Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Friday, 31 July 2015

Basic Retirement Sum (BRS) for CPF

For an updated version, refer to the article HERE.

Today's post: Basic Retirement Sum
It is one of the 3 types of Retirement Sum launched by CPF.
It is currently set at half the prevailing CPF Full Retirement Sum (FRS)
Why would someone wish to pledge their house in exchange for a "large" sum of money?
This post will answer that question.

For more information on the different types of Retirement Sums, click HERE
For more information on the amount on the different types of Retirement Sums, click HERE

Criteria for BRS

1) You need to have a house.
The house will be used and pledged against CPF.
Is your house fully paid or are you still paying it?*

2) You need to have money in excess of the BRS amount
The BRS amount from now until 2020 has been set.
For 2015/2016, the BRS is set at $80,500 for those turning 55 after 1st July 2015.
For the years beyond, please look at our post HERE


1) You get to withdraw your CPF money
No, you don't get to withdraw all your CPF money.
But you get to withdraw the amount that is in excess of your BRS.
So if your BRS is $90,000; you can withdraw from your CPF money in excess of that $90,000.


1) Lower Monthly Payouts
Because you currently only have half the Full Retirement Sum (FRS), you will only get half of the monthly payout. But, you have withdrawn the excess amount.

2) You have to Return the Money to CPF
If you sold your house, you have to return the money you have taken out, back into the CPF.
BUT! You can still use the money in your CPF to buy another house and then apply for BRS again to get the excess money out if you have any. For more details, look at our post HERE

*If you have fully paid your house, you can pledge your house to withdraw money in excess of your BRS.
If you have not year fully paid your house, you can still withdraw the CPF money in excess of your BRS after pledging your house.
Your outstanding housing loan, however, will be paid with
       a) your CPF OA money - if you are still working or if there is still money inside
       b) with your cash - if your CPF OA has insufficient money to pay your monthly mortgage
The money in excess of BRS that you withdraw WILL NOT be forcefully used to immediately pay your housing loan.
For more concrete examples, you may refer to the link HERE and THERE

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