Cash top up to SA, SRS and MA? Which to prioritise or what factor to consider? - Seedly
Seedly logo
Seedly logo
 

CPF

Retirement

Investments

Savings

Supplementary Retirement Scheme (SRS)

Robo-Advisors

Personal Finance 101

Anonymous

Asked 5d ago

Cash top up to SA, SRS and MA? Which to prioritise or what factor to consider?

SA: FRS 181k, cap 7k

SRS: No limit?, cap 15.3k

MA: BHS, cpf contribution cap

-Just knew these, is my understanding above correct?

-Which will you advise to prioritise?

-Have not top up, can I top up lump sum max amt at once? Does it matter when to top up?

-For SRS, once I top up can immediately used it to invest? Any recommendation?

-Saw trsf from OA to SA, is it advisable? Or should accumulate 20k then invest?

-Are there things to consider when top up? No plan for house at least next 8 yrs.

0 comments

2 answers

Answer Now

Answers (2)

Sort By

Mr. Risk Averse
Mr. Risk Averse
Level 4. Prodigy
Updated 5d ago

This is a question with no right or wrong answer — but below is my opinion:

PRIORITIES

1.. If your income has not reached the CPF contribution cap, prioritize MA up to the BHS because:

  • when your income increases, this tax relief option goes away

  • MA account can be used for medical expenses and hospitalisation insurance even when you’re young

2.. If you have exceeded the CPF contribution cap, prioritize SRS first (and yes you can and should invest the sum!) over top up SA in cash because:

  • SRS account is way more flexible than CPF SA

  • Can get more tax relief $15,300 vs $7,000

3.. If you still have spare cash then top up $7k to SA for tax relief... If you still have cash even after that, consider topping up another $7k in cash to your loved ones CPF for tax relief as well

TIMING

  • For SRS, the best timing is to lump sum the full amount on 31 Dec.. Let your money grow for 364 days outside and then put it in SRS on the last day of the year

  • For CPF top-ups, top up on the last day of Jan to get full 12 months of 4% essentially risk free interest

Big picture wise though, timing is a much more minor decision than the decision about priorities.

TRANSFER OA TO SA

If you have no foreseeable use of your OA in the mid term future, then whether to transfer from OA to SA becomes a question of risk appetite (ie do you prefer a very safe 4% return or a potentially higher return in OA beyond the first 20k but with some risk).

I would say though that circumstances / plans do change, and I personally would think leaving $20k in OA just in case is not a bad idea..

0 comments

👍
0
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post
Choon Wang
Choon Wang
Level 4. Prodigy
Answered 5d ago

Hi there!

For FRS:

It is the amount that will be transferred into the Retirement Account (RA) upon reaching age 55. The exact amount depends on when you reach age 55. Funds from Special Account will first be transferred into the RA, and followed by Ordinary Account should there be any shortfall.

For example:

Right before age 55

OA: $200,000

SA: $150,000

Upon reaching age 55

OA: $169,000

SA: $0

RA: $181,000

Also, for the $7K cap, I think you are referring to the tax-relief cap for cash top ups into your own SA. You can still choose to top up more, though the tax relief is capped at $7K

For SRS:

There’s no limit of how much you can have in your account. You are right that the current maximum yearly contribution (for Singaporeans) is $15.3K.

For MA:

The Basic Healthcare Sum is $60,000 this year. For those who have reached age 65 this year, it will be fixed for life. For those who have yet to reach age 65, it will be adjusted yearly.

0 comments

👍
0
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
Post