CPF Life - Standard Plan

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zhiguzai

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eggie011 said:
Basic means a small portion of your RA is taken and used as CPF Life premium. Rest is kept in you RA. So your money is divided into two parts.

Payout first comes from your RA. While this is happening, both your RA and CPF life are earning interest. This interest is kept in the part where they are earned. This means that interest earned in your RA will goto your beneficiaries, whereas interest earn by CPF life goes to common pool and will not go to your beneficiaries.

When your RA is finally finished, payout will then start from your CPF Life part. This payout will be less than the payout from RA. Don't ask me why, I don't know how the maths work out. This payout will continue until end of life.

Hope this clear some doubts.
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When I visit the CPF branch in Jurong East, the officer informed me that after age 90, my monthly payout will be reduced by about 6% (I am on Basic Plan).
 
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inmyopinion

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zhiguzai said:
When I visit the CPF branch in Jurong East, the officer informed me that after age 90, my monthly payout will be reduced by about 6% (I am on Basic Plan).
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https://forums.hardwarezone.com.sg/...e-plan-is-best-for-you.7219969/post-159759954

CPF LIFE Basic Plan’s monthly payouts are relatively lower than that of the Standard Plan. This is because the Basic Plan is structured in such a way that only 10-20% of your RA savings will be deducted as CPF LIFE premium when you join the annuity scheme. Under the Basic Plan, your monthly payouts will be paid out from your RA till it is depleted at about age 90, after which the payouts will come from your CPF LIFE premium and interest earned.

1. CPF LIFE Basic Plan payout: the monthly payouts will first be paid from your RA savings until age 90.

2. Thereafter, you will receive the monthly payout from your CPF LIFE premium.

3. Since the monthly payouts is first from your RA savings, the amount in RA will continue to earn 4% interest, with an extra interest of up to 2% earned on the first $60,000 of your CPF balances (across all your CPF accounts). This interest is paid to your RA and included in your monthly payouts. As your RA savings are gradually withdrawn to provide you with monthly payouts, the extra interest you earn will decrease when the total balances fall below $60,000. Your monthly payout will then get progressively lower as the extra interest earned decreases over time.



* Upon your passing, your remaining CPF LIFE premium balance will be paid to your beneficiaries.
 
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royalmix

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inmyopinion said:
an extra interest of up to 2% earned on the first $60,000 of your CPF balances (across all your CPF accounts).
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Extra interest is 3%x30k (simplified formula) = total 900 per year so long your RA+Premium is >60k. It will gradually reduce as RA+Premium drops below 60k, then you have to us the complicated formula to calculate the extra interest - that accounts for the drop in mthly payout.

Edit: Now I know why you got it wrong, you copied from CPFB website, that page was not updated! :ROFLMAO:
 
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weiess

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Each CPF LIFE plan suits a different type of individual based on their priorities for monthly income, inflation protection, and leaving money to family.

Basic Plan
Best for: Individuals who want to leave a larger inheritance (bequest) for their family.
How it works: Uses less of your Retirement Account savings for the premium initially (10% to 20%), letting the rest earn 4% interest.
The trade-off: Monthly payouts start lower and eventually drop when your remaining savings fall below $60,000.

Standard Plan
Best for: Individuals who prefer steady, higher payouts right from the start and want simple budgeting.
How it works: Provides fixed, predictable monthly payouts for life without changing amounts.
The trade-off: Payouts do not grow over time, meaning inflation will reduce your purchasing power as you age.

Escalating Plan
Best for: Individuals who expect to live a long life and worry about inflation raising the cost of living.
How it works: Payouts start lower than the Standard Plan, but they increase by 2% every year for life.
The trade-off: You must accept lower initial payouts for the first dozen years before total payouts surpass the Standard Plan later in life.
 
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zhiguzai

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royalmix said:
How did you get 7.7%? This imply something is wrong with the CPF rules which states 10-20% as premium?

Did you use the Premium/RA (FRS+interest)? But you have BRS+interest?
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The amount deduct from my RA as CPF Life premium is about 7.7% of my latest RA sum (include interest) before deduction .
 
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LWZ

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wah, you started posting in EDMW when you were 60
 
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royalmix

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zhiguzai said:
The amount deduct from my RA as CPF Life premium is about 7.7% of my latest RA sum (include interest) before deduction .
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Then I am surprised if that RA sum is FRS/ERS+interest = 7.7% only for premium.
 
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royalmix

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Andrew833 said:
RA start of age 55, interest is credited into RA. It's a fact.
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We are discussing the 7.7% premium. If his RA sum is the full sum since 55+interest, why only 7.7%. Do you know why?

  • New CPF LIFE members: When you join CPF LIFE, about 10% to 20% of your Retirement Account (RA) savings will be used as your CPF LIFE premium.
 
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