So I came into a small five figure sum of money recently (an inheritance) and was contemplating what to do with this money. Many ideas came about ( buying high yield bonds, stocks, fixed deposit, REITS, etc).
There were some criteria on what I wanted that money to do. One of which was that I did not want the value of the money to fall (loss from stock market, company bonds defaulting, inflation erosion) etc. I have been doing well with my stock investments and was leaning on putting in that small inheritance into a sub-fund with the intention of willing that to my children. Doing so will however put that sum of money at risk as markets rise and fall.
After talking to some friends and reading up a little, I decided to do something which is in my opinion is not very me. I decided to spilt the money among my children and contribute the money into their CPF accounts as a living inheritance to them.
The idea of contributing to their CPF Special Account fulfilled a few criteria. It enabled me to “give” them that money while I was still alive and kicking. They could not touch that money and squander it away while they are young. The money would accumulate at a relative high interest rate of 5% (first $20,000 in the CPF Special and Medisave account’s interest rate). It will give them a small safety net for their retirement when they are older.
With that in mind, I did some research further on how about to do so. My first step was of course to call the CPF hotline. The young lady on the other end of the line was friendly but she didn’t seem very familiar with what I wanted to do. I guess it probably is because not many people contribute to their childrens’ CPF? Anyway, she didn’t give me the right information. Firstly, she told me that I could only do a voluntary contribution to my children’s’ accounts which would spilt the money into the ordinary, special and medisave accounts and that secondly, I had to apply for Singpass for them so that I could view their account balances.
Now, prior to call the CPF, I had spoken to a close friend who had told me that he had contributed money to his children’s CPF Special Account. So upon telling the young lady on the phone what my friend told me, she seems flustered and told me she had to check that. I took her “advice” as that and asked her further how to apply for the Singpass for my kids. She directed me to the Singpass website. I thanked her and started planning to visit the CPF office at Bishan to do the transaction the next week when I am on leave from work.
In the mean time I tried to find out more from the web and some articles I came across that helped are:
With that in mind, I decided to get that Singpass before I head to CPF and that is when I realized that I cannot do it. Apparently children under the age of 16 cannot apply for a Singpass. So does this mean I cannot see the progress of their savings?
Well I found the answer after checking online and confirming with a few people. So, as parents we can apply to the CPF board to link our childrens’ CPF accounts to ours so that we can see the balances. With that new info, I went down to the CPF office at Bishan to get it done.
On the day, I had to bring all their birth certificates and my Singapore identity card. The procedure was pretty straight forward. After taking a queue number, I was “called” when my queue number popped up and went to the assigned CPF officer at her booth. She asked me how she can help me and I proceeded to tell her what I wanted to do. She understood me and proceeded to print out the respective forms and photocopy the birth certificates and IC. She told me the application will take up to 2 weeks to process and I accepted and thanked her and left.
So I thought that was that and everything was settled and all I had to do was transfer the money (note that I wanted to be able to view their account before I put in any money) until I got a call a week later from the CPF. The lady on the line was also friendly and told me that she had processed my application and for my younger children, their accounts are in order and the application will proceed as normal. However, for my two older children, because there is no money in their CPF account she could not process the application until I put in some money. She told me to just put $10 into each child’s account.
Her call made me sit up and ask myself just how do I put money into their CPF accounts? I had put cash into my mum’s retirement account before and was used to using the DBS bank internet platform to do so. So I thought it would be the same. Well as it turns out, I could not do so with the e-cashier facility as there is no selection to put money into my children’s account.
The procedure is pretty straight forward and I won’t be going into detail here but basically you choose to contribute to the Special Account via OCBC internet banking. The CPF website will generate a Bill Reference Number which you key in in the OCBC internet banking website as your reference. Note that you are making a transfer to the CPF board (not your children’s accounts) through OCBC internet banking.
One thing to note and CPF emphasized this is that you need to do the transfer on the same day you do the application, else there is a chance the application may be rejected. This is because it takes up to 3 days for the money to be transferred. So if you follow the procedure, 3 – 4 days later (the CPF website says to allow 5 days), you will receive an email from CPF saying your application is successful and you can then go into your CPF account to view their balances.
So I started by first transferring $50 into my 2 elder kids account in order to set up their CPF accounts. Just last week, I successfully transferred a total of $3000 each into their accounts.
I am going to transfer another $4000 each into their accounts this coming week and that would complete the procedure. This $7,000 should double itself to about $14,000 after 15 years and slightly more than $40,000 after 40 years. That’s the power of compounding!