Extrapolation of CPF Full Retirement Sum (FRS)

The Government had announced the Basic Retirement Sum (BRS) amount that each cohort (turning 55 years old between Year 2016 and Year 2020) needs to set aside. Looking at these numbers, I realised that the dollars were increasing at a fixed rate of $5,000 but the percentage point was decreasing from Year 2016 to Year 2020. With this information, I went ahead to extrapolate an unofficial estimation of future Full Retirement Sum (FRS) from Year 2021 until Year 2040.

If you chanced upon this blog post via searching for retirement materials, I hope that the table below is useful for you. Please be reminded that it is only an unofficial estimation. The official BRS and FRS from Year 2021 onwards would still need to be announced by the Government in the future.

Age 55	CPF Full Retirement Sum (FRS)	Remarks
Year 2016	$161,000	Announced by the Gov in Feb 2015
Year 2017	$166,000	Announced by the Gov in Feb 2015
Year 2018	$171,000	Announced by the Gov in Feb 2015
Year 2019	$176,000	Announced by the Gov in Feb 2015
Year 2020	$181,000	Announced by the Gov in Feb 2015
Year 2021	$186,000	My Unofficial Estimation
Year 2022	$191,000	My Unofficial Estimation
Year 2023	$196,000	My Unofficial Estimation
Year 2024	$201,000	My Unofficial Estimation
Year 2025	$206,000	My Unofficial Estimation
Year 2026	$211,000	My Unofficial Estimation
Year 2027	$216,000	My Unofficial Estimation
Year 2028	$221,000	My Unofficial Estimation
Year 2029	$226,000	My Unofficial Estimation
Year 2030	$231,000	My Unofficial Estimation
Year 2031	$236,000	My Unofficial Estimation
Year 2032	$241,000	My Unofficial Estimation
Year 2033	$246,000	My Unofficial Estimation
Year 2034	$251,000	My Unofficial Estimation
Year 2035	$256,000	My Unofficial Estimation
Year 2036	$261,000	My Unofficial Estimation
Year 2037	$266,000	My Unofficial Estimation
Year 2038	$271,000	My Unofficial Estimation
Year 2039	$276,000	My Unofficial Estimation
Year 2040	$281,000	My Unofficial Estimation

The advantage of CPF monies NOT covered by a Will

Under the Central Provident Fund (CPF) Act, CPF monies do not form part of a deceased member's estate and are not covered by a will. This is actually a wonderful feature. Please think deeper about it. 

Extracted text:

This has the advantage of not subjecting the member's CPF savings to his debts upon his death.

This is to protect the member's CPF monies and ensure that the member's dependants receive the monies. Moreover, if CPF monies are distributed according to a will, any disputes arising from the existence and validity of the will may delay the receipt of the CPF monies by the dependants.

It is, therefore, in the interests of both members and their dependants for un-nominated CPF monies to be distributed by a public agency outside of the member's estate, in accordance with intestacy laws.

If the CPF member wants his CPF monies to be distributed in accordance with a will, the member can make a nomination of the same beneficiaries as those under the will. Upon the member's death, the CPF Board will pay the CPF monies to the nominees directly.

Source: http://www.straitstimes.com/forum/letters-in-print/cpf-monies-not-covered-by-a-will

Source: http://www.straitstimes.com/forum/letters-in-print/why-cpf-monies-share-of-hdb-flats-not-automatically-covered-by-a-will

CPF is a sustainable safety net system

The Straits Times, 8 Sept 2015, p. A4

Do you know? CPF Medisave Account has a contribution ceiling

Since Jul 2014, our CPF Medisave Account (MA)'s Maximum Sum* has been increased to $48,500.

After fulfilling the MA's Maximum Sum, excess Medisave contributions will flow to the Special Account (if below 55 years old) or Retirement Account (if above 55 years old).

In other words, the earlier you hit your MA's Maximum Sum, the faster you can grow your Special Account (Hint: See how I did not mention about growing your Retirement Account?) for retirement needs!

Now you know!

* What is the "Maximum Sum"? The term "Maximum Sum" does not exist anywhere else on the Internet because this is an original term that I have coined to represent the reverse meaning of "Minimum Sum".

Why it's wise to keep money in CPF

The Sunday Times published an informative article about CPF LIFE on 15 Feb 2015. What intrigued me are the following views shared by Mr Colin Pakshong, an independent actuarial consultant.

Question: How does CPF Life compare with private annuity plans? 

CPF Life is very competitive. It is supported by special government bonds; so, for the same premium, it would be difficult for a private annuity plan to offer the same level of payout.

Question: How do the CPF Life's returns compare with stocks and bonds' returns?

The returns are also very competitive, particularly once risk is taken into account.

There will be some periods when a portfolio of stocks and bonds provides a better return, but over the years during which the payouts will be made, CPF Life is likely to provide better and much more stable returns.

. . .

It's certainly possible that some members will earn higher returns (from stocks and bonds), but past experience from the CPFIS shows that most members would have been better off leaving their money in the CPF.

Even professional fund managers find it difficult to produce superior returns on a consistent basis.

Mok, F. (2015, February 15). Why It's Wise to Keep Money in CPF, pp. 26-27.

New-found Faith in the Central Provident Fund (CPF)

Everyone, please take a deep breath.

During this year, I have made an irreversible and permanent transfer of $25,000 from my Ordinary Account (OA) to my Special Account (SA).

By transferring $25,000 from the OA to the SA, I am projected to earn $17,000 more interest after 20 years, as compared to leaving the amount in the OA. $17,000 is 68% of the original sum!