4 more roadshows taking place for the rest of 2018. More details at the end of this article.
Zone 1: Estimate Your Retirement Needs
Heartland Boy references Zone 1 as the place to learn about the 101 of CPF. In Zone 1, participants will learn about the various accounts of CPF and how they are designed to support critical life milestones such as housing, medical bills and retirement. Do not underestimate the importance of grasping the fundamentals well and knowing what happens to your CPF. For instance, not many CPF members are aware that HDB will wipe out their Ordinary Account (‘OA’) balances before granting a HDB loan, although the government had finally removed this rule this week.
More importantly, this is also a zone which can potentially kickstart an “awakening process”. A retirement calculator is available to estimate the cash needed to support your desired lifestyle in your silver years. This is a highly customisable activity as variables such as inflation rate, rate of return, age of retirement and life expectancy can be changed.
Zone 2: Learn About CPF Interest Rate and CPF LIFE
After a brief introduction to the types of accounts under CPF, event-goers can learn about the CPF interest rate structure in Zone 2. An amazing tip is that CPF members age over 55 can earn an additional 1% extra interest rate on the first $30,000 of the combined balances in their CPF.
One particularly useful infographic caught Heartland Boy’s eye and that is the concept of Basic Healthcare Sum (‘BHS’) for the Medisave Account (‘MA’).
Basically, once the MA reaches the BHS, any ensuing interest and future contribution will flow into the Special Account (‘SA’). If the SA has already reach Full Retirement Sum (‘FRS’), such excess funds will instead flow towards the OA. That is also the reason why Heartland Boy advocates making a voluntary cash top-up to one’s Medisave Account.
This is also the zone whereby the concept of a Retirement Account (‘RA’) is first introduced. At age 55, a RA is created for CPF members and they can also decide how much cash to withdraw from their CPF. It also sets the stage for CPF members to start thinking about the type of CPF Lifelong Income For the Elderly (‘LIFE’) plan that best suits their retirement needs.
Zone 3: Upsize Your Retirement Payouts
Heartland Boy strongly believes this is the zone that is potentially the most rewarding. A total of 4 amazing tips are shared on how CPF members can grow their CPF savings. In return, this will directly upsize their retirement payouts and hence bolster their retirement safety net.
1.Cash Top Up To SA and RA
A cash top-up to the SA or RA is known as the Retirement Sum Topping-Up Scheme (‘RSTU’). The beauty of this is that the RSTU applies not only to your own CPF accounts, it also applies to your loved ones’ CPF accounts. For instance, Heartland Boy has been regularly depositing cash into his parents’ CPF accounts whenever he receives his year-end bonuses. In doing so, he enjoys tax relief as well.
* Note that this tip is not eligible for members who have already reached FRS in their SA/RA.
2. CPF Transfer
Heartland Boy has been transferring funds from his Ordinary Account into his Special Account since the age of 27. This is to allow his CPF funds to compound at a higher interest rate in the SA.
* Note that this tip is not eligible for members who have already reached FRS in their SA/RA.
3. Voluntary Contribution To CPF
There are 2 types of Voluntary Contribution (‘VC’) to your CPF account. The first is a generic cash contribution that will be funnelled proportionately to all CPF accounts in accordance to your age group.
*Note that this type of VC does not attract tax relief.
The second type would be making a cash contribution to your Medisave Account only. As aforementioned, this is eligible for tax relief.
*Note that both types of Voluntary Contribution are subject to the CPF Annual Limit.
4. Delay CPF LIFE Payouts
CPF LIFE automatically commences payouts upon the CPF member reaching age 65. However, it is possible to delay CPF LIFE’s payouts till age 70. In doing so, CPF members receive a larger monthly amount to help them cope with retirement.
Depending on Heartland Boy’s financial circumstances then, this is a possibility that he may explore. This is because he expects to commence withdrawals from his Supplementary Retirement Scheme (‘SRS’) upon reaching age 62. He has a period of 10 years to complete his SRS withdrawals and may not find the need to tap onto CPF Life at age 65.
Zone 4: Chat With CPF Officers
Zone 4 is helmed by full time CPF service officers to address any queries from the public. This is probably the most convenient way to clarify any lingering doubts that you have with regards to CPF policies.
Collect Instant Rewards
Many of the tips that you learn at the CPF Retirement Planning Roadshow may only bear fruits in the long term. If you are looking for instant gratification, do work your way through all the stations and complete your activity card. This allows you an opportunity at a lucky dip where some useful merchandise can be won! Remember to stuff your activity booklet with those print out cards to reinforce your learning back home.
CPF Retirement Planning Roadshow 2018
The theme for CPF Retirement Planning Roadshow 2018 is “Be Ready With CPF”. Heartland Boy believes that one should always take a proactive approach towards retirement planning and CPF is the probably the best place to start. Such roadshows organised by CPF serve as mini CPF Learning Centres for the public that provide the building blocks to a more secure retirement. If you miss out on this CPF learning journey, fret not as there are 4 more CPF Retirement Planning Roadshows scheduled in the rest of 2018. Here are the details:
- Waterway Point, B2 Event Square (8, 9 Sep 2018)
- Canopy @J-Link, behind J-Cube (29, 30 Sep 2018)
- Bedok Town Square, next to Bedok Mall (13, 14 Oct 2018)
- Suntec City West Atrium (10, 11 Nov 2018)
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