Almost one year ago, I wrote an article on CPF SA Shielding before RA is formed at .age 55. It is one of the several legit CPF Hacks that any Singaporeans can employ to maximise their CPF dollars to go towards their retirement funds. While we hear all the theory online, part of us is constantly thinking — are there actually people who are doing CPF Shielding for their SA or OA? Does SA Shielding work in reality? We don’t get many live examples because the people who do share willingly are just a numbered few.
Uncle X is 55 on this year and month on the 28th Sep.
Uncle X has been going his thought process in maximising the CPF hacks for OA and SA Shielding since early last year.
Uncle X has planned and perfected his execution of CPF SA and OA shielding for this very important moment of his life.
Uncle X is invested in low-cost funds during the period of shielding, which translates to shielding roughly $484,200 of OA monies and $221,400 of SA monies. This is honestly alot of monies, if you ask me, for continuing earning higher interests (2.5% and 4%) and almost risk-free.
Lorna had shared this CPF SA Shielding hack back in the Straits Times a year back.
Some quick pointers from the resulting sharing by Uncle X and the key take-aways:
Does OA and SA monies go back respectively to OA and SA accounts after the two funds are sold or divested?
Yes, technically we call it “SA or OA deshielding” or putting down the shields respectively for OA and SA accounts. Whatever investment was bought using OA and SA monies will be respectively returned back to the same accounts. The automatic transfer of SA/OA monies to set up RA account only take place once in your lifetime — the day when you turn 55. Any other SA/OA transfers to RA account is manually triggered.
Is it worth performing the CPF SA Shielding or OA Shielding hack for the cost involved?
It would be worthwhile to compare brokerage costs. For POEMS, Dollardexs and FSMOne for example, the net sales charge or commission is zero.
CPF SA Shielding is the first consideration in the past, due to higher interest earned in the SA (4%) versus the OA (2.5%). What is the rationale and why are people doing OA Shielding as well?
When RA is created, it is created first with monies from your SA account, then OA account in that order of priority. The main aim of SA Shielding, is therefore to “protect” the bulk of your SA from getting transferred over to RA.
The idea of shielding BOTH CPF SA and OA however, is to minimise the monies that gets transferred to your RA when it is created at age 55. The lowest you can go is $60,000 ($20,000 from CPF OA and $40,000 from CPF SA).
Monies in the RA has the least flexibility — it could only be used as premiums for CPF LIFE. Monies in the OA has the highest flexibility — it could be used for CPFIS investments, purchase and monthly installments of property. When BRS (with property pledge) or FRS amount is met in the RA account, the excess amount residing in the CPF SA and OA could be withdrawn as cash, at any time. This is the next reasoning why people would rather keep more of their CPF monies in OA/SA rather than RA.
The last reason, especially for those who are cash-rich, is that by having the bare minimum in RA, you have a wider range to do RSTU cash top up to RA all the way to prevailing FRS or even ERS amount. You would then enjoy the relating tax reliefs!
What if I shield my SA and OA such that RA created has less than BRS amount? Will I not be entitled to CPF LIFE?
Firstly like I mentioned from the earlier question, RA created can go to as low as $60,000 with maximum shielding for CPF SA and OA. You will be auto enrolled in CPF LIFE if you have at least $60,000 in your RA six months before reaching Payout Eligibility Age (PEA). Anything below $60,000 you will remain on the Retirement Sum Scheme (RSS). And if you were on RSS, we would not be talking about CPF Shielding in the first place.
Can we continue to transfer OA to SA after age 55?
The simple answer is No. After age 55, only OA/SA transfers to RA is allowed. CPF OA to SA transfers can only happen before age 55 or before RA is created.
What is the most important consideration in the execution of the CPF Shielding?
After you carry out SA or OA shielding, you are also planning the next steps on deshielding. You would want to deshield as soon as your RA is created to continue earning OA and SA interests, e.g. you would try as best as possible not to miss another month of interests earned as the amount could be quite substantial if your OA and SA has large numbers. Timing is of importance, especially for people whose birthdays (or they turn 55 years of age) near the end of the month.
Uncle X’s birthday is on the 28th Sep, thus he would plan to bring down his shielding either on the 29 or 30 Sep. Once it crosses to the next month e.g. 1 Oct, he would have lost another month of interest for October. Interests earned for CPF accounts are based on the lowest balance in your SA/OA for the month.
Theory of Constraints 
why complicate life.
abut 1 month before 55, just apply to withdraw a small sum to force RA creation a few days before your 55th birthday.
then transfer from OA to SA(up to FRS amount) after RA creation, before you reached 55.
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I’m not aware of any alternatives or ad-hoc method to “force create” RA even before your 55th birthday. Would you be able to advise on this small sum withdrawal you mentioned? As far as I am aware, you are not able to withdraw from your SA or even OA in cash before 55th as well.
Even if so, the main aim of doing SA Shielding and OA Shielding both in tandem is to minimise the dollars sum created in RA, which is $60,000 ($40,000 from SA and $20,000 from OA).
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CPF will write to you asking if you would like to withdraw above FRS from OA or SA upon reaching 55. So you apply to wthdraw some (like $10) upon reaching 55. CPF will then create RA from SA then OA to form FRS a few days before 55, and you transfer OA to SA before 55.
It worked for me and spouse and sibling.
It is simple and not meant for OA shielding.
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Ahh I see! Noted, thanks for the enlightenment!
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Can I get some clarification please? So RA is created before 55 and you can move funds between RA, SA and OA? If I have $200k in SA and $150k in OA, how do I shield SA? Can you specify the steps before I turn 55 and after please? Thanks.
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You can’t actually move funds between CPF accounts freely. OA to SA is one-way before 55. OA to RA and SA to RA is one-way after 55.
To shield SA, I had included the steps in my earlier article:
https://toc.net/2019/10/20/cpf-sa-shielding-before-ra-is-formed-at-age-55/
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Can you please elaborate more? I do not understand what you mean by withdraw $10 after 55. Withdraw $10 from which account?? RA account is only setup after 55, isnt it? Thanks.
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As I noted Uncle removed the funds on Sep 1. To have the funds back into the SA account and after his birthday (28 Sep), he should sell his funds on POEM platform on Sep 25 (since it is T+5)?
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Saturdays and Sundays are considered non-working days, so 22nd Sep would be more accurate. To play safer, sell funds on 23 Sep.
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Hi,
On the T+5 days, will it be safe as I sense that we are risking the chance that the money may reach the SA before you turn 55? Is this T+5 a firm date? My birthday is 27 Oct (Thursday) and even though I might miss one month interest, would it be safer to sell on your birthday instead? Maybe will need to check with the platform to make sure that they are on time always and not too efficient and settle earlier 🙂
On the SA shielding, I think it is worthwhile for me if I am trying to enjoy a fixed income based on 4% pa kind of payout. However, for OA shielding, this will likely only be good for people who would like to grow their OA without the need to take it out and possibly leave it for their next of kin as this amount will not be able to be withdrawn without affecting the SA after 55. If I go all out to shield my SA, I would want to enjoy the annual interest pay out and not to touch the SA principal.
So for my case, I would do the SA shielding and draw down by OA to the minimum before I de-shield my SA back. The OA monies withdrawn can then be used to purchased fixed income instrument to supplement my retirement.
BTW, I was told that there is still a way to cash-out from OA without affecting the SA. This is by closing the investment account after purchasing the investment via OA after 55. Cash payout will then goes back directly to your bank account. Do not have black and white on this by this is something shared by a friend when he contacted CPF.
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For the T+X business days (and not calendar days), it really depends on the brokerage on what is X. It is best to consult your brokerage by email or phone if needed to, on the exact scenario that you are planning. When you sell is only important if your birthday is near the end of the month e.g. 2Xth of the month. If you sell on your birthday, you may not make it in time for the interest loss for the month. That to say, I would rather lose the interest for the month than lose the plot e.g. settlement happened too early and thus Shielding does not work.
Thats the idea for retirement. We want to draw down first on the interests only, while leaving the principal to continue earning interests. A point to note as well: Withdrawal on SA/OA takes priority in the order of SA interest withdrawn first, then OA interest, then SA principal, then OA principal. Voluntary Contribution and RSTU cash top-ups cannot be withdrawn. Only mandatory contribution (e.g. employer/employee con) and OA to SA transfer can be withdrawn.
OA Shielding works for people who wants to maintain the liquidity of their OA monies, one of which is investment, or even housing loan installments. One other point is to allow for more tax reliefs by being able to top up RA account.
Your last point can actually be found on the CPF website. It only works for age 55 and above, and only if you already meet FRS in your RA. See below:
Can I withdraw my CPF Investment Scheme (CPFIS) investments when I reach 55 years old?
You can apply to the Board to withdraw your CPFIS-OA and CPFIS-SA investments as well as the cash balance in your Investment Account, as long as you have set aside your FRS in your RA. The FRS can be set aside fully with cash, or with cash (i.e. at least the Basic Retirement Sum) and property. Your CPF Investment Account will be closed once you apply to withdraw your investments.
However, if you are unable to set aside your FRS in the RA, your investments will not be transferred to you. Upon liquidation of your investments, the sale proceeds will be credited to your CPF Investment Account for CPFIS-OA or Special Account for CPFIS-SA.
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Wish4Wisdom, Thanks for pointing out that we could do SA shielding so that we can withdraw from OA first if required. Do you know if you are still require to set aside $40K in the SA if you do the shielding after 55 years old?
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The point of doing shielding is to limit the amount of monies flowing to the newly created RA at age 55 to form your retirement sum. There is little point in doing shielding after 55 or after your RA is created. Actually the min amount of $40K SA and $20K OA is “booked” by CPFB to at least form your RA and qualify you for CPF LIFE ($60K min.), before you use the rest for investment, housing etc.
When the RA is created at 55, the only aim by CPFB is to auto created up to FRS level only. Any more (e.g. to ERS) has to be manually initiated by yourself. Any less, whatever is in your RA will just be that sum. There would not be any auto transfers later to make up to FRS amount.
In short, there is not setting aside of $40K in the SA after RA is created at age 55.
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After RA is formed with $60K, will $ from de-shield of OA and SA goes into RA? Cash top-up to RA, must it be done before de-shield?
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Once RA is formed, monies divested from investment respectively go back to OA and SA accounts.
Do you mean Cash Top-up to SA, not RA? You can only do RSTU cash top-up to SA before age 55. After 55, you can only make RSTU cash top-up to RA.
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Since RA is only $60K, if I want to top up using cash, must it be before de-shield?
monies back to OA and SA, would it be transferred to RA since it has not met the BRS?
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RA is created by automatically transferring monies from SA first, then OA accounts. This automatic transfer is only done once by CPFB. Any other further transfers must be initiated by member. Even if you divest your investment, the monies return back to OA or SA respectively. It will not be transferred to RA.
After 55, you can top up to RA before or after de-shielding. It does not matter.
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I understand that you can top up to prevailing ERS every year from age 56 to 64.
1. Can use SA to top up to prevailing ERS each year?
2. Or does it makes more sense to keep the SA roll by 4% and just do a 1 lump sum top up at 64? Instead of topping up every year from 56 to 64.
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1. Yes, you can either choose to transfer OA or SA monies to RA up to ERS. I believe however, that your (BRS, FRS, ERS) is locked in at age 55 by your cohort.
2. Possible as well, as CPF LIFE only starts when your entire RA monies is used to pay for CPF LIFE annuity premiums from age 65 to 70 onwards.
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Hi Lyndon
I am reposting this as not sure if my earlier post went through.
I am planning to do maximum shielding of my CPF SA and OA, meaning only minimum $60K will enter my RA in 2021 when I turn 55.
Can I confirm the following:
(1) My BRS (which is $93K for 2021) is FIXED – in the event I need to withdraw my CPF SA/OA monies a few years after 55 (e.g. in 2030), I still only need to top up my BRS to $93K (and not prevailing BRS as computed for 2030).
(2) Interest earned/accrued interest – I only need to top up EXACTLY $33K (BRS $93K – RA $60K) regardless of whether I do so when I am 56 or 64. I.e., the interest earned on my $60K in RA until the top up would not count to my BRS (meaning I need to top up LESS than $33K to make it $93K in total), nor do I need to top up until BRS + accrued interest at point of top up (meaning I need to top up MORE than $33K due to the accrued interest on BRS until that point).
Thanks!
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Another quick query following on from the above
(3) Withdrawal after 65 – if I only need to withdraw my CPF SA/OA monies after turning 65 when my CPF Life payouts have started, do I still need to top up to BRS with property pledge (or FRS without)?
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