Sunday, September 23, 2012

CPF Life payouts reduced barely 3 years into it's inception
CPF Life Payout from $948-$856 (in 2009) dropped to $844-768 (2012) for the same $117,000.

Tue, Sep 15, 2009
The Straits Times

With rising life expectancy, it is prudent to ensure that your retirement savings will last for all your days.

The opt-in system began on Sept 5 and is open to older CPF members who wish to join the annuity scheme ahead of 2013, when it will be implemented for those turning 55 then. For older CPF members, the monthly payouts will start as early as next January.

While many are still undecided, some, like Madam Wong Kwai Sim, 55, have taken the plunge. She has opted for the CPF Life Balanced Plan, which will give her an estimated monthly payout of $855 to $948 when she hits 65.

Madam Wong, who works part-time as a clerk, currently has $117,000 in her Retirement Account, which is also the prevailing MS.

Projected CPF Life payout in 2009

CPF Life scheme can do better ...
04:46 AM Mar 08, 2012
Letter from Tan Say Yin

THERE are two negatives in the Central Provident Fund Life scheme: Low payouts and, especially, the uncertainty of the monthly quantum, which could fluctuate yearly depending on interest rates.

And if the payout is at the lower end of the range, it could be further eroded by inflation in the future.

Private companies can structure their annuities with a locked-in monthly payout, with some even providing participating annuities whereby bonuses could be declared, which then raise the monthly payout.

The CPF Life scheme surely could do better, since it has a larger pool of members, as it is mandatory from next year for the majority of Singaporeans who turn 55.

I am in my late 50s and am looking at various options for my retirement. Using the CPF online calculator, I did some comparisons.

Assuming I have S$117,000 in my Retirement Account, the Minimum Sum monthly payout would be S$1,040 from the age of 65. The current CPF Life Balanced Plan, however, would provide a lower monthly payout ranging from S$768 to S$844.

I am aware that the monthly payouts last for as long as a member lives, But the Minimum Sum example I quoted could last for a good 20 years, likely to be sufficient for most Singaporeans.

Even if the difference in payouts between the two schemes was, say, only S$136, I would get S$32,640 more under the Minimum Sum scheme.

I could set aside this amount to possibly give me another three years of allowance, taking me to a ripe old age of 88 years. I am therefore not sold on CPF Life.

So far nobody reply his letter in Today's Voice forum.

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