Voluntary CPF Contribution

[Falc]

Just wondering if any one of you are doing that? Worthwhile?

Perhaps you are self-employed, or also for family members who are not working.

 

And can one specifically contribute to say Sp A or Med A only?

Tax relief is only applicable for Sp A?

 

[Latka]

Just wondering if any one of you are doing that? Worthwhile?

Perhaps you are self-employed, or also for family members who are not working.

 

And can one specifically contribute to say Sp A or Med A only?

Tax relief is only applicable for Sp A?

 

When time to declare income to IRAS, think they wl inform u to contribute to Medisave with amount stipulated by them.

 

If want to make voluntary contribution, u pay CPF board lump sum and they will put it into your OA, SA and Medisave according to stipulated share.

[Latka]

Whether or not worthwhile is up to your judgement. The interest rate CPF board pays is much more higher than banks and for now it is totally safe. But, u cant withdraw the money as and when u like.

[Imaginary]

Whether or not worthwhile is up to your judgement. The interest rate CPF board pays is much more higher than banks and for now it is totally safe. But, u cant withdraw the money as and when u like.

 

Is the interest rate 2.5% now? Might be the same as one of the fixed deposits out there.

[Latka]

Is the interest rate 2.5% now? Might be the same as one of the fixed deposits out there.

 

OA is 2.5%, SA is 5%. Not sure for Medisave though.

[Falc]

SA, RA and MA are 4% now. From 1 January 2008, savings in the Special Account, Medisave Account and Retirement Account (SMRA) is pegged to the 12-month average yield of the 10-year Singapore Government Securities (10YSGS) plus 1%.

 

Other than interest rate, with Medisafe can get Medishield which is an ok insurance if one doesn't mind lower rate ward?

[Thug]

Hmmm...contribute and get at 90 yrs old?

Bank!!

[Falc]

That's why i'm thinking of Medisafe only. That one sure will need, and good to earn interest there.

[Falc]

Here's what i found out by calling cpf board:

 

1)

From your CPF - can be used to top up family members SA or RA if you have more than 159K in your CPF already.

 

2)

From cash - topup family members SA or RA only => tax relief

 

[Solar]

imho, not worth it...getting them locked up for so many years for that 4% (which is only extra 1.5% over 2.5%)..

if you are currently 30yr old.. that's a whooping 32 years (assuming until age 62)

want to take out also can, but i understand there are penalties...

 

why not make use of the current crisis and search for opportunities?

eg, A$ is now on par with S$. they are going down further.

but since you are going to lock up your $$$ for many years anyway, why not put it there?

historically, they have risen above S$ when the times were good..and besides, they earn good interest.

even now, the 1-mth renewable FD is giving 3.6% from maybank (used to be over 5% a few months back)

 

i still get the flexibility of getting my money back (with some forex risk.. i think should be quite okay if you buy A$ when S$ is stronger.. may even make forex gains.. unlike cpf.. early withdrawal kenna penalty, confirm lose)

 

much better than getting it locked in cpf... and dunno when they'll change the rule (eg raising retirement age/min sum) and moola there gone forever

 

that's my own opinion/strategy.. follow at your own risk

[Mummypenguin]

Just wondering if any one of you are doing that? Worthwhile?

Perhaps you are self-employed, or also for family members who are not working.

 

And can one specifically contribute to say Sp A or Med A only?

Tax relief is only applicable for Sp A?

 

It is worthwhile if you're giving money to your parents who are above 62 years old.

You can either give them in cash or top up their CPF retirement account.

By topping their CPF account, you enjoy tax relief and you parents will still get their pocket money monthly.

 

E.g. I top up my mum's CPF account last year $7K max. For that, I got ~$200 tax relief and CPF transferred money to her bank account monthly for 2 years ~ $297/mth.

Disadvantage is you have to come up with a lump sum first.

 

[Falc]

Agreed. I'm more looking at the medisave part more than the other accts.

 

But i think Maybank's interest is pathetic now, 1.3x% for 250K above TD only!

[Falc]

Sounds good. Any draw back of this plan other than the lump sum, if no limit i dump a big sum in :P

[Dumb]

imho, not worth it...getting them locked up for so many years for that 4% (which is only extra 1.5% over 2.5%)..

if you are currently 30yr old.. that's a whooping 32 years (assuming until age 62)

want to take out also can, but i understand there are penalties...

 

At 4% pa for SA it better than many live insurance policies and endowment policies. First 60k or 40k at 5% pa. But 4% not guaranteed from next year. Can be more can be less depending on 10YSGS rate + 1%.

 

why not make use of the current crisis and search for opportunities?

eg, A$ is now on par with S$. they are going down further.

but since you are going to lock up your $$$ for many years anyway, why not put it there?

historically, they have risen above S$ when the times were good..and besides, they earn good interest.

even now, the 1-mth renewable FD is giving 3.6% from maybank (used to be over 5% a few months back)

 

i still get the flexibility of getting my money back (with some forex risk.. i think should be quite okay if you buy A$ when S$ is stronger.. may even make forex gains.. unlike cpf.. early withdrawal kenna penalty, confirm lose)

 

much better than getting it locked in cpf... and dunno when they'll change the rule (eg raising retirement age/min sum) and moola there gone forever

 

that's my own opinion/strategy.. follow at your own risk

 

There is risk involved compared to CPF. Banker may fold and A$ has gone down to $0.85 and up to $1.30 in the recent past. Long term A$ should be down. Long ago it was S$3.50 to A$1 if I am not mistaken.

Edited February 18, 2009 by Dumb

[Dumb]

Where got disadvantage?

 

If you leave $7000 in your bank and draw $297 monthly to give your mother how much interest can you get from $7000 which will earn 5% pa in your mum RA. Also tax savings of $200 for depositing money in your mum RA is equivalent you earning interest rate of more than 2% pa on the same $7000.

[Dumb]

OA is 2.5%, SA is 5%. Not sure for Medisave though.

 

OA is 2.5% and SA and MA is currently 4%.

 

First 20k in OA earns 3.5% and balance of 40k in SA and MA earns 5%.

Edited February 18, 2009 by Dumb

[Nhyone]

E.g. I top up my mum's CPF account last year $7K max. For that, I got ~$200 tax relief and CPF transferred money to her bank account monthly for 2 years ~ $297/mth.

Disadvantage is you have to come up with a lump sum first.

It's not the same thing to top up the CPF as giving your mother $7,000. $7,000 should be $583/mth. If your mother received just $297/mth, don't you have to "top up" a bit so that your mom can survive?

[Dumb]

It's not the same thing to top up the CPF as giving your mother $7,000. $7,000 should be $583/mth. If your mother received just $297/mth, don't you have to "top up" a bit so that your mom can survive?

 

You assuming he puts $7000 in his mum CPF and forget about giving her additional allowance. Also $7,000 may not be $583/mth. It depends on the age of his mother.

 

I top up my 83 yo father's CPF but he only got $243 pm from the CPF Board and I give him cash allowance of $400 pm besides 1k to 2k as bonus.