My BTO has been paid off. Should I regularly transfer my cpf OA to SA if I don't intend to buy another house? - Seedly
 

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Asked by Anonymous

Asked on 20 Jun 2019

My BTO has been paid off. Should I regularly transfer my cpf OA to SA if I don't intend to buy another house?

If anyone has any advice for me to take advantage of the i/r pls lmk, thanks alot!

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Eric Chia
Eric Chia, Senior Financial Consultant at Prudential
Level 6. Master
Updated on 21 Jun 2019

Congrats on paying off your BTO! CPF-OA can be used for the following expenses which you should consider before transferring money to SA. The transfer is one way and you can only get money back after 55yo, assuming you reach the full retirement sum by then.

1) children’s education - know how old your children are now and if you intend to use CPF-OA for their tertiary education should they intend to study in Singapore.

2) yes you have no intention to get another flat/ house, but would you change your mind 10 years down the road (understand from the comments you are currently 35), when many couples get their second house around 45yo for the sake of having a second property to receive recurrent income

3) know your risk appettie - you are currently 35 and there’s still 20 years before reaching 55years old. It’s good time to start investment, especially when the government just announced slashing sales charges for CPF investments to 0 sales charge. However, 0 sales charge isn’t equal to no charges, admin fees are still involved when you invest, and unit trusts have continuing investment charges. You can also put your money in shares and gold certs (via UOB) if you feel you are up for higher risks. Leaving money in OA is good for 2.5%p.a. interest, and SA is good for 4%p.a. interest.

Investment outside of CPF is non capital guaranteed, though the returns can be as high as 4% to 10%p.a. By Singapore Law CPF have to give these interest rates. So the risk for leaving money in CPF is when the law changes.

Just a personal opinion, since you’re still young, you should explore investments. It’s not recommended when you are close to retirement.

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Question Poster

21 Jun 2019

This is so helpful 👍
Junus Eu
Junus Eu
Top Contributor

Top Contributor (Nov)

Level 9. God of Wisdom
Updated on 20 Jun 2019

Congrats on paying off your BTO!

If your age is close to 55 (which I don't think it is) - you wouldn't need to be so concerned about your money being locked up.

Of course, you wouldn't want a bulk of your savings being locked up until 55!

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Question Poster

20 Jun 2019

I'm 35 and my MA is already maxed out.
Siow Nan
Siow Nan, Electrical And Computer Engineering at Nus
Level 6. Master
Updated on 05 Jul 2019

Based on your age and achievements so far, I presume that you are having the max cpf contribution already Or have enough cash to pay off your bto early.

if you do regular transfer from OA to SA, and with OA getting the Medisave component since you have already hit BHS, then you would be hitting your FRS on your SA pretty soon if you have not reached it by now. In that sense, it may not be necessary for you to do the transfer but I may suggest instead for you to do a cash topup of 7k yearly to the SA to take advantage of the additional assessible income tax rebate for voluntary cash TOP ups. That will help you in your tax savings and you get to enjoy the compounded interest of 4% for your cash topups too.

once you have hit frs in your SA, you will not be able to do anymore top ups anymore and will not enjoy further tax rebates later on. So I would say you don’t need to rush into OA-SA transfer now if your cash flows are ok.

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Question Poster

05 Jul 2019

Thank You!

If you are confident that you might not be buying a new home, you will be better off to transfer your OA to SA to maximize your yield.

However, you have to be certain about it because transferring your funds to SA is a one way ticket.

Or if you would like to, you might want to do periodic transfer of your OA to SA in case you have a change in mind with regards to purchasing a new property.

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Zen Rogue Xuan
Zen Rogue Xuan
Level 6. Master
Answered on 26 Jun 2019

Congrats OP on paying off your BTO.

What you can consider doing to is return the CPF monies used for paying your BTO, as this sum would have interest accured. In other words, you will own yourself interest on the amount you used for paying off your CPF. Do note that thus amount can only be paid using cash. See more details here: https://www.cpf.gov.sg/Assets/members/Documents/FORM_HSDVR.pdf

Transfer of CPF OA to SA would be advisable only if you do not need to touch the funds as the process is irrversible. Do note that your CPF OA can be used to pay for your child's education fees too, while SA is only meant for retirement.

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Joy Tan
Joy Tan
Level 2. Rookie
Answered on 21 Jun 2019

Sound like you have max cpf contribution. considering max cpf contribution, you can max out SA in a few years time. why not use the 4% while the market are current very unpredictable? they had done a few research saying that most OA investment more worthwhile keeping in OA account.

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If you have no more loans or future use for OA, then yes, it will be a good idea to transfer to SA for the 4% interest.

OA can be used for education too, if you have kids that will need it. So, if really nothing else to use OA, then go for it! Slowly transfer if you are hesitant, like small amounts each month.

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Mujimoro
Mujimoro
Level 5. Genius
Updated on 21 Jun 2019

Transferring to SA locks up your money until you reach 55, and there’s no going back. Meaning you can’t access the money for e.g. kids education etc

If you’re sure that you won’t be needing the money until then, then go ahead. But do your due diligence first :)

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Question Poster

21 Jun 2019

What are the risk involved? Compared to guarantee 4%?
Joy Tan
Joy Tan

21 Jun 2019

The current market is so unpredictable. it is better to keep 4% and 100% safe than maybe 5% while 50% chance of losing it?