How to Top Up the CPF RA and Why it is a Great Option for Most People

As previously mentioned, on your 55th birthday, CPF creates a special Retirement Account for you. Your savings from your Special Account (SA), followed by your Ordinary Account (OA) is transferred to the RA up to your Full Retirement Sum (FRS).

(Right now, that amount is at $192,000 as of year 2022, but this is subject to change with inflation increasing yearly)

The FRS calculates your monthly payouts when you reach 65 from CPF LIFE.

If you cannot save the FRS when you turn 55, the good news is you don't have to top up with cash to meet this number. However, your future monthly payout will be adjusted to reflect the shortfall.

That's partly why some people choose to top up their accounts to still receive their full monthly payout. In fact, some even choose to top up their RA to meet the Enhanced Retirement Sum (ERS) of $288,000 to receive a higher payout in the future.

For a better understanding of how the monthly payouts are calculated, you can check out the CPF website or feel free to arrange a coffee session with me. The numbers may seem intimidating and confusing, but once you take a little time to see how it fits into your retirement planning, it will all make sense.

This brings us back to the topic...

How would you go about topping up your RA if you have a shortfall and want to meet either the FRS or ERS?

You can do so by either making a Cash Top Up or a CPF Transfer.

If you want to make regular top-ups, you may consider doing so via GIRO to avoid the hassle of completing the application form every time you choose.

You can make cash top-ups to any Singaporean or PR, but only CPF transfers to yourself or your loved ones, and they must be either a Citizen or PR.

In addition, if you're making CPF transfers to a recipient, you need to make a one-time submission of the following supporting documents:

• Spouse: Your marriage certificate (only if your marriage is not registered in Singapore)

• Parent: Your birth certificate

• Grandparent: Your and your parent's birth certificates

• Sibling: Your and your sibling’s birth certificates

• Parent-in-law: Your marriage certificate (only if your marriage is not registered in Singapore) and your spouse’s birth certificate

• Grandparent-in-law: Your marriage certificate (only if your marriage is not registered in Singapore), your spouse’s and your parent-in-law’s birth certificates

At the same time, there is a limit to how much a person can receive from top-ups. This is likely to prevent anyone from abusing the system since the RA provides a higher interest rate than many financial instruments available in the markets.

Generally, the maximum top-ups a person can receive depends on their FRS or ERS less their current RA savings. After all, the RA's purpose is to help every Singaporean afford CPF LIFE.

For those who wish to save over and beyond this amount and gain some tax benefits, there is always the Supplementary Retirement Scheme (SRS) and other forms of retirement planning.

But with all this talk about topping up, some people may wonder...

What happens to the unused CPF transfers in the event of an untimely demise?

This is another huge topic that is covered in legacy planning, but generally, the unused amount will be paid to the CPF owner's beneficiaries or according to their CPF nomination instructions.

So, if you're still unsure about your CPF RA, the drawback is few, as the money inside is always yours. And you're really going about growing the funds to finance your CPF LIFE account.