Anonymous
Will the mandatory FRS deduction at 55 affect the accumulation process?
Is FRS at 55 a deduction or just freezed from withdrawal?
JUST AN EXAMPLE : Say the FRS is 300k when am 55, I managed to save 800k by 55. If there is no deduction, this 800k will continue to earn 4% interest and my cpf contribution and usual top ups will see me achieve 1M by 65.
However, we know there is a FRS to be put aside at 55, so how is it like? Is it a deduction, or freezing it from withdrawal? The former see less interest based on 500k while the latter gets more interest on 800k.
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Jim Ng
16 Nov 2018
Marketing Strategist at https://www.bestseo.sg
Hi, once you turn 55 years old, if you choose to select the FRS, the FRS amount will be transferred to your newly set-up Retirement Account (RA).
That is where your FRS will be resting in the RA, obtaining an interest rate of 4%.
The rest of the amounts which are not being used will sit in your OA earning 2.5% to 3.5% , and your SA earning 4% to 5%.
I hope that answers your question. If you've any further queries, feel free to ask further.
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Upon reaching 55, a new account will be setup called the retirement account RA. So u would have 4 accounts then, OA, SA, MA and RA. The FRS will be transferred to the new RA. RA monies can only be used to purchase CPF life upon your eligible payout period starts.
The RA receives the same interest rate as the SA. Currently is the floor rate of 4%. Any 'excess' monies will remain in their respective accounts OA or SA. You can then choose to withdraw them if u want. If not, u can choose to transfer more money (from your OA to RA up to the enhanced limit) to earn a higher rate.