CPF Retirement Sum Scheme

[tmkedmw]

@oceanicmanta， the additional interests are known anyway based on existing policies. The RA calculator should have factor that in the caln of monthly payout and duration.

As to how they determine it is 28 years for one individual, and 20 or some other years for another individual, I have no idea what criteria cpf uses.

 

[henrylbh]

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 ..

You did see the whole explanation or just zero on "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely"?

My understanding is that payout is calculated to last about 20 years from PEA and the payout does not take into account any government top-ups and the extra and additional interest, which as I said will lengthen the actual payout period slightly.

 

[henrylbh]

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

Correct. But about 20 years from drawdown age which could be 60 or 62 to about 80 or 82 without taking into account those receiving D and V bonus etc when PEA was changed to 65.

 

[oceanicmanta]

You did see the whole explanation or just zero on "we are unable to adjust monthly payout to last 20 years as it will deplete his RA prematurely"?

My understanding is that payout is calculated to last about 20 years from PEA and the payout does not take into account any government top-ups and the extra and additional interest, which as I said will lengthen the actual payout period slightly.

I read the entire reply but may not have understood everything CPF is saying or its implication

I think it is reasonable that actual payout period is extended slightly (... maybe by 2-3 years) for the reasons you mentioned.

but for my BIL's, CPF maxed out payout tenure to 26yrs (even though he already delayed payout by 6 years) while the other case, payout period was 28 yrs.

 

[Mecisteus]

I read the entire reply but may not have understood everything CPF is saying or its implication

I think it is reasonable that actual payout period is extended slightly (... maybe by 2-3 years) for the reasons you mentioned.

but for my BIL's, CPF maxed out payout tenure to 26yrs (even though he already delayed payout by 6 years) while the other case, payout period was 28 yrs.

Just calculate the returns on the annuity. It should be at least 4% pa. Does it?

If I understand correctly, the difference between this scheme and CPF Life is the latter has a lifelong payout. The lifelong payouts come at a cost or premium.

 

[foozgarden]

my dad also on the older RSS.
payout from 70 (this year) for 26 yrs. so until 96 yrs. for ~$1000/mth.
(but according to the letter, is subj to changes. hence, the numbers is not confirmed? can be lower or higher?)

question:
how do i know which scheme is better? cpf life or old RSS?
is there a calculator or table to show, for this fixed balance amount in the RA.
at least we know if CPF life or RSS is better. (in terms of payout and length of payout)

 

[01asdf]

I read the entire reply but may not have understood everything CPF is saying or its implication

I think it is reasonable that actual payout period is extended slightly (... maybe by 2-3 years) for the reasons you mentioned.

but for my BIL's, CPF maxed out payout tenure to 26yrs (even though he already delayed payout by 6 years) while the other case, payout period was 28 yrs.

The wonders of compound interest. The additional period is due to the extra 1% on 60k - which is declared every quarter.

Think of it as guaranteed and non guaranteed returns.

 

[HWZ1973]

You can use the google sheet below as a guide for CPF LIfe standard and escalating plan.
Check at what age the XIRR is at 4% and above then compare to RSS will do.
Unfortunately there is no calculation for Basic plan (seems the calculation method is different so can't use this spreadsheet).

How come the monthly payout for standard is higher than escalating? Shouldn’t it be the other way round?

 

[SKenny]

How come the monthly payout for standard is higher than escalating? Shouldn’t it be the other way round?

Err... Actually Standard option payout is both lower and higher than Escalating option. It is just that they don't happen at the same time.

And I am not joking here.

 

[tangent314]

question:
how do i know which scheme is better? cpf life or old RSS?

If you kiasu, take old RSS. If you kiasi, take CPF Life.

 

[Battery Operator]

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

Pardon my question, how did you arrive at $176,400?
Shouldn't it be $240,240?

 

[oceanicmanta]

Pardon my question, how did you arrive at $176,400?
Shouldn't it be $240,240?

yes you are correct ... my mistake !! .. it shd be $240,240 ... not $184,800

so it's $64k more (not counting TVM) over additional 12 years

then the choice is less obvious ... but think my BIL wld still prefer shorter payout period

 

[Battery Operator]

yes you are correct ... my mistake !! .. it shd be $240,240 ... not $184,800

so it's $64k more (not counting TVM) over additional 12 years

then the choice is less obvious ... but think my BIL wld still prefer shorter payout period

I see. Considering your BIL has already deferred close to 6 years from his DDA at 62, he must have his reasons and preference for a bigger payout, even if it is for a shorter period of time.

 

[oceanicmanta]

I see. Considering your BIL has already deferred close to 6 years from his DDA at 62, he must have his reasons and preference for a bigger payout, even if it is for a shorter period of time.

he told me "siao ah, want me to wait until 94 yo, i dont know where I will be by then"

but he is more annoyed that CPF Officer at CPFB was adamant that his payout cannot be shortened to 82yo ... think I may accompany him to visit to find out exactly which is the situation

 

[maple96]

he told me "siao ah, want me to wait until 94 yo, i dont know where I will be by then"

but he is more annoyed that CPF Officer at CPFB was adamant that his payout cannot be shortened to 82yo ... think I may accompany him to visit to find out exactly which is the situation

Benefits of longer (more than 82 years): he can continue to earn 4% +2% (extra interest) and get more from CPF in the future. If he cannot wait, learn from uncle henry, play with the RA account to earn the 4% +2% interest to get higher mthly payouts, then bequest!

Think +ve! Me want also cannot lah!

btw how much does he have in the other CPF accounts?

 

[foozgarden]

To me, old RSS is definitely much better than CPF Life!
But as the saying goes, good thing don't last!

stil trying to understand, why is old RSS better?

 

[yoongf]

But isnt CPF Life monthly payout much higher than under RSS?

Say a 75yr old guy at BRS level of savings, shd opt in to CPF Life?

You don't need to pay annuity insurance premiums and subsidize other people (unless you are very confidence you can live past 95 years old!)

 

[dork32]

But isnt CPF Life monthly payout much higher than under RSS?

you must be joking, right?

cpf life pays for life
rss pays for 20+ years, which one will be higher?

you can use a bit of common sense to get the answer.

 

[dork32]

Benefits of longer (more than 82 years): he can continue to earn 4% +2% (extra interest) and get more from CPF in the future. If he cannot wait, learn from uncle henry, play with the RA account to earn the 4% +2% interest to get higher mthly payouts, then bequest!

if you are only child this game is fine. if your siblings want to grab a share after the old man kaput then gg

 

[dork32]

stil trying to understand, why is old RSS better?

better or lousier is just a perception

rss pay higher for 20+ years.

to ensure that your payout last for life, you money is pooled with others. and of course they will reduce your payout and the bequest.

this reduction is the price for having a lifelong payout.

people that finds this price cheap will say cpflife is good.

people that find this price expensive will say rss good.

this is my opinion

for basic, you lose 20% of your interest every year. at 250k and 4%, you lose 2k per year. ok lah not too expensive, not very cheap either.

for standard, you lose all your interest, 10k per year. compounded some more. i think not cheap at all