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Anonymous
Can I use CPF as an endowment plan for my child education?
Hi,
I am at 40 yo and was advertised to buy Endowment Plan for my children to withdraw in 15 years (i.e when I am 55 years old). I realized the return in the Endowment Plan is lower than 4.5% while also having the same restrictrion of not being able to withdraw until 55.
Question: Can I instead use the same amount to top up into my CPF annually to get 4.5% compound every year? At 55, if I need this amount, I can withdraw to fund for my child's education. By topping up to CPF I will have the flexibility of skipping a few years if I dont have cash to top up.
Is there anything wrong in my understanding of withdrawal after 55? If this understanding is correct, why I haven't heard of this planning before....
Assumed that at the age of 55, my combined SA + OA is at least equal to Full Retirement Sum (excluding the above top up amount).
Thank you for your clarification.
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Tan Choong Hwee
31 Oct 2022
Investor/Trader at Home
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After 55, your RA would be formed with the then FRS from your combined SA+OA, and you can freely withdraw what remains in SA+OA once FRS is met (withdrawal would be from SA first, then OA after SA depleted).
Of course you can use the cash withdrawn then for any purpose, including for your child education.
BTW, the interest rates are 4% for SA and 2.5% for OA at the moment (not 4.5%), and there is an extra $600 interest per year for the 1st $60k combined savings. It is not 4.5%.