Monday, June 01, 2015

Top up the minimum sum account

Dear Mr. Tan,
My wife was a home maker for most of your life. She does not have adequate savings in the CPF. While most people like to take out their money from the CPF as early as possible, I encourage her to put her savings in the CPF as it gives an interest rate of 4% per annum, which is much better than interest from the bank.

My question is - how can she top up her CPF savings? She prefers to transfer the savings from her bank account into the CPF special account to reach the maximum allowed. How do we find out what is allowed, as it is quite complicated.

Ask your wife to bring her NRIC and check book and visit any of the CPF branches. They have branches in the major housing estates. Make an appointment or just go and queue up. The staff will be able to advice her on the amount that she can top up, and also explain the restrictions and withdrawal options. The staff will also help her to fill up the required forms. She only need to write the cheque.
If she cannot pay on the same visit, she can come back another day to make the payment.

1 comment:

Anonymous said...

CPF interest rate maybe high relative to bank saving interest rate but real(not nominal) cpf interest rate is still too low, or negative.
Recent committee to study CPF states long term inflation is 3%. then why cpf OA interest rate is 2.5%, lower that 3% inflation.
Morever, CPF accounts interest are computed monthly based on LOWEST amount/balance for any month and NOT based on average balance for any given month. This means CPF avoids paying at least 1 million sgd very month since the inflow is 2 bio and the outflow is about 1 bio.

A3. Contributions and Withdrawals by Members (within period)
2010 2011 2012 2013 2014 Jan-Mar 2015
Total Contributions4 (S$m)
21,993 24,628 26,048 28,530 29,722 8,968
Net Withdrawals5 (See Section D for breakdown) (S$m)
9,617 10,437 11,727 14,863 17,298 4,580

You had 100K in your CPF OA on 1st Feb 2015, 1K was deducted at 10th Feb 2015 for housing loan,
1K was contributed on 18th Feb 2015, what would be the interest for Feb 2015?
Lowest amount in Feb 2015 was 99K,
so interest for Feb 2015 was 99,000 x 0.025/12 = 206.25 (not 208.33 as expected)
The difference maybe small, but do that for 60 years and it becomes sizeable over 60 years. Do that for 1.5 mio active members and it becomes hugh.

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