Minimum Sum In Laymen Term

[kalimantan 6]

Please correct me if i am wrong.

Had a chat with a recent 56 year old collegue and i asked him about cpf changes and his lifestyle after turning 55 years old ...from a good chat, now i know how the minimum sum scheme works in layman terms (no time to read those guidellines from cpf) ...

To start off, must understand old model of cpf

a) age 55, withdraw everything, then draw your money until no money left. If you survive or age more than the population, you have to depend on your dependents / govt for money (but you know govt won't give u money if your life-span out-live your finances)

b) New model (i hope i ask my collegue the right questions and he answer everything truthfully). for calculation, let's say all of us turn 55 years old now and minium sum requirement is 150k

1. pledge property for half value, which means you pledge 150k to cpf.

2. can take immediate 50% cold hard cash which is 50% x 150k = 75k

3. the other 75k will be manged by insurance as annuity - or publicly known as cpf life.

4. Withdraw the 75k bit by bit until you die. If you outlive that 75k, u earn !

5. If you do not out-live before the consumption of 75k, the left-over goes to your dependents. Also your house also goes to dependents (if you wish).

Am i correct on the new model ?

[Warrior88 0]

Your friend got 50%, cos he turn 55 in 2008.

Every year reduce by 10%, until 2013

For layman, just know this...if turn 55 after Jan 2013

Can withdraw cash only after setting aside the CPF Minimum Sum (MS)

and Medisave Minimum Sum. (MMS)

Assuming MS=150k, MMS=40K

If MS<150K, can still get token 5k .... hehe

If MS>40K, auto include in CPF Life, bal go to Retirement Account (RA)

If MS<40k, want CPF Life, must apply, if dun want then follow MS scheme

For MS scheme,drawn down age WILL be 65, means you get monthly payout from 65

If MS>40K, you are under 2 scheme, CPF Life & MS

IF MS<40k, you get to choose with CPF Life or MS

Although auto include if MS>40k, you can appeal if you can prove to them that you are getting some form of pension or annuity from Pte Bank that is paying more than CPF Life.

By the way, selling house after 55 is another calculation... hehe

Also, if you are thinking of how to beat the system, DON"T

cos CPF also lock and impose restriction on OA & SA for investment and housing loan.

Edited June 21, 2011 by Warrior88