CPF Life Plans
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Can we have some financial advisor's views on these plans?
After some reading thru on my own, I realised the plans can be beneficial in some ways. But the emphasis on the CPF websites and Straits Times seems to be on selling the plan. Nowhere does it cater a special section on the drawbacks of such plans. Nowadays as we buy financial products, the benefits and limitations have to be mentioned.
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Anyone?
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The way I see it, CPFLife is purely an extension to the current Minimum Sum Scheme. It gives more assurance that you will not outlive your savings.
About the only drawback I can come up with right now is that once you opt into a particular plan, you cannot opt out of it anymore.
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One more thing, there are CPFLife plans that do give higher payouts on the premise that there is not bequeathment. This means that if you are slated to receive payouts that are supposed to last for 30 years but you pass away on the 3rd year, there will be no refund of the remaining balance you are supposed to receive.
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Originally posted by maxtor:
One more thing, there are CPFLife plans that do give higher payouts on the premise that there is not bequeathment. This means that if you are slated to receive payouts that are supposed to last for 30 years but you pass away on the 3rd year, there will be no refund of the remaining balance you are supposed to receive.
U dun talk rubbish lah,...who said no refunds, CPFlife plans come in 4 plans to choose from ya, three of these plans allow for a contributor to bequeath his savings to his beneficiaries if he dies while still on the CPF Life scheme.The Life Plus plan gives the most in monthly payouts but will yield the smallest amount that can be bequeathed to beneficiaries.
On the other hand, the Life Basic plan gives the least in monthly payouts but provides the most should the contributor die. So dun anyhow talk rubbish ok.
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Originally posted by angel7030:
U dun talk rubbish lah,...who said no refunds, CPFlife plans come in 4 plans to choose from ya, three of these plans allow for a contributor to bequeath his savings to his beneficiaries if he dies while still on the CPF Life scheme.The Life Plus plan gives the most in monthly payouts but will yield the smallest amount that can be bequeathed to beneficiaries.
On the other hand, the Life Basic plan gives the least in monthly payouts but provides the most should the contributor die. So dun anyhow talk rubbish ok.
One more thing, there are CPFLife plans that do give higher payouts on the premise that there is not bequeathment.
I think you have an interpretion problem.
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Originally posted by maxtor:
One more thing, there are CPFLife plans that do give higher payouts on the premise that there is not bequeathment.
I think you have an interpretion problem.
but u got more monthly payout, so it is up to you to choose, you want more monthly payout, ur beneficiaries get less when you mati,vice versa, if you choose to get less monthly payout, yr beneficiaries get more when you mati...so now, it is between you and your beneficiaries decision. At the end of the day, i think CPF life plan may create certain family unrest.
"This means that if you are slated to receive payouts that are supposed to last for 30 years but you pass away on the 3rd year, there will be no refund of the remaining balance you are supposed to receive." you quoted.
I am not an intrepretor.
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My rich friend told
me rich ppl dun need CPF payout to survive one
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Originally posted by noahnoah:
My rich friend told
me rich ppl dun need CPF payout to survive one
many rich people in my neighbourhood also told me, but when rebates come, they quietly go put themselves...dun think rich are not kiasu type, they are more thrifty and calculative than most of you, if not, how to get rich. The rich alway like to fool the poors and middle class into parting their money, they like to act blur, telling you investment no good, that one better, but actually the no good one is the very good one, and the good one is the one they waiting for you to put your money in..which is actually no good ya. When you are rich, people listen to you, that is where they can fool you ya, just like me, I tell those stupid poor uncles that my draftbeer is special one, that is why it is expensive abit, unlike other pub who mix up with water and dilute, they look at me also respect me and ordered alots to drink, and u just add in more cheap alcohol contents and they happily drink, paid...drunk also paid. -
CPF Life is an annuity scheme. This scheme is not very different from the current Minimum Sum Scheme (MSS), which is also an annuity scheme, just that the MSS is a limited-payment annuity scheme. The current MSS takes your minimum sum in your Retirement Account and gives you a monthly income over the next 20 years.
CPF Life takes your minimum sum and spreads it over the course of your life, thereby eliminating the concern that you will outlive your Retirement Account savings.
In my opinion, CPF Life offers you choices. By giving you 4 options on your CPFLife Plan, you are given some leeway on the type of monthly payments (whether higher or lower), and whether or not your loved ones will receive money in the event of your premature death. The current MSS can only offer a fixed amount for a fixed time period (20 years).
One more thought that just sprung my mind - The absolute interest you receive on your CPF Life Plan should exceed the absolute interest you receive on your MSS plan (currently at 4% p.a.). This is because the principal amount for CPF Life should theoretically be kept in the RA account for a longer period than that of the MSS Scheme. However I havent done any formal calculations so this is just a thought.
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Originally posted by maxtor:
CPF Life is an annuity scheme. This scheme is not very different from the current Minimum Sum Scheme (MSS), which is also an annuity scheme, just that the MSS is a limited-payment annuity scheme. The current MSS takes your minimum sum in your Retirement Account and gives you a monthly income over the next 20 years.
CPF Life takes your minimum sum and spreads it over the course of your life, thereby eliminating the concern that you will outlive your Retirement Account savings.
In my opinion, CPF Life offers you choices. By giving you 4 options on your CPFLife Plan, you are given some leeway on the type of monthly payments (whether higher or lower), and whether or not your loved ones will receive money in the event of your premature death. The current MSS can only offer a fixed amount for a fixed time period (20 years).
One more thought that just sprung my mind - The absolute interest you receive on your CPF Life Plan should exceed the absolute interest you receive on your MSS plan (currently at 4% p.a.). This is because the principal amount for CPF Life should theoretically be kept in the RA account for a longer period than that of the MSS Scheme. However I havent done any formal calculations so this is just a thought.
For ur info, those who are 50yo and above can opts out this plan, for those 50yo and below, it is compulsory to choose one of the plans. And also the plan offer a 5%p.a. interest.
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Who can join CPF LIFE? When can I join?
If you are 55 years or older in 2009, you can join CPF LIFE from
September 2009. Members who are between 52 and 54 years old can
join CPF LIFE from 55.
For those 51 and below in 2009, you will be automatically included in the
LIFE Balanced Plan if you have at least $40,000 cash savings in your
Retirement Account (RA) when you turn 55. Members who have less than
$40,000 can opt-in, if they wish to do so.CPF LIFE monies will be invested in special Government bonds and
will continue to earn an interest pegged to the yield of the 10-Year
Singapore Government Securities + 1% to reflect the long term interest
rate. However, to achieve greater stability, these special Government
bonds will now have coupon rates fixed for a longer period rather than being
adjusted quarterly as is the present practice. CPF LIFE Funds will earn the
weighted average interest rate of the entire portfolio of bonds, so that
every member will enjoy the same rate. Monies in the Retirement
Account will also be treated similarly as they are also retirement monies
and would benefit from more stable returns.Taken from: http://mycpf.cpf.gov.sg/NR/rdonlyres/B29DCEDB-FF83-4528-9B48-7B171C7CC477/0/CPFLIFE_Speech050909.pdf
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hmm..i dun need to cut and paste also know...me attended Minister's Seminar on this ok
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This I suspect is just another effort by the cursed despot with a zombie wife and his ass licking cronies to hold on to Singaporeans' money.
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Originally posted by AndrewPKYap:
This I suspect is just another effort by the cursed despot with a zombie wife and his ass licking cronies to hold on to Singaporeans' money.
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yes that is true. if one takes the fourth plan and dies early, no $$ bequeathed. Straits Times shd have published that.
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Seriously, the payout from the plan and bequeath looks too good to be true.
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Originally posted by AndrewPKYap:
This I suspect is just another effort by the cursed despot with a zombie wife and his ass licking cronies to hold on to Singaporeans' money.
Since when did they want to return your CPF monies quickly?
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Maybe it's not as good as it seems, I didn't take into account that the payout starts at 65, so most likely you will enjoy 10 years of pathetic cashflow.
I thought the payout starts at 55 y.o. for 20 years, but it starts at 65 y.o., so if you live to 75 y.o., you only get 10 years payout, the rest ends up as bequeath (the figures are not provided by CPF Board to make any good financial decision).
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if payout starts at 65 year old, even they double the interest many of us would not be able to enjoy the fruits. so wat is the point?
i think the gahmen is trying to gun for money for temasick and payout for election
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Product wise.
By the way, if you are looking to buy an annuity, the CPFLife plan offers the best return at the moment in the market (due to the fact that the principal amount compounds at 4% p.a.). There is a competitor, Manulife's SRP which offers a non-guaranteed 5% p.a. (non-compounded). Other people in the industry may feel otherwise and I highly encourage you to post here if you do.
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Ok let me give my layman's analysis.
For Plan 1 aka Basic Plan: Govt locks in 10% of your money for annuity but payout the annuity portion from age 90. How many do you know live till 90?
For Plan 2 aka Life Balanced Plan: Govt locks in 30% of your money and annuity payout at age 80. Quite a few live till early 80s.
For Plan 3 and Plan 4: Govt locks in all your money and if halfway you need a huge amount of cash, you die already. Benefit is if nothing happens, the payout is indeed quite good.
One more thing need to clarify is the 3.75% - 4.25% interest given. From what I understand, that is given to the CPF life plan yes BUT only for the portion which is non annuity. If you park all your money in annuity like Plan 3 and Plan 4, the interest given is not fantastic if compared to similar industry financial products....say maybe 0.025%? CPF website says that it will be based on market returns.
Well this is my layman's take on it. Pls feel free to correct if anything. Seems to me that annuity benefits those who live longer. Given food in this modern day and all that MSG in there, most people contract some form of illness by their 50s or 60s, serious or not. Therefore to live till early 80s is already a miracle, let alone 90.
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Originally posted by maxtor:
Product wise.
By the way, if you are looking to buy an annuity, the CPFLife plan offers the best return at the moment in the market (due to the fact that the principal amount compounds at 4% p.a.). There is a competitor, Manulife's SRP which offers a non-guaranteed 5% p.a. (non-compounded). Other people in the industry may feel otherwise and I highly encourage you to post here if you do.
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are u sure, u put in starhub and you get 8% dividend return, more than them lor...u never study your work one is it?? everytime i have to teach you one, imagine a mei mei teaching her uncle...so lame
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Originally posted by AndrewPKYap:
This I suspect is just another effort by the cursed despot with a zombie wife and his ass licking cronies to hold on to Singaporeans' money.
shit, bo medicines liao, i go IMH pharmacy and Q up first. -
Originally posted by Rock^Star:
For Plan 1 aka Basic Plan: Govt locks in 10% of your money for annuity but payout the annuity portion from age 90. How many do you know live till 90?
For Plan 2 aka Life Balanced Plan: Govt locks in 30% of your money and annuity payout at age 80. Quite a few live till early 80s.
For Plan 3 and Plan 4: Govt locks in all your money and if halfway you need a huge amount of cash, you die already. Benefit is if nothing happens, the payout is indeed quite good.
Regardless of which plan you choose, CPFLife locks up all your money. The only concern here is whether one would like to receive less now so their loved ones will receive more when they pass on.
One more thing need to clarify is the 3.75% - 4.25% interest given. From what I understand, that is given to the CPF life plan yes BUT only for the portion which is non annuity. If you park all your money in annuity like Plan 3 and Plan 4, the interest given is not fantastic if compared to similar industry financial products....say maybe 0.025%? CPF website says that it will be based on market returns.
Since CPFLife locks up all your money, there shouldn't be an annuity or non-annuity portion. The interest rate you receive on your CPFLife annuity should be 4% now, and be converted to yield of Singapore Government Securities + 1% after the end of this year. This coincides with the changes in CPF interest rates made to the SMRA (Special, Medisave and Retirement Accounts).
Historical Yield of 10 year SGS Rate
Year/Mth Yield
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2000 Dec 4.09
2001 Dec 3.97
2002 Dec 2.55
2003 Dec 3.75
2004 Dec 2.58
2005 Dec 3.21
2006 Dec 3.05
2007 Dec 2.68
2008 Dec 2.05
2009 Sep 2.38For more information regarding changes of CPF interest rates, see -
http://mycpf.cpf.gov.sg/CPF/News/News-Release/N_3Sep2009.htm