CPF after 55

[vsvs24]

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.

Thanks for sharing. This is the first sharing of live case that I have seen on people that already start on CPF life.

The same reason why I plan to choose standard plan plus retain money in SA instead of using it to top up RA - so that I have more at my disposal when I am alive.

Prefer not to be a burden to my dependents when I am alive. Sandwich generation is really tough. Don't want them to have to fork out cash for me when I am alive. They will be in a terrible position if cash strap as the amount of money that I can bequest to them is meaningless during the period that I am alive and need their support. That's why my main concern is liquidity. To have the money when you need it. Not being a financial burden to dependents when I am alive is already a gift to them.

This is just my view.

 

[vsvs24]

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.

Just wondering, is there any restriction on switching ?

Because of what you shared, I am wondering if it is better to start off with basic plan and then switch to standard plan later if there is a need for more cash upfront

 

[henrylbh]

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.

It is clear that not a cent of interest will pass to the beneficiary if the member uplorry at anytime.

It is also clear that member will first draw his premium till it is exhausted, then he will be paid from the pool.

Even if member draws his own premium, the payout cannot be guaranteed or fixed for life

 

[Andrew833]

Thanks for sharing. This is the first sharing of live case that I have seen on people that already start on CPF life.

The same reason why I plan to choose standard plan plus retain money in SA instead of using it to top up RA - so that I have more at my disposal when I am alive.

Prefer not to be a burden to my dependents when I am alive. Sandwich generation is really tough. Don't want them to have to fork out cash for me when I am alive. They will be in a terrible position if cash strap as the amount of money that I can bequest to them is meaningless during the period that I am alive and need their support. That's why my main concern is liquidity. To have the money when you need it. Not being a financial burden to dependents when I am alive is already a gift to them.

This is just my view.

Just wondering, is there any restriction on switching ?

Because of what you shared, I am wondering if it is better to start off with basic plan and then switch to standard plan later if there is a need for more cash upfront

Basic plan have bequest
Standard maybe not much bequest but payout last you a life time after 65.
Choose plan depend on your own case.

(Hope I'm not wrong on this )

 

[henrylbh]

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.

Misinformation or ownself say to ownself.

Every cent of interest is forfeited if a member died before a certain age.

 

[Stingray36]

Just wondering, is there any restriction on switching ?

Because of what you shared, I am wondering if it is better to start off with basic plan and then switch to standard plan later if there is a need for more cash upfront

Based on cpf life faq, can switch from basic to standard or escalating plan anytime before 80 years old.

We did enquire on the estimated monthly payout before making the switch.

 

[item2sell]

https://dollarsandsense.sg/complete-guide-understanding-benefit-illustration-cpf-life-payouts/
2018 Estimation.

Standard Plan VS Basic Plan VS Escalating Plan


In the three tables below, we compare how your CPF LIFE monthly payouts and bequest amount would change if you opt for each of the three different CPF LIFE plans available.

Table 1: Full Retirement Sum + Standard Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts ($1,473/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$88,380	$171,422	$259,802
75	$171,000	$176,760	$88,522	$265,282
80	$171,000	$265,140	$8,379	$273,519
85	$171,000	$353,520	$0	$353,520
90	$171,000	$441,900	$0	$441,900

Table 2: Full Retirement Sum + Basic Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts ($1,345/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$80,700	$223,719	$304,419
75	$171,000	$161,400	$187,949	$349,349
80	$171,000	$242,100	$143,904	$386,004
85	$171,000	$322,800	$89,670	$412,470
90	$171,000	$403,500	$24,734	$428,234

Table 3: Full Retirement Sum + Escalating Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts (Increasing 2% yearly from $1,166/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$88,308	$187,130	$275,438
75	$171,000	$170,352	$111,126	$281,478
80	$171,000	$260,928	$31,194	$292,122
85	$171,000	$360,960	$0	$360,960
90	$171,000	$471,396	$0	$471,396

 

[dork32]

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.

the payout of basic is always a bit less than 10% less than basic. i also did not do any calculation. i just did an estimate from the payout.

 

[dork32]

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.

there is no right or wrong answer here. this is a free world. you win some you lose some. you decide which is best for yourself.

 

[dork32]

https://dollarsandsense.sg/complete-guide-understanding-benefit-illustration-cpf-life-payouts/
2018 Estimation.

Standard Plan VS Basic Plan VS Escalating Plan


In the three tables below, we compare how your CPF LIFE monthly payouts and bequest amount would change if you opt for each of the three different CPF LIFE plans available.

Table 1: Full Retirement Sum + Standard Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts ($1,473/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$88,380	$171,422	$259,802
75	$171,000	$176,760	$88,522	$265,282
80	$171,000	$265,140	$8,379	$273,519
85	$171,000	$353,520	$0	$353,520
90	$171,000	$441,900	$0	$441,900

Table 2: Full Retirement Sum + Basic Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts ($1,345/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$80,700	$223,719	$304,419
75	$171,000	$161,400	$187,949	$349,349
80	$171,000	$242,100	$143,904	$386,004
85	$171,000	$322,800	$89,670	$412,470
90	$171,000	$403,500	$24,734	$428,234

Table 3: Full Retirement Sum + Escalating Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts (Increasing 2% yearly from $1,166/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$88,308	$187,130	$275,438
75	$171,000	$170,352	$111,126	$281,478
80	$171,000	$260,928	$31,194	$292,122
85	$171,000	$360,960	$0	$360,960
90	$171,000	$471,396	$0	$471,396

thanks for the table. your table basically summarises the decision to choose basic instead of standard.

look at the 80 years old, the difference is the total payout is more than 100k. this is a lot of money. the difference between the monthly payout is only 120. i can take the difference.

there is a real chance that we die at 80. if you do, you will lose big big if you are on standard

there are 2 weakness i can identify with the table.

1. the numbers do change from time to time. what the table does is to take a snapshot of the situation at that time. however, the changes are small so the numbers are still a good approximate

2. the table tends to favour basic and discredit standard. you should not just take the total payout + bequest. for the same value, standard is always better. for standard you get your money equally distributed throughout the retirement.
for basic, much of the value is gotten from the bequest. this is at the end of period. $10 today is always more than $10 in the future.
i prefer to use irr to measure how good the scheme is.

then no amount of early money is going to save you if you are more than 100k down.

 

[dork32]

Basic plan have bequest
Standard maybe not much bequest but payout last you a life time after 65.
Choose plan depend on your own case.

(Hope I'm not wrong on this )

what you mention is not wrong. but not good enuf to make decision.

standard has a higher payout. how much higher? if it is just $10 extra, forget about it. if it is 40% more i will jump into it

basic has a higher bequest. how much higher? if it is just 5 or 10 thousand, then forget about basic. but if it is 200k more then it will be good decision to stay with basic.

what item did was to provide many important numbers. his numbers are swaying me towards basic.

 

[fr33d0m]

Misinformation or ownself say to ownself.

Every cent of interest is forfeited if a member died before a certain age.

as much as the result is the same, the actuarial model is not that. The member of CPF LIFE draws premium and interest at the same time, not premium alone. There is no such actuarial model that only draws premium and interest pool later.

you are inventing your own “actuarial” model.

just like paying a mortgage monthly. There is no such as paying interest or principal only. You are paying both at the same time.

 

[BBCWatcher]

2018 Estimation.

Table 1: Full Retirement Sum + Standard Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts ($1,473/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$88,380	$171,422	$259,802
75	$171,000	$176,760	$88,522	$265,282
80	$171,000	$265,140	$8,379	$273,519
85	$171,000	$353,520	$0	$353,520
90	$171,000	$441,900	$0	$441,900

Table 2: Full Retirement Sum + Basic Plan + Commence payment at age 65

Age Member passes On	Full Retirement Sum (FRS)	Total Amount Received In CPF LIFE Monthly Payouts ($1,345/mth)	Bequest Left Behind	Total Amount Received From CPF LIFE
70	$171,000	$80,700	$223,719	$304,419
75	$171,000	$161,400	$187,949	$349,349
80	$171,000	$242,100	$143,904	$386,004
85	$171,000	$322,800	$89,670	$412,470
90	$171,000	$403,500	$24,734	$428,234

Let's assume these figures are still correct. OK, now let's apply some straightforward "time value of money" logic....

In order for the CPF LIFE Basic Plan to be an acceptable choice for comparison you must be willing to live for the rest of your life on $1,345/month fixed nominal. (There's actually a "burble" when the amount goes down a bit, but let's assume it doesn't for simplicity.) So let's pick the CPF LIFE Standard Plan but then take all dollars above the Basic Plan's $1,345/month payout and plow them straight back every month into your CPF Retirement Account. (At FRS level you're allowed to do that for the rest of your life. The ERS isn't constraining.) I'll exclude whole month interest discrepancies and bonus interest oddities for these purposes and assume straight/naive 4.0% p.a. interest.

OK, so here's what we get as the approximate figures, and I'll carry this calculation into another couple age brackets. (I'm not sure why they stopped at 90 since gobs of Singaporeans live past 90.)

Table 1A: Full Retirement Sum + Standard Plan + Commence payment at age 65 + monthly plowback of all dollars above the Basic Plan level

Age Member passes on	Bequest Left Behind
70	$179,894
75	$107,301
80	$39,699
85	$46,578
90	$65,141
95	$87,726
100	$115,204

Yes, that's correct! The "crossover" point for the bequest is between ages 85 and 90. And this approach (Standard Plan, plowback all dollars above the Basic Plan payout level) guarantees a bequest -- and an escalating bequest starting no later than age 80.

Is this comparison fair? Absolutely it's fair! You're holding monthly income constant at $1,345/month. If you're not willing to do that then the Basic Plan is inoperable -- you have to dismiss it out of hand. So what do you do with the extra $128/month? That's up to you, but obviously you could save it every month straight back into your CPF Retirement Account where it earns 4.0% interest. The CPF Board then recomputes your CPF LIFE payouts every July, and that $128/month actually grows every July. But you keep plowing the excess all back, every penny above $1,345/month. And this is the result you get, approximately anyway.

Now, if you're an "ERS pegger," i.e. you're going to jam as many dollars as you possibly can into your CPF Retirement Account every time the ERS is raised, from age 55 for the rest of your life, then you cannot plow back any further dollars into your CPF Retirement Account. That's a different scenario, and the interest rate/yield assumption (4.0% in this example) would be different. Also, age 65 payout start modeling is weird. That's the non-default, and everyone knows (or should know) by now that if you're going to play games like these you'd never start payouts any earlier than age 70. At the very least you'd model age 70 plus one other payout starting age.

Disclaimer: To reiterate, these figures are approximate. They're probably overstated a little since getting the calculation exactly correct is quite difficult. Simple/naive 4.0% interest isn't actually how it works. But the principles are sound.

 

[fr33d0m]

Basic plan have bequest
Standard maybe not much bequest but payout last you a life time after 65.
Choose plan depend on your own case.

(Hope I'm not wrong on this )

Of course there is bequest for standard plan. The unused premium can be bequeathed. If someone dies before getting CPF LIFE payout, he/she gets the maximum bequest.

 

[dork32]

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.

so sorry. i may have seen the wrong guy. maybe the free lunch guy would like to own up. this is a good statement. it just means that whatever the advantages a scheme has, will come with a cost. it is up to the individual to evaluate the cost vs benefit.

 

[Andrew833]

what you mention is not wrong. but not good enuf to make decision.

standard has a higher payout. how much higher? if it is just $10 extra, forget about it. if it is 40% more i will jump into it

basic has a higher bequest. how much higher? if it is just 5 or 10 thousand, then forget about basic. but if it is 200k more then it will be good decision to stay with basic.

what item did was to provide many important numbers. his numbers are swaying me towards basic.

I'm more toward standard plan for my case. Nvm can switch plan if decision change. (before age of 80)

 

[Stingray36]

I'm more toward standard plan for my case. Nvm can switch plan if decision change. (before age of 80)

I believe the switching is only from basic to standard/escalating. I don't think they allow standard to basic.

 

[dork32]

Is this comparison fair? Absolutely it's fair! You're holding monthly income constant at $1,345/month. If you're not willing to do that then the Basic Plan is inoperable -- you have to dismiss it out of hand. So what do you do with the extra $128/month? That's up to you, but obviously you could save it every month straight back into your CPF Retirement Account where it earns 4.0% interest. The CPF Board then recomputes your CPF LIFE payouts every July, and that $128/month actually grows every July. But you keep plowing the excess all back, every penny above $1,345/month. And this is the result you get, approximately anyway.

Now, if you're an "ERS pegger," i.e. you're going to jam as many dollars as you possibly can into your CPF Retirement Account every time the ERS is raised, from age 55 for the rest of your life, then you cannot plow back any further dollars into your CPF Retirement Account. That's a different scenario, and the interest rate/yield assumption (4.0% in this example) would be different. Also, age 65 payout start modeling is weird. That's the non-default, and everyone knows (or should know) by now that if you're going to play games like these you'd never start payouts any earlier than age 70. At the very least you'd model age 70 plus one other payout starting age.

this para confirms our resident amdk cannot do maths. in coming out with a general scheme, you do not care about how the payout is being used. then there are so many variations that proper evaluation cannot be done.
eg the money i get kena conned, and nothing is left.
or the money is put under my pillow
or the money is ploughed back into cpf as what amdk says
or the money is used to buy 4D and every month you keep on striking first price.
We can actually come up with a method that does not take into account what is done with the money, it is called irr.
of course you have decided what is to be done with the money. we can also calculate the return. it is called mirr

 

[dork32]

as much as the result is the same, the actuarial model is not that. The member of CPF LIFE draws premium and interest at the same time, not premium alone. There is no such actuarial model that only draws premium and interest pool later.

you are inventing your own “actuarial” model.

just like paying a mortgage monthly. There is no such as paying interest or principal only. You are paying both at the same time.

wah piang, simi si actuarial. please stop spreading rubbish.

this is cpf, they say simi means simi. you dont argue.

https://www.cpf.gov.sg/member/faq/r...uts/how-does-the-cpf-life-standard-plan-work-
although i and henry buay gum, i will not shoot henry if he is right.

 

[sohguanh]

what you mention is not wrong. but not good enuf to make decision.

standard has a higher payout. how much higher? if it is just $10 extra, forget about it. if it is 40% more i will jump into it

basic has a higher bequest. how much higher? if it is just 5 or 10 thousand, then forget about basic. but if it is 200k more then it will be good decision to stay with basic.

what item did was to provide many important numbers. his numbers are swaying me towards basic.

Above is the essence. If the monthly payout is not so big of a difference between standard and basic and the bequest is so much difference between standard and basic from age 80 onwards I think I would choose basic.

But why everyone is defaulted to Standard from govt point of view I know why. The pool of monies need to be huge in order to feed those who live longer lives than others. With Standard, the member pass away at 85 all monies are in the pool no more in the bequest to the deceased family.

Now what happen if Basic is the default instead of Standard? It will be harder for govt to operate and manage the pool of monies is it ? Since lesser monies are in the pool and need to release monies in the form of bequest to Basic deceased member families for those die at age 85 onwards?