How do you know whether you can use your SRS money to buy unit trusts? Make use of free instruments on the Internet. At fundsupermart.com, you can use the fund selector. Just select ‘SRS available’ at the ‘CPF/SRF?’ section. You will find a list of unit trusts that allow you to tap on your SRS funds. If you plan to use your CPF-OA account, you can also do the same thing. Remember that you need to have a minimum sum of $20000 from April onwards, so you may want to use part of it to invest.

Next, to find the best-performing funds, just sort out the list according to the criteria you want. You may sort according to weeks, months or years. After that, just go to your usual online trading platform to execute your trades. Make sure your account details for CPF-OA and SRS are updated at the online platform.

So far, many of the CPF-OA approved funds are not doing as well as the other funds. Hence, do make sure you make your selection carefully. If not, you may be better off putting your money in the CPF account, earning that paltry 2.5%, subject to an additional 1% interest on your first $60000 in the accounts. Only up to $20000 in your CPF-OA will receive that additional 1%. Again, with the high inflation rate, the value of your money has actually decreased. Therefore, to beat the inflation rate, your returns have to be higher.

Once you have selected the option to use your SRS or CPF-OA funds to pay for the unit trusts, you may leave it to the company to contact the agent banks (DBS, OCBC and UOB) for transactions. If your company is a CPFIS-Registered Investment Administrator (IA), then you pay less on your transactions. Remember that you have to pay additional charges on the number of transactions. Hence, you may want to consolidate your transactions to save on charges, if yours is an IA. According to Fundsupermart, it is still cheaper than if you have gone to a non-IA company.

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I tried both refunds and non-refunds. The difference isn’t much. It all depends on how much money you have in your minimum sum.

 I tried $100000 as minimum sum. The difference I got was $20+.  

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However, if you can earn more money from unit trusts and stocks, then you should take the money out. Besides, if you are planning to buy a HDB flat, HDB will wipe out all the money in your OA. Hence, to have a buffer when you make your repayments, just in case you are in the midst of changing jobs or taking time off, you will be able to sell your investments and use that money to continue to pay for your flat. This will reduce the possibility of you forking out cash to service your loans, especially when you do not have a job. Even if you have a job, the repayments may be quite high, and when you sell your investments after making money, this sum of money can go towards refinancing your loans and you will pay less interest.

With the new ruling, quickly go and apply for a CPFIS-OA with any of the three banks in Singapore: DBS, UOB and OCBC. There is no difference. What I recommend is just to get the account from them, and then you use your own other trading accounts to make your trades.

While making your trades, take note of the percentage of sales charge. Some of my friends recommended using POEMS for unit trusts, but the lower sales charges (1.5%) only apply to certain unit trusts. The rest cost 2.5%. Fundsupermart still allows me to buy them at 2%. So, just check before making your purchases. Anyway, for those who like getting freebies, by retaining at least $10000 in your Fundsupermart account, you can get a free quarterly magazine from them.

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If you happen to enjoy longevity, the extra money that is payable to you actually comes from other people who passed away before the entire sum is fully paid out. If you want the money unpaid to go to your family members in the event of your death, like some form of insurance, then you will have to pay higher premiums.

All these money will come from the CPF Minimum Sum. You can choose to start receiving payouts from 65, 70, 75, 80, 85 or 90 years all. I am very puzzled about the 90 years old. How many years can this person enjoy before passing away? In addition, the interest earned from the premiums do not seem to be transparent at this stage. With close to 45 years, the interest earned would be huge. This also means that the government can delay paying for a longer period of time. I doubt many will take up the 90 years option. Already, people were complaining about receiving money only after 80 years of age.

I guess the successful retirement plan should include many streams of income after 50. It would be great to come into different sources of money every few years after retirement. In addition, since we cannot predict inflation, the $300 promised to you now may be worth peanuts after another 30 years. They had already said that they could not factor in inflation because the costs would escalate wildly.

In a nutshell, this annuities scheme should be only one small source of income come retirement. Make use of your SRS, CPF, insurance payouts, rental, stocks and royalty payments among others. Include pocket money from children. Train them from young that they need to give you pocket money when they start working.

When do you think you want yours to start? Which one do you want to opt for?

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While the reasons for increasing the Minimum Sum are sound, we should remake our plans for the future. Currently, my endowments payments and my CPF withdrawals are timed in such a way that I would be getting a neat sum of money every few years. With the change in the minimum age, I would require another sum of money of money to come in when I am around 62 and before I reach 65. The SRS will come in useful as you can withdraw money from it over a span of ten years, lasting me until 72.

The Minimum Sum is currently set to increase to $120000, and that is before inflation is taken into account. If we fail to meet the Minimum Sum, that means we can only take out $5000 from our CPF. According to the CPF website, there are three ways to invest this sum. First, we can buy annuities with a participating insurance company. Second we can take the money out and put at a participating bank. Third, we can leave it with CPF and get it after we turn 65.

You may apply for exemption from the Minimum Sum Scheme if you have bought your own life annuity using cash. The monthly payment you receive from the life annuity should be equal or above the Minimum Sum monthly payment.

This is something you can consider by buying your own life annuity.

According to the government, quite a significant number of people live beyond 85 years. The government would look into getting the people buy compulsory annuities. This money would be paid out. Depending on this is not enough for most of us, since with inflation, the amount of money we require post-retirement is even more than now.

Since the boundary for to get our money is constantly being pushed back, we need to have more sources of income. Apart from savings, endowment plans, insurance and other investments are necessary, because we will never know when the government will change the ruling (again). It is wise to receive the money in stages, so that we do not have to worry about running out of money after a certain age. I’ve once read that this lady will have policies maturing every few years all the way until she is 85 years old. That’s some food for thought.
 

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