Chapter 4: FR Flashcards
CPF stands for…
CENTRAL PROVIDENT FUND
What is CPF
- mandatory monthly contribution by resident workers & employers into workers’ accounts (capped at $6,800)
- Savings for retirement
main aim of CPF is to cover 3 basic needs in retirement
- A fully paid up home
- Insurance & savings for healthcare
- A steady stream of lifelong retirement income
CPF is capped at…
- $6,800 NOW
- 1st Jan 2025: $7,400
- 1st Jan 2026: $8,000
CPF is a mandatory social security plan for…
- Retirement
- Healthcare
- Home Ownership
- Family Protection (HDB)
- Asset Enhancement & Investment
4 types of CPF
- Ordinary Account (OA)
- Special Account (SA)
- MediSave Account (MA)
- Retirement Account (RA)
SA is for…
Old age, contingency purposes and investment in retirement-related financial products
MA is for…
for hospitalization expenses & approved medical insurance.
RA is for…
Those who turn 55 years of age can choose to set aside in their Retirement Account (RA) either
* Full Retirement Sum (FRS) or
* Basic Retirement Sum (BRS) AKA half the FRS amount, if got a property (which is sufficient for CPF property charge / pledge)
Then the balance savings can be withdrawn in one lump sum.
Percentage of OA
2.5% per annum
Percentage of SA, MA, and RA
4% per annum
Depending on age CPF contribution can range from…
12.5% to 37%
CPF contributions rates depends on…
➢ nationality (SC or SPR)
➢ Length of PR Status (for PRs)
➢ age group
➢ salary range
➢ nature of employment
CPF calculations will only consider
Standard interests, dont care about extra interest rate for ct
CPF Housing Scheme is for CPF to use their OA for…
- Buy HDB flats
- Buy or build private residential properties in Singapore
CPF Housing: OA ( HDB/PUBLIC)
- Direct payment of purchase price of flat, including cost of common areas, to the HDB, financier and/or sellers;
- Repayment of housing loan in part or whole and/or to pay monthly instalments of housing loan taken for purchase of flat;
- Payment of stamp duty, legal fees, and other related costs incurred in connection with purchase or mortgage on flat;
- Payment of cost of upgrading HDB flat incurred under HDB Upgrading Programmes & Town Council Lift Upgrading Programme (TCLUP) in part or whole and/or by monthly instalments.
CPF Housing: OA (PRIVATE)
- Direct payment to property developer / seller for purchase of property
- Repayment of housing loan taken and/or to pay monthly instalment of housing taken for purchase of property
- Repayment of housing loan taken for purchase of land and/or for construction of a house on that land
- Payment of legal costs, stamp duty & survey fees & other related costs incurred in connection with purchase, refinancing and/or construction of house.
BRS meaning
Basic Retirement Sum
FRS Meaning
Full Retirement Sum
LIMITS ON USE OF CPF FUNDS AFTER 55 YEARS OF AGE
- Can use CPF saving above BRS if remained lease is at least 40 years
- If remaining lease cannot meat 40 years, need to use FRS before member can use excess OA money
- if remaining lease cannot cover member until 95 even if remained lease is at least 40 years, need to set aside FRS before excess OA can be used to buy more properties
why remained lease must be 40 years for those above 55?
- so can cover to age of 95
LIMITS ON THE USE OF CPF FUNDS
- remaining lease of property is at least 20 years
- cover youngest buyer using CPF until at least 95 years old
Limits on use of CPF: HDB flat, directly from HDB, no loan…
Up to the purchase price of the flat or such amount as may be required by HDB
Limits on use of CPF: HDB flat, directly from HDB, w HDB loan
Up to the purchase price of the flat or the housing loan taken to buy the flat
Limits on use of CPF: HDB/DBSS, resale, w HDB loan
- Up to VL, if cannot set aside Basic Retirement Sum (“BRS”)
- Up to housing loan taken to buy flat, if can set aside BRS.
Limits on use of CPF: HDB/DBSS, resale, w Bank loan
- Up to VL, if cannot set set BRS
- Up to an additional 20% of lower VL, if can set aside the BRS + Cash/ CPF/ Housing grants)
BTO Flats (With HDB Loan)
- if buy directly from HDB, can use all available savings in OA to pay
- if takes up loan, first withdrawal of CPF to meet deposit for purchase cannot exceed 20% of purchase price or other $$$ required by HDB
- No limit of use of OA to repay loan installment
Resale HDB/DBSS With HDB Loan
- can use OA to pay 100% of valuation limit.
what if still got house loan outstanding after VL is reached
- current BRS is set aside in SA & OA for those below 55.
- BRS is set aside in RA, SA and OA for those above 55.
Private/Public housing With Bank Loan
- If take up bank loan, cash-over-valuation (COV) & mandatory minimum cash payment (MCP) cannot be paid by CPF savings.
- Lumpsum CPF withdrawn plus loan taken for the purchase of flat cannot exceed VL.
remaining lease of property is at least 20 years but cannot cover youngest buyer using CPF until at least 95 years
the maximum CPF OA that can used is a prorated VL
formula for allowable CPF limit(prorated limit)
(remaining lease/age of youngest buyer) X VL
Are CPF withdrawals allowed for residential properties with a remaining lease of less than 20 years?
No
BASIC RULE OF CPF REFUND
Need refund:
* Principal CPF amount [P] AND
* Accrued interest [I] which would have been earned if savings were not withdrawn from account.
CPF REFUND FOR THOSE ABOVE 55
- Pledged amount on top of the P and I, if the property was pledged to withdraw RA savings in cash.
- Any balance will be paid in cash within 1 week from the time refunds are credited to the CPF account.
- Possible to request to only refund up to the FRS amount if the member is unable to wait for the pay-out
