You will be able to run a short yearly review of your CPF plan.
Linda used to look at CPF only when something forced her to: a letter about her 55th birthday, a renewal notice, a question from her daughter. Each time she had to relearn the rules and dig out her numbers. This year she tried something different. She blocked out one Saturday morning in January and went through her CPF in a fixed order. It took her about an hour and a half, and she has done it the same way since.
A yearly check keeps your plan current without making CPF a hobby. CPF rules and rates change most years, your life changes too, and a plan you made two years ago may be quietly wrong.
Pick a fixed date and book it now. January works well for most people. Interest for the previous year has just been credited, so your balances are complete, and changes announced the previous year usually take effect from 1 January. If you plan to make a cash top-up, a January check also gives you the option of topping up early, when it earns the most interest, as lesson 3.4 showed.
Some people prefer to do it after the Budget statement, usually in February, which is when many changes to CPF are announced. Either works, as long as it happens every year.
Linda's check follows the same five steps every year.
Check last year's flows: confirm contributions arrived every month you worked, note the interest credited to each account, and list what left: housing payments, MediSave premiums and bills, investments. Look up what changed: find the current interest rates, contribution and allocation rates, wage ceilings, Basic Healthcare Sum and retirement sums on cpf.gov.sg, and read any changes announced in the past year. Update your numbers: put the new rates and balances into your contribution worksheet, housing model and projection, and see what moved. Decide this year's action: choose your top-up, transfer, MediSave or investing move for the year, or decide to do nothing, and give it a date. Check your nomination and documents: confirm your CPF nomination still reflects your wishes, especially after a marriage, divorce, birth or death in the past year.
Each step is short. The first takes twenty minutes with your transaction history. The second is mostly reading. The third is copying figures into sheets you have already built in this course. The last two are decisions.
In the first step, the main things to catch are a missing contribution, usually around a job change, and an outflow you didn't expect. Read the fine print: payslips, statements, policies and contracts, lesson 2.4, Reconcile your CPF contributions with your payslips, covers the matching in detail.
In the second step, focus on what affects your plan. A change to the retirement sums matters if you are within ten years of 55. A change to contribution rates for older workers matters if you are over 50. A change to the OA rate matters to your housing model and hurdle rate. Not every change affects you.
In the third step, compare this year's projection with last year's. If your projected balance at 55 has moved a lot, find out why. It is usually a change in salary, housing or a rule, and knowing which tells you whether to act.
In the fourth step, start from your plan in lesson 3.5 and your hurdle rate sheet in lesson 4.4, and ask whether anything has changed that would change last year's decision. If nothing has, last year's decision usually stands.
When Linda did her first check, step one turned up her mother's premiums coming out of her MediSave for the first time, which she had agreed to in lesson 5.3 but hadn't seen yet. Step two showed that the retirement sums for her cohort had been published. Step three moved her projection at 55 slightly below the Full Retirement Sum, because her new figure was higher than the example she had used. In step four she kept her yearly cash top-up to her SA, raised the amount a little to close the gap, and left the date in December. Step five was quick: her nomination was current.
The whole check produced one page of notes and one action with a date, which is about right for a year in which nothing big happened.
Write your own yearly CPF check as five steps, using the ones above or your own version, and put a date in your calendar for it every year.
Write your yearly CPF check as five steps and book a date for it each year.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).