CPF after 55

[fr33d0m]

this is fake news. you are right that a dead man cannot spend money. but sorry, the money does not go to the pool. it goes to your kids

Not everything is inheritable. Interest from CPF LIFE premium is one such instance.

 

[fr33d0m]

this is so wrong. first is you die before 90, the interest would be inherited.

second i believe i would have accumulated enough that when i die, there would be something for my kids. since i cannot finish spending my money, i should think about how to maximize what is left over without affecting my lifestyle.

and thirdly, my kids are not someone else. there is much resemblence of my kids with me. they contain half of my genes. it is through my kids that i lived on after i die.

and lastly, the way you post shows that you are likely to be unmarried and unkids. you will not understand how family people thinks

You have every right to leave your legacy. However, CPF LIFE is not for that bar unused premium and it has been written into law.

But to say that interest from your premium payment only goes to the pool is ultimately wrong. Every member of CPF LIFE enjoys higher payout from his/her own interest earned on his/her own CPF LIFE premium.

 

[Stingray36]

Hi, been reading in this forum for while now. Have decided to share some information on cpf life that applies to my parents and in laws.

All 4 of them have started cpf life standard plan. The payout is almost exactly or above the estimator.

For example, one of the cpf life premium is about 124k. The payout of $680 started this month. By the time that person is 81 years old, the cpf life premium would be exhausted and start drawing from the pool.

The same applies for the rest, their cpf life premium will be used up by the time they are about 80 to 81 years old.

One of them have been drawing for a few years and have since switched from basic to standard plan this year. The yearly variation was not a lot. Eg.
2019: 780.84
2020: 779.15
2021: 781.67

As children, we do not care about bequest. We just want them to live a fulfilling retirement Iife.

If they live long enough, by the time they pass away, we would have also retired or even would not be around to enjoy their bequest. But I guess the money can still be passed to grandchildren.

We have also wrote in to cpf to check if 1) starting the payout at 70 or
2) starting the payout at 65, then putting in the money back into RA till age 70 is better.

Interestingly, option 2 is better. Eg. Leave till 70, payout increase from 680 to 780. But if start payout at 65 and put just 630 monthly for 5 years, it will still reach 780 and we get to keep 50 bucks each month for 5 years. And we get tax relief too. So it's win-win for us.

But they have decided to not continue with option 2 as they need the money now.

In the meantime, we will try to increase their cpf life premium as and when we have extra money or bonuses. It is just in case they really live for very long and have exhausted their own savings. At least a decent amount is still streaming out of cpf life and we do not need to greatly increase our contributions to them by then.

 

[dork32]

Not everything is inheritable. Interest from CPF LIFE premium is one such instance.

who is talking about interest from cpf life premium. i am talking about cpf life basic which stores money in the ra. every cent of the ra is bequested when i die, interest + principal.

you go ahead and join bbc and tangent in the cpf life standard and escalating plan. i want to be able to bequest my interest.

 

[dork32]

One of them have been drawing for a few years and have since switched from basic to standard plan this year. The yearly variation was not a lot. Eg.
2019: 780.84
2020: 779.15
2021: 781.67

As children, we do not care about bequest. We just want them to live a fulfilling retirement Iife.

you are right on two points.
point 1 there is small difference in the payout of standard vs basic
point 2 children should not be clamoring about bequest.

i am an engineer by training. engineers in sg optimize like crazy to remain competitive

combining the two points, i would pay the difference in payout between basic and standard to my parents for your case it is probably $50 a month and request them to stay in basic.

they can continue to enjoy their fulfilling retirement with the estra $50 as long as they lived. there is no lost to them.

there will be loss to me if they die after 90. then again the $50 a month can be treated as allowance for them

 

[zoneguard]

For example, one of the cpf life premium is about 124k. The payout of $680 started this month. By the time that person is 81 years old, the cpf life premium would be exhausted and start drawing from the pool.

The same applies for the rest, their cpf life premium will be used up by the time they are about 80 to 81 years old.

One of them have been drawing for a few years and have since switched from basic to standard plan this year. The yearly variation was not a lot. Eg.
2019: 780.84
2020: 779.15
2021: 781.67

The LIFE payout does include interest earned on LIFE premium.

=ROUND(NPER(4%/12,680,-124000)/12,0)+65=88

If no interest, it will be like you said. 80/81. It's the bequest that excludes the interest earned on the LIFE premium and any prior payouts.

But interesting to note that the LIFE payout varies from year to year. If there is no variance in interest rates, this only means it reflects the actual mortality rates.

 

[item2sell]

This is not about pro or not pro cpf life. This is about someone who thinks that cpf would not pay out for cpf life. Why in the world that would happen boggles the mind. As if CPF would suddenly pull the plug on people just because they are on cpf life and not RSS. That is a fantasy world.

I don't know. You should ask CPF.

CPF itself also not sure if payout can be guaranteed.

https://www.mom.gov.sg/newsroom/press-replies/2009/cpf-life-members-assured-of-income-for-as-long-as
Of course, if I were CPF, I wouldn't be stupid to stop payment. I just pay $0.10cent if some scientist invented the immortality pills.

 

[Stingray36]

you are right on two points.
point 1 there is small difference in the payout of standard vs basic
point 2 children should not be clamoring about bequest.

i am an engineer by training. engineers in sg optimize like crazy to remain competitive

combining the two points, i would pay the difference in payout between basic and standard to my parents for your case it is probably $50 a month and request them to stay in basic.

they can continue to enjoy their fulfilling retirement with the estra $50 as long as they lived. there is no lost to them.

there will be loss to me if they die after 90. then again the $50 a month can be treated as allowance for them

Yes. So it depends on how we look at it. The difference between the standard and basic is about $90 for each parent. So it's a good $360 for all 4. That's why we still decide with standard plan. They still have their flat that they will leave for bequest for us. But of cos, if really need to, we will encourage them to do lease buy back if really desperate.

 

[Stingray36]

The LIFE payout does include interest earned on LIFE premium.

=ROUND(NPER(4%/12,680,-124000)/12,0)+65=88

If no interest, it will be like you said. 80/81. It's the bequest that excludes the interest earned on the LIFE premium and any prior payouts.

But interesting to note that the LIFE payout varies from year to year. If there is no variance in interest rates, this only means it reflects the actual mortality rates.

As they have all started standard cpf life plan this year, I'm not sure if the interest earned will be added to the premium or pool. I'll check their accounts again next year Jan and update.

 

[Stingray36]

Yes. So it depends on how we look at it. The difference between the standard and basic is about $90 for each parent. So it's a good $360 for all 4. That's why we still decide with standard plan. They still have their flat that they will leave for bequest for us. But of cos, if really need to, we will encourage them to do lease buy back if really desperate.

Sorry, do not know how to edit post. I was wrong about the difference. Yes you are right, it's about $50, not $90. I was mistaken cos one of them switched from basic to standard after a few years and the difference is $90.

 

[Andrew833]

The LIFE payout does include interest earned on LIFE premium.

=ROUND(NPER(4%/12,680,-124000)/12,0)+65=88

Thanks to clarify, many people here insist it but few people confuse others eg. BBC.

BTW to dork and others, I didn't say no free lunch, it's said by another person.

 

[Stingray36]

How does the CPF LIFE Standard Plan work?​

The CPF LIFE Standard Plan provides level payouts. It is suitable for people who are willing to cope with rising prices in the years ahead by buying less and living a more modest lifestyle. Payouts start higher than the Escalating Plan if you join with the same CPF LIFE premium, but will remain the same for the rest of your life and will eventually be lower than Escalating Plan payouts.

Under this plan, all your Retirement Account savings will be deducted as CPF LIFE premium when you join CPF LIFE.
Your CPF LIFE monthly payouts will first be paid from your CPF LIFE premium. When your CPF LIFE premium is depleted, you will continue to receive the monthly payouts from the interest that you and other CPF LIFE members have accumulated, no matter how long you live.

Based on the info in CPF website, it does seem that even the 4% interest does not contribute to the initial payouts until the premiums are exhausted.

 

[andyhtc]

My take is CPF still gives the full 4% interest on the RA into the RA account.

However, the payout to each CPF member is adjusted after factoring in the (a) number of CPF members who continue to live even when they have reached $0 in their RA, and (b) payout this group has been getting.

Hence, if everyone starts to live longer, the CPF Life payout will be reduced to all existing members so that at a pool level, the total CPF amount can last longer for everyone.

Eventually, the breakeven age for CPF Life could increase over time so that the system is self-sustaining.

 

[fr33d0m]

who is talking about interest from cpf life premium. i am talking about cpf life basic which stores money in the ra. every cent of the ra is bequested when i die, interest + principal.

you go ahead and join bbc and tangent in the cpf life standard and escalating plan. i want to be able to bequest my interest.

Whichever plan you choose, it is your right.

however, to claim that CPF LIFE premium interest only goes to the pool is not right. That’s where we disagree.

 

[fr33d0m]

How does the CPF LIFE Standard Plan work?​

The CPF LIFE Standard Plan provides level payouts. It is suitable for people who are willing to cope with rising prices in the years ahead by buying less and living a more modest lifestyle. Payouts start higher than the Escalating Plan if you join with the same CPF LIFE premium, but will remain the same for the rest of your life and will eventually be lower than Escalating Plan payouts.

Under this plan, all your Retirement Account savings will be deducted as CPF LIFE premium when you join CPF LIFE.
Your CPF LIFE monthly payouts will first be paid from your CPF LIFE premium. When your CPF LIFE premium is depleted, you will continue to receive the monthly payouts from the interest that you and other CPF LIFE members have accumulated, no matter how long you live.

Based on the info in CPF website, it does seem that even the 4% interest does not contribute to the initial payouts until the premiums are exhausted.

CPF may not word it properly. But every member enjoys his/her own interest on CPF LIFE premium until the point that he/she dies. Then all future interest will go to the pool as dead man does not need money.

 

[item2sell]

Whichever plan you choose, it is your right.

however, to claim that CPF LIFE premium interest only goes to the pool is not right. That’s where we disagree.

Does this "interest" goes to the children after the parent pass away? If "NO", then the interest goes to the pool.

That's my view. Dont scold me.

 

[fr33d0m]

Does this "interest" goes to the children after the parent pass away? If "NO", then the interest goes to the pool.

That's my view.

By law, interest from CPF LIFE premium is not inheritable.

However, as a member of CPF LIFE, you enjoy the interest every moment you live and get CPF LIFE payout from both the premium and interest. So no, not all interest goes to the pool, you withdraw interest every time you receive CPF LIFE payout.

 

[sohguanh]

you seem to be a bit worried that payout is going to fluctuate if people lives longer.

cpf life basic partially address this problem. for the first 25 years, you will not be drawing on the pool. you will be drawing down on your own money and not the pool. since it is your own money, it does not matter whether others are dying or not.

if is after 25 years then you start to draw from the pool. by that time you will not have to live. coupled with the lower payout, you will not be a burden to the pool

also since it is my own money, it is a left pocket right pocket thing. if the payout reduces, the ra will have more money to roll for interest. i dont really lose. this is like the home loan thing. you can choose to pay less every month. but the large loan principal will accrue more interest

for cpf life standard, your money is gone after 15 years. you would drawing from the pool from then onwards. since you are drawing from the pool, reducing the payout does affect how fast the pool is depleted.

many people can survive many years after 15 years, so expect the pool to support you for a long time .

since the pool money is not your money, lowering the payout affects you affects your money directly. you are not going to earn interest for the money not drawn.

of course the payout of cpf life basic is slightly 10% lower than that of standard.

I get it CPF Life Basic contribute 10-20% into the premium unlike the other plans which plough ALL in. But CPF Life Basic is not the default correct? Default is Standard. So when my time come and no change (again) I will ask it to be Basic rather than the default Standard. Disadvantage is every month draw lesser but it is ok becuz once I get so old my spending will decrease not increase with assumption I keep myself healthy.

 

[BBCWatcher]

suddenly our fren is concerned about money after death. i thought you say when you are dead, you cannot spend anymore. so you should not bother anymore about money. a dead man cannot spend money.

Correct, dead people cannot spend money.

this is your exact words you used to support the cpf life standard. suddenly you are willing to take a cut such that your loved ones can get more.

You're hilarious.

The problem with CPF LIFE as currently constructed is that it's just not designed to support a surviving spouse, in particular. That's a living individual. All you (the CPF LIFE participant) need to do is live long enough and there's no bequest to the surviving spouse. If your spouse has zero in her CPF accounts, when you end then so does household retirement income from CPF LIFE, quite often. This is a real problem; it happens, frequently. And the current design particularly penalizes stay-at-home parents who worked hard but who didn't work in the market economy for an employer. (And people wonder why Singapore has a low birthrate.)

The most cost-effective solution to this particular problem is a joint/survivor or joint/contingent life annuity. This type of annuity is perfectly common around the world, and it works. A joint/contingent life annuity would support and promote the stable, nuclear families that the government keeps saying it wants. And it would be very easy to do within the current CPF LIFE system: just allow two individuals to pool their CPF Retirement Accounts to buy a single joint/contingent life annuity. I would try to keep the two individuals who want to band together as open as possible. For example, I believe same sex spouses/partners should be treated equally to opposite sex spouses. The government currently disagrees with me, and I happen to think the government is quite wrong on this point.

and also since the guy has frs, he could have transferred some to his spouse when he is younger such that they have 2 brs. the payout for 2 brs > 1 frs > lala scheme.

That's way too complicated, and it simply doesn't work as well as a single joint/contingent life annuity. If for example the couple equalizes their balances (and CPF LIFE premiums) then household retirement income can still easily fall off a cliff when the first spouse dies. For the typical male-predeceases-female scenario the monthly income gets cut by about 55%, and easily/often with zero bequest help. Household expenses don't fall by 55% after the first spouse dies. More like 25%, perhaps. A 100%/75% joint/contingent life annuity would neatly and simply solve this popular, real world problem. Also, current rules don't allow digging below the BRS to buy two separate life annuities. A single 100%/75% joint/contingent life annuity is much better optimized in household income support terms particularly for those couples with the more limited aggregate CPF savings.

The government has said recently that it's looking for ways to try to make CPF (and CPF LIFE) simpler for members. Well, here's a great idea. You ought to be able to say "Make sure my surviving spouse is taken care of," and then it just happens. No gymnastics required.

 

[BBCWatcher]

Just as a comparative point of reference since I'm familiar with it....

I have contributed significantly to the U.S. Social Security system (payroll taxes), so I have a future U.S. lifetime retirement income stream "in the pipeline." My spouse is eligible to receive half of my retirement benefit while I'm living, starting from her retirement age, or her own retirement income stream based on her U.S. payroll taxes, whichever stream is higher. Since she has never paid any U.S. payroll tax, her spousal benefit is higher, so that's what she'll receive. If I predecease her then her spousal benefit ends but she picks up my retirement benefit for the rest of her life. So it works like this in terms of household income from this source:

Both living: 150%
One spouse living: 100%

In other words, it's a 100%/67% joint/contingent life annuity -- the income falls by 1/3rd when the first spouse passes on. It's also escalating, pegged to the U.S. Consumer Price Index with no nominal decrease allowed during periods of deflation. (When the deflation ends, and inflation resumes, the monthly benefit amount will eventually start to rise again when the CPI passes its prior peak.)

OK, now let's suppose we divorce. Definitely not my plan and not expected, but let's suppose that's the scenario. Since we've been married "long enough" (can't remember what the threshold is, but we're definitely past it) then even as my ex-spouse she's still entitled to her spousal benefit while I'm alive and then my full retirement benefit after I pass on, if I were to predecease her. If she remarries then she loses this benefit. That'd be an expensive marriage!

Is this design helpful? You bet it is! I want my spouse to have income security, and this system provides her some important, robust, foundational income security. Ordinarily spouses care about each other, and I certainly do. There are parts of the U.S. system I don't like, but this is one part that works terrifically well in practice. It's also been a program component in operation for over 80 years. My own grandmother received a widow's pension this way, and thank goodness she did.