CPF Account Value Thread 2024

[Froggyman]

copy and paste from CPF site after Googling..

If you opt for the Basic Plan, about 80-90% of your Retirement Account (RA) savings will be directly used to provide payouts until age 90. The remaining 10-20% will be deducted as your CPF LIFE premium when you join CPF LIFE and used to provide payouts from age 90 for the rest of your life.

Err.. so they're going to deduct 10-20% of the RA savings (regardless of how much you have) and then only use it to payout IF you can live beyond 90?

LOL. sounds like a scam leh.

Haha, if nothing from the Basic Plan goes into the pool, then those people that join the Std plan will said scam too when CPF pay you $ from the pool when your RA account runs dry at about age 90.
Also if just depend on your RA only (without joining the pool), it will be be the same like the old system that the $ in the RA account will run dry in one day itself.
Think that you have more $ in the pool, you will get more payout compare to those with little $ into the pool.

 

[maumu]

Haha, if nothing from the Basic Plan goes into the pool, then those people that join the Std plan will said scam too when CPF pay you $ from the pool when your RA account runs dry at about age 90.
Also if just depend on your RA only (without joining the pool), it will be be the same like the old system that the $ in the RA account will run dry in one day itself.
Think that you have more $ in the pool, you will get more payout compare to those with little $ into the pool.

unless there's more to CPF Life that I don't understand yet, I feel it's quite unfair to those who have accumulated significant savings in RA and then they are forced to contribute 10-20% to the pool and can only get them back (in some ways) if they can live beyond 90.

it makes a lot of difference (say if one person has $1 mil vs. another who has $100k).

would be more fair if there's a quantum regardless of RA balance.

 

[BBCWatcher]

Err.. so they're going to deduct 10-20% of the RA savings (regardless of how much you have) and then only use it to payout IF you can live beyond 90?

unless there's more to CPF Life that I don't understand yet, I feel it's quite unfair to those who have accumulated significant savings in RA and then they are forced to contribute 10-20% to the pool and can only get them back (in some ways) if they can live beyond 90.

There's more to CPF LIFE you don't understand yet.

First of all, the "age 90" part is potentially somewhat variable. But as a shorthand summary, that's fine, it works.

Second, more importantly, you're always buying an individual claim on the CPF Lifelong Income Fund no matter which payout plan you choose. That claim is (also) refundable to the extent you and your CPF nominee(s) would not receive at least your starting principal.

For example, let's assume you're in genuinely poor health at age 69 years 10 months, you have at least one CPF nominee you care about, and you can get by with the lower monthly payout that the Basic Plan provides (compared to the Standard Plan). So you select the Basic Plan at age 69 years 10 months. Then payouts start from age 70 (the default payout starting age), you get one payout (1 month), then unfortunately you die. The single month payout plus your remaining RA balance is a much lower amount in this situation than your RA balance (your principal) just before CPF LIFE entry. So your CPF nominee(s) will receive funds back from the CPF Lifelong Income Fund in this scenario.

All 3 current CPF LIFE payout plans guarantee no less than return of principal to the member and his/her nominee(s). All 3 CPF LIFE payout plans also guarantee monthly payouts for the member's entire life, however long it lasts.

 

[chong18]

copy and paste from CPF site after Googling..

If you opt for the Basic Plan, about 80-90% of your Retirement Account (RA) savings will be directly used to provide payouts until age 90. The remaining 10-20% will be deducted as your CPF LIFE premium when you join CPF LIFE and used to provide payouts from age 90 for the rest of your life.

Err.. so they're going to deduct 10-20% of the RA savings (regardless of how much you have) and then only use it to payout IF you can live beyond 90?

LOL. sounds like a scam leh.

Lol unfortunately that's how it works. Pooled risk. You won't say it's a scam if you live till 100 yo... But say u die exactly at 90 n never use a single cent from the 20% paid into pool, ur beneficiary still get back the full amount. That means the $$ sitting in the pool for 20years (assume u start payout at 70) earn 0 interest. Standard and escalating even worse since the full RA deducted as premium.

 

[dork32]

unless there's more to CPF Life that I don't understand yet, I feel it's quite unfair to those who have accumulated significant savings in RA and then they are forced to contribute 10-20% to the pool and can only get them back (in some ways) if they can live beyond 90.

it makes a lot of difference (say if one person has $1 mil vs. another who has $100k).

would be more fair if there's a quantum regardless of RA balance.

you so right man. a guy that drives a ferrari should pay the same quantum for insurance as the guy that drives a lousy malaysian car. it is more fair if there;s a quantum regardless of the car value. it seems unfair to those that have accumulated enough savings to buy a ferrari and then force to contribute to the insurance pool.

also car insurance is also a scam. you can only get them back in some way IF YOU WRECK YOUR CAR.

 

[dork32]

All 3 current CPF LIFE payout plans guarantee no less than return of principal to the member and his/her nominee(s). All 3 CPF LIFE payout plans also guarantee monthly payouts for the member's entire life, however long it lasts.

but you always promoted the me me me concept. if i die you, my money go to my kids, who cares about my kids. cpf is a scam. it force me to give money to my kids if i were to die young. the money should only be spent on me me me

 

[BBCWatcher]

but you always promoted the me me me concept. if i die you, my money go to my kids, who cares about my kids. cpf is a scam. it force me to give money to my kids if i were to die young. the money should only be spent on me me me

Hah.

For the record, that choice was available. It’s called the CPF LIFE Income Plan. It offered the highest level payouts — even higher than today’s Standard Plan — because it had zero residual. Evidently too few people selected that plan to keep it around, although those who have it can keep it.

I still think a CPF LIFE “Partner Plan” would be great. It’d allow a couple to pool their RAs to buy a single joint/contingent Escalating Plan. Another possible idea that could be optionally available with all payout plans is a minimum funereal residual since a lot of members seem concerned about that detail. Currently all of the payout plans feature residuals that fall every month after payouts start and eventually fall to zero.

 

[highsulphur]

Hah.

For the record, that choice was available. It’s called the CPF LIFE Income Plan. It offered the highest level payouts — even higher than today’s Standard Plan — because it had zero residual. Evidently too few people selected that plan to keep it around, although those who have it can keep it.

I still think a CPF LIFE “Partner Plan” would be great. It’d allow a couple to pool their RAs to buy a single joint/contingent Escalating Plan. Another possible idea that could be optionally available with all payout plans is a minimum funereal residual since a lot of members seem concerned about that detail. Currently all of the payout plans feature residuals that fall every month after payouts start and eventually fall to zero.

The payout ratio falls as RA increases. The payout for ERS is not double of FRS for example. Hence it doesn't make sense to pool a couple's RA into one annuity right?

 

[aeng]

so what's the "only 10%-20% of RA is deducted from" come from for the basic plan? if Peter has $1 mil in RA and Susan has $100k, and both choose basic plan, they will have different amounts deducted?

I know your numbers are hypothetical but RA max is limited to 4 x ERS.
This 1M vs 100k won't happen.

 

[BBCWatcher]

The payout ratio falls as RA increases. The payout for ERS is not double of FRS for example. Hence it doesn't make sense to pool a couple's RA into one annuity right?

No. The phenomenon you're describing is solely an artifact of bonus interest effects. Bonus interest would still be computed based on two individuals — on the first $120,000 in combined RA balances in this case. In fact, if the CPF Board were to use "naive" bonus interest computations then pooling RAs would actually be beneficial in that sense.

Also, if/when the first spouse dies then that spouse's CPF interest (including bonus interest) stops (crashes to zero). Pooling RAs effectively mitigates that problem. And because there's zero residual (or better yet the option of a fixed funereal residual) after the second spouse dies the payout can be a little higher than otherwise. AND the surviving spouse's (typically female's) income doesn't crash by >50% (even assuming equal RA entry funding). It might fall 20%, or 25%, depending on the design of the Partner Plan. But not ~52%.

It all makes perfect sense. Which is why many other governments and life annuities offer this option. Most retired couples don't actually want two completely separate life annuities as if they were strangers. They want a household joint/contingent life annuity. The #1 biggest worry most couples have is that their surviving spouse will be OK when the first passes on. CPF LIFE as presently constructed is poorly designed to provide that assurance.

 

[dork32]

The payout ratio falls as RA increases. The payout for ERS is not double of FRS for example. Hence it doesn't make sense to pool a couple's RA into one annuity right?

what is the point of this system? it does not exist now. it probably will not exist in the future. you are wasting your time trying to evaluate something occurs in the alternate universe

 

[dork32]

I know your numbers are hypothetical but RA max is limited to 4 x ERS.
This 1M vs 100k won't happen.

400k vs 100k will still occur