Once someone passes on, all of the assets they own (everything of monetary value) forms their estate. CPF monies are specifically excluded from the estate of the deceased. Their estate will first be used to settle any liabilities that they still owe. If their estate is insufficient to repay their personal debts, the debt is considered to be settled.
Read Also: What Happens To A Person’s Debt When They Pass Away In Singapore
In the absence of a will, the deceased assets that remain will then be split according to the Intestate Succession Act, which spells out what happens in various scenarios.
Read More: What Happens To People’s Assets When They Pass On?
For your CPF monies, if you made a CPF Nomination, then your monies will be distributed according to the instructions in your nomination. Otherwise, distribution of your CPF monies will be according to the Intestate Succession Act.
Read Also: CPF Nomination: What You Need To Know About It
What happens to one’s HDB flat is handled differently, depending on whether the flat was bought under a Joint Tenancy or Tenancy-In-Common arrangement.
Read Also: What Happens To Your HDB Flat After You Pass On Without Leaving A Will?
Have a question?
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Question:
Do you have any information on how to determine whether it is worth to pay my housing loan fully?
DollarsAndSense Answers:
When thinking about whether it makes sense to pay down your housing loan, there are many factors that one should consider. However, it typically comes down to two main factors. Opportunity cost and cashflow.
Opportunity Cost – Assuming you are taking an HDB loan of 2.6%, this means the cost of borrowing money for your housing loan is 2.6%. If you repay this amount, you will immediately save 2.6% per annum. However, you also miss out on the opportunity where you could have invested and earned a higher return than 2.6%. Of course, we have to consider that investing also comes with an element of risk and uncertainty. So, while you may expect a higher return, this is not be a guarantee. There may also be conditions for how long you need to hold your investments in order to earn the return.
Read Also: HDB Or Bank Loan: Pros & Cons To Consider Before Deciding On Which Housing Loan To Take
Cashflow – If you have an existing housing loan of $100,000, and emergency savings of $100,000, you may choose to repay your housing loan in order to save on interest cost.
However, you have to consider your short-term cashflow. If your emergency savings are depleted because of a housing loan repayment, it also puts you at financial risk if some unexpected cost were to incur, or if you were to lose your job. That’s because you no longer have your emergency savings to tap on since the funds have been used for home loan repayment.
At the end of the day, there is no right or wrong decision. You should decide based on what you are comfortable with, the opportunity cost you lose out on if you repay your housing loan, and your cashflow requirement.
Read Also: Why Singaporeans Should Stop Using Their CPF Money To Pay Their HDB Home Mortgage
Question:
I have set aside the FRS amount of $171,000 for CPF LIFE at age 55. What happens to the rest of my monies and interest rate if i pass on one year after receiving my CPF LIFE payouts?
DollarsAndSense Answers:
Firstly, we have to note that there are three plans for CPF LIFE. They are the Full Retirement Sum (FRS), Basic Retirement Sum (BRS) and Enhanced Retirement Sum (ERS). The FRS refers to the amount that Singaporeans and Singapore Permanent Residents are required to aside aside at 55. This will go into our Retirement Account (RA), and eventually into CPF LIFE, our life annuity scheme that provides monthly payouts for as long as we live, when we turn 65.
The FRS is not a static sum either. Those turning 55 in 2018 will have to set aside an FRS of $171,000. This amount will increase 3% in the each of the next two years, to keep up with inflation. There isn’t a figure for how much it will increase beyond 2020, but we should assume it will continue increasing in line with inflation figures.
Read Also: Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55
| Year | Cohort FRS |
| 2018 | $171,000 |
| 2019 | $176,000 |
| 2020 | $181,000 |
Example of the scenario in the question:
If we are 55 today, $171,000 will be put into our RA to set aside for our CPF LIFE payouts. We can opt to put in half this amount ($85,500) by pledging a property that we own to go on the Basic Retirement Scheme (BRS), or double this amount ($256,500) if we choose to opt for the Enhanced Retirement Scheme (ERS).
Once on the FRS, our monies will continue to compound. According to the CPF website, here’s the interest rates we will receive.
| Balances in Special, MediSave and Retirement Accounts | Interest rate (p.a.) |
| First $30,000 | 6% |
| Next $30,000 | 5% |
| Amounts above $60,000 | 4% |
This means we may have close to $266,000 in our RA when we turn 65. Once we enter CPF LIFE, we can choose whether we would like to go on one of three plans:
# 1 Standard Plan
# 2 Basic Plan
# 3 Escalating Plan
Assuming we are turn 65 today, have $266,000 in our RA and opt for the Standard Plan, we will receive a monthly payout of close to $1,350.
What happens if we pass away 12 months later? Will all our CPF LIFE monies be gone? The short answer is NO. Here’s what will happen.
After 12 months, we would have withdrawn close to $16,200. If we were to pass on, our beneficiaries will receive no less than the amount we initially put into the plan. This means $266,000 – $16,200 = 249,800. This means the family members of anyone who passes on early in life does not get shortchanged by CPF LIFE.
If the person lives to a ripe old age of 85, he or she will continue drawing $1,350 every month, and ultimately have received $324,000. This is more than what he or she would have put in.
Have a question?
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Question:
What are the first few insurances should one get? Just graduated, just started working?
DollarsAndSense Answers:
In general, there are three types of insurance policies. Health, life and general insurance. As a young working adult, let’s focus on health insurance. Health insurance is designed to protect you from hefty healthcare cost, or the associated cost of falling ill.
As young graduates entering the workforce, our ability to work is our biggest personal financial asset. However, health matters can steal that ability from us in a heartbeat. If that happens, not only would we be unable to work and earn an income while recovering, we will also incur potentially hefty healthcare cost.
A private integrated shield plan pays for our hospitalisation cost. A critical illness plan gives us a lumpsum payout if we are diagnosed with a major illness. Disability income insurance provides income in the event that we are no longer able to work due to disability. All these different insurance plans provides an individual with holistic healthcare coverage. Of course, you should also strive to live a healthy life as well, even after getting these coverge.
Watch how much you are paying for your policies. It’s better for you to have basic coverage that you can afford, than to have comprehensive coverage but to end up paying too much for your premiums that you have to terminate some plans in the future. You should always buy an insurance policy with the mindset that you intend to hold them till the policy coverage is over.
Read More: What Types Of Insurances Should Fresh Graduates In Singapore Buy
Question:
My father and I bought a HDB flat together under joint tenancy. What will happen to the HDB flat if my father passes on without leaving a will? Can my father will his share of the HDB flat to another family member?
DollarsAndSense Response:
Since the HDB flat is own under joint tenancy, upon the passing of either of the joint owners (i.e. you or your father), the surviving individual will inherit the entire HDB flat.
The easiest way to understand this is to think of it as similar to a joint saving account. When one of the joint-account holders passes on, the money in the joint savings account automatically belongs to the surviving account-holder. This is also known as rights of survivorship.
A HDB flat which is own under joint tenancy cannot be will away to another individual.
A HDB flat can only be distributed in accordance to a will if 1) the owner is the sole owner of the HDB or 2) the flat is owned under a tenancy-in-common.
Read Also: What Happens To Your HDB Flat After You Pass On Without Leaving A Will?
In Singapore, the law protects all employees from unfair dismissal – requiring any such decisions to be based on relevant and objective performance criteria, and after a comprehensive inquiry.
Therefore, dismissing an employee because of pregnancy is against the law.
Furthermore, a pregnant employee has maternity protection if she has been at her job for at least 3 months. This means that if you are retrenched (and not fired for sufficient cause) while you are pregnant, your employer must pay the maternity benefits you would have been eligible for.
Maternity leave benefits and protection are covered under Part III of the Child Development Co-Savings Act and Part IX of the Employment Act. This includes being entitled to up to 16 weeks of maternity leave if you meet the eligibility criteria while continuing to receive your salary. Employers also cannot ask an employee to work during the first 4 weeks of her confinement.
If you have been discriminated against or unjustly treated, you should approach MOM for assistance.
Read Also: Maternity Leave: Understanding Your Rights As A Pregnant Employee In Singapore