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if u don't need that RA amount, just leave it as your one of the diversified investments as FD loh. 4 % rate is a good one as compared to bank's rate. gov is smart one. while I was retired, my MA was 32.5 k, but later CPF returned me half, only left 16 k in my MA. gov just reluctant to pay me the interest rate on the max MA amount as my wife and I got free medical benefits, owing to AK is under pensioner scheme.
on the othre hand, if you use your RA to buy annuity, the monthly payout to u after 62 or 65 is only about 65% as compared to those given by CPF board. However, CPF only pay u till you are 82 loh. But Insurance coy can support u till you die. Anyway, thats up to individual loh. AK parked the RA in CPF and lets the interest rolls.
there are articles about the above in today Zaobao. however, u may visit the cpf web site for more details on retirement issues:
http://www.cpf.gov.com.sg
apply Singpass, for your spouse as well, to gain access to CPF account on line.
Don't depend on CPF for your retirement. Take out as much as you can and leave the minimum sum there
today, garbermen working hard again... whacking the bond yield down to 3.6%.... bradyyy smart.... on one hand, worried you do not save enough for old age, on the other hand, wanna pay you as little as possible.
die die savings grow at die die rate.... use money to buy stocks better than die die saving...
long term... equity outperform bond which in turn outperform die die saving... ratio outperformance at 4-2-1, respectively... true or not....
Looks like there was MAS intervention today to prevent the SGS-10yr bond yield from going above 4% anytime soon. The yield last friday (13/6) was 3.94% and dropped suddenly today (16/6) to 3.77%.
Is Govt playing a manipulating role to save on paying more than 5% anytime soon on our SMRA???
Some corrections to my earlier msg on new formula for calculating CPF rates for OA and SMRA.
Information from CPF showed 10-yr SGS bond rate formula do not apply to OA account. OA account rates will continue to base on the averages of the 3 major local banks rates (saving&FD weighted) quarterly. The 10-yr SGS bond rate formula is effected to the SMRA account and computed quarterly. The next annoucement to the SMRA rate likely around end of this month.
Based on the new information, it looks unlikely we will get more than 3.5% and 5% for OA and SMRA, respectively, in 2009.
simply, if u r retiree, like ak, no issue as currently the prime rate at market is below 2%. now u are enjoying 4% rate on yr 90-98 k RA, ha ha don't forger gov had given us 1.5k as retirement bonus into our RA last mth. expected will rcv more perks fr gov over the nest few yrs. till u r 62, u will get at least 800 per mth till 82.
as for the younger one, leave the money in oa still not a bad option as CPF paid better premium than market. best u transfer your part of the oa to sa to enjoy better premium. if u cash rich, top up your wifes, parents, in laws sa account(at this moment is 98000.00, check SingPass), if they are below 10 yrs before 65(ak assume u r not very old or younger than them. if u don't trust them, get solicitor to sign a deed loh. he he.
An economist had commented Singaporean CPF holders can expect higher CPF rate if the 10-yr SGS bond rate seen recently can hold for the next 2 years. Why must wait 2 yrs. The economist mentioned Govt quaranteed to pay 1% higher for OA and SMRA on the first 60k in individual's account for 2 years starting from Jan 2008 (3.5% for OA and 5% for SMRA in 2008 and 2009). Any amount more than 60k will earn 2.5% for OA and 4% for SMRA in 2008 and 2009. After 2009, the guranteed floor rates for both OA and SMRA will drop to 2.5%.
I have a different interpretation based on my understanding when the Govt put forth this scheme about 2 yrs ago. I will explain my thought in the next para and would want to hear your comments if I'm mistaken, if so, let me know.
There could be three scenarios depending on the 10-yr SGS bond rate. Scenario 1 is where 10-yr SGS bond rate hover between 3.5% and 4% and Scenario 2 where 10-yr SGS bond rate is between 4% and 5%. Scenario 3 is where the 10-yr SGS bond rate is greater than 5%. CPF on a quarterly basis review and announce the rates applicable for CPF accounts. So for the first six mths of 2008, OA should be getting 3.5% and SMRA 5% for the first 60k while the excess above 20k in OA will earn 2.5%. The excess above 40k in SMRA will earn 4%.
Now assuming Scenario 1 kicks in and hold true from June 2008 to Dec 2008 and Scenario 2 kicks in from Jan 2009 to Dec 2009. Scenario 3 kicks in from 2010 onwards. Under the assumed scenarios, I thought CPF account holders should not have to wait for the 2-yr periods to be up before they can enjoy higher rates. Why should they?
Under scenario 1, CPFshould be paying between 3.5%-4% (not Govt guaranteed minimum of 3.5%) for OA and 5% for SMRA(Govt guaranteed minimum for SMRA).
Under scenario 2, CPF should be paying between 4% - 5% for OA and 5% for SMRA.
Under scenario 3, CPF will be paying more than 5% for both OA and SMRA. (The Govt guaranteed floored rates from 2010 is 2.5%).
(Please note all the above assumptions are based on my expectation of 10-yr SGS bond rates going up, not down in the next few years.)
So do we still have to wait for the 2-yr period to be up before we can expect higher CPF payout rates. I don't recall the Govt imposing a moratorium on paying higher rates in excess of the guaranteed rates when Govt announced the scheme about 2yrs ago. What I recall if my faculty don't failed me is that the Govt at that time used the additional 1% as a carrot to appease Singaporeans to be amicable to accepting the change in the formula to be used for computing future CPF rates. At that time, everyone including the Govt was not expecting the 10-yr SGS bond rate to go any higher than 3% based on past historical MAS data. But now the world is witnessing a possible resurgence of inflation never seen since the 70s and 80s. A whole new ball game has arrived sooner than Govt expected.
I surely hope the CPF Board in the next quarterly rate review announment could throw more light on the issues I mentioned.