CPF Retirement Sum Scheme

[dyland]

Hi
Anyone on the above scheme check the drawdown amount recently?
I checked recently and notice the amount is lower that what I was told last year.
Notice the drawdown period is for 26 years (or until 91 years old).
Previously the period was for 20 years.

Wonder if the drawdown period is now fixed at 26 years?

 

[JuniorLion]

How old are you?

 

[oceanicmanta]

Recently, my brother in law who is 68yo and under old RSS, was also given an amount to last 28 years when he started his payout.

This seems to be the default CPF option ie giving the minimum payout to last the maximum duration.

This is similar to recent case mentioned here :
https://forums.hardwarezone.com.sg/118895656-post1.html

What surprises me most is CPF's answer, that "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely" ...

Would appreciate if experts can explain or provide some insight .. thanks

My understanding is that for those on RSS, the payout amount shld last at least 20 years from the Payout Eligibility Age for that cohort ..

 

[tangent314]

28 years sounds reasonable to me. As I've explained before, because of the skewed probability distribution curve of life expectancy, a mean life expectancy of 20 years would imply a median of ~23 years and a mode of ~27 years.

https://understandinguncertainty.org/why-life-expectancy-misleading-summary-survival

You don't automatically die when you reach the life expectancy age, there is a really good chance of living beyond that (more than 50%, in fact) and so the payout term needs to take that into account.

 

[oceanicmanta]

have no issue with the 28 years .. but surely he can ask for higher amount to last just 20 years right .. as stated "to last at least 20 yrs from PEA" ?

 

[Hanwudi]

The drawdown period has always been for 20 years from 65. Since when there was a change and no announcements?

 

[oceanicmanta]

The drawdown period has always been for 20 years from 65. Since when there was a change and no announcements?

My BIL is from earlier cohort whose PEA is 62yo, so for him shld be 20yrs from 62

 

[havetheveryfun]

Recently, my brother in law who is 68yo and under old RSS, was also given an amount to last 28 years when he started his payout.

This seems to be the default CPF option ie giving the minimum payout to last the maximum duration.

This is similar to recent case mentioned here :
https://forums.hardwarezone.com.sg/118895656-post1.html

What surprises me most is CPF's answer, that "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely" ...

Would appreciate if experts can explain or provide some insight .. thanks

My understanding is that for those on RSS, the payout amount shld last at least 20 years from the Payout Eligibility Age for that cohort ..

perhaps you should calculate how much he is getting in total if it lasts longer. someone pointed out in that thread the total payouts was almost double of what the person had in his RA currently.

 

[oceanicmanta]

perhaps you should calculate how much he is getting in total if it lasts longer. someone pointed out in that thread the total payouts was almost double of what the person had in his RA currently.

for my BIL case :

1) CPF Default : $770 per month for 26 years = Total $184,800

2) 14 yrs to 82yo : $1050 per month for 14 years = Total $176,400
(14yrs is bcos he delayed his payout)

given above, I would choose the latter ...

the above figures were from CPF reply when I asked them based on hypothetical case using my BIL's RA figures

 

[yoongf]

CPF life allows ppl up to 80 to opt in.

If a person currently aged 75 on the retirement sum scheme, will there be any benefit to opt in?

 

[henrylbh]

Recently, my brother in law who is 68yo and under old RSS, was also given an amount to last 28 years when he started his payout.

This seems to be the default CPF option ie giving the minimum payout to last the maximum duration.

This is similar to recent case mentioned here :
https://forums.hardwarezone.com.sg/118895656-post1.html

What surprises me most is CPF's answer, that "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely" ...

Would appreciate if experts can explain or provide some insight .. thanks

My understanding is that for those on RSS, the payout amount shld last at least 20 years from the Payout Eligibility Age for that cohort ..

If under RSS, how you know he is given payouts that would last 28 years? Upon request, payout would be adjusted to exhaust RA by 82 or 85 depending on ..... I forgot the changes then

If he is 68 now (born after Jul 1950), then his default payout should be $711 based on his cohort's min sum of $90k and that payouts would last about 20 years to age 82. If he choose to defer, then the monthly payouts would be calculated to exhaust his RA by around 82yo, assuming no subsequent top-ups or D or V bonus from CPF which would stretch payout to slightly more than 20 years.

 

[henrylbh]

CPF life allows ppl up to 80 to opt in.

If a person currently aged 75 on the retirement sum scheme, will there be any benefit to opt in?

Yes if he thinks he can live beyond 90yo, and the older, the better the CPF Life scheme.

 

[henrylbh]

for my BIL case :

1) CPF Default : $770 per month for 26 years = Total $184,800

2) 14 yrs to 82yo : $1050 per month for 14 years = Total $176,400
(14yrs is bcos he delayed his payout)

given above, I would choose the latter ...

the above figures were from CPF reply when I asked them based on hypothetical case using my BIL's RA figures

From my checking, there is no default of $770 per month. It is adjusted from the default payout as follows -

For full RSS at 84,500, default payout is 668
For full RSS at 90,000, default payout is 711
For full RSS at 94,600, default payout is 750.

Your uncle should be in one of the above.

 

[tmkedmw]

I know cpf has a RA calculator where they input your RA $ and the number of years to draw it down from payout eligibility age. A standard "30 years" is in the calculator default but can be changed to say 25years, 20years to see the impact on the monthly sum that can be withdrawn.

Really don't know the cpf "default years" when one reaches payout eligibility age till one received the letter 3 months before 65.

 

[crimsontactics]

28 years sounds reasonable to me. As I've explained before, because of the skewed probability distribution curve of life expectancy, a mean life expectancy of 20 years would imply a median of ~23 years and a mode of ~27 years.

https://understandinguncertainty.org/why-life-expectancy-misleading-summary-survival

You don't automatically die when you reach the life expectancy age, there is a really good chance of living beyond that (more than 50%, in fact) and so the payout term needs to take that into account.

I disagree. The pros of RSS is the higher monthly payout. If it is stretched till 28 years, might as well put him on CPF Life scheme where he will be guaranteed payment for life since the age where his account is depleted is about the same for both.

Sent from . using GAGT

 

[oceanicmanta]

From my checking, there is no default of $770 per month. It is adjusted from the default payout as follows -

For full RSS at 84,500, default payout is 668
For full RSS at 90,000, default payout is 711
For full RSS at 94,600, default payout is 750.

Your uncle should be in one of the above.

I think my use of "Default CPF payout" has caused confusion.

Based on the 2 examples (my BIL & recent case), it seems to me CPF would first offer the "payout that would last the maximum tenure" this is what I coined as "Default case"

My 68yo BIL went to CPFB to start his payout and was told he would get $770 per month for next 26 years. He has 140k in RA. When he asked can he get more, the CPF officer said no, and that is the policy.

I then wrote in, and CPFB answered the RSS payout shld last for at least 20 years from PEA. Based on my example of a 68yo with 140k RA, CPFB said can get $1050 per mth, starting from age 68, up until 82yo (20yrs from PEA of 62).

Then, I saw CPF's reply in the other recent case ( "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely") which contradicted CPF's reply to me.

That's why I am confused ..

 

[tmkedmw]

20 years is the shortest duration from PEA to depletion. As to what criteria cpf uses to determine to give u the shortest 20years, or add some more years to say 23, 25, 28, 30.... I don't know. Whatever cpf dishes out, no harm to ask for shorter duration if that is what u wanted and await their reply.

 

[a4973]

20 years is the shortest duration from PEA to depletion. As to what criteria cpf uses to determine to give u the shortest 20years, or add some more years to say 23, 25, 28, 30.... I don't know. Whatever cpf dishes out, no harm to ask for shorter duration if that is what u wanted and await their reply.

this seems all very arbitary.

 

[oceanicmanta]

20 years is the shortest duration from PEA to depletion. As to what criteria cpf uses to determine to give u the shortest 20years, or add some more years to say 23, 25, 28, 30.... I don't know. Whatever cpf dishes out, no harm to ask for shorter duration if that is what u wanted and await their reply.

in CPF's reply to my query, they alluded to the additional interest having effect of extending payout duration :

"My Qn: Is it correct that the maximum monthly payout is computed to last 20 years from my PEA ie til 83yo ?

CPF Ans: Yes, that's right. CPF members can apply to increase their CPF monthly income provided their income can last at least 20 years from their payout eligibility age, or at least another 5 years from the time of application, whichever ends later; subject to terms and conditions.

Notwithstanding, the resulting payout duration may vary from 20 years due to new policies introduced, which is shown below for your quick reference:
• Extra Interest (EI): An extra 1% per annum on the first $60,000 of a member’s combined balances [with up to $20,000 from Ordinary Account(OA)]
• Additional Extra Interest (AEI): CPF members aged 55 and above will also earn an additional 1% extra interest on the first $30,000 of their combined balances (with up to $20,000 from the OA)

The purpose of EI and AEI is to extend the duration of members’ payouts, to ensure that they do not outlive their retirement savings as much as possible.

Hence, based on the scenario above, the payout duration will last till age 84."

 

[dyland]

CPF says you can apply for payout for 20 yrs. Can apply does not means approval. There is another thread where it was rejected due to new rules.. Sigh..