FRS or ERS?

[henrylbh]

it's a bet for u bcos u view it as an investment, rather than an annuity product it actually is. And for some reason u place no value on the part where it removes/lower longevity risk.

Ha ha I don't believe in annuity and never bought annuity or any life insurances, except for health. Leave CPF to let member to decide on RSS or CPFL instead of forcing all to tikam. RSS payout can be lowered to last balance to age 90 or 95 if the gov is concerned that many may be outliving their CPF as present RSS payout will last till about 85. Those who live beyond 95 they will be like those with low CPF balances. Any scheme wouldn't help much as the payout like those with BRS will be not meaningful. The gov still need to bear the cost of a decent life.

 

[chong18]

True is rubbish as member is not only himself as he has to take into account his beneficiaries and dependants. If he is alone than BP is never better for the CPF member him/herself.

Agree that we cannot just look at the member only but should also take into consideration the bequest amount. At what age you pass on is Basic better than Standard, and how much is the difference, this should be transparent so the member can make their decision accordingly.

 

[henrylbh]

However, I'm not sure how the top ups after you start CPF life are computed.
Especially if you are on Basic Plan.

I believe the whole top up goes into the pool and no part of it into RA, in which case it is calculated separately from one's basic plan. I could be wrong though. That's my impression.

Topping up will increase your monthly payout as part of it goes into RA for that and part to the pool to maintain close to the payout after 90. Otherwise, dumb to top up.

 

[dantom04]

If we take 2023 as the year when the member turns 55, topping up to ERS each year until 65 should take an extra 120k.
This is a rough figure. ERS for the next 5 years (I think) is known on the CPF website. The rest is assumed.
If you take the known figures, the increase is roughly by 3.5% each year. So you can work that out.

The final figure in your RA if you don't top-up, would be (($298,200 x 1.04) + 900) for however many years until you decide to start CPF Life.
Roughly $450k at 65. About $555k at 70.
If you do top-up annually,
Roughly $595k at 65. About $815k at 70.

Using Standard Plan as comparison.
No Top-Up & Start at 65 gives you roughly $2,410 / mth.
Top-Up & Start at 65 gives you roughly $3,160 / mth.

I'll just do that Start at 70 as well.
No Top-Up & Start at 70 gives you roughly $3,230 / mth.
Top-Up & Start at 70 gives you roughly $4,720 / mth.
(This last figure is an extrapolation. CPF Life calculator does not allow a figure in RA larger than $800k.)

Hmmmm... So for example using top up to 65 yrs old I need to pumped in extra $120k to get extra $750 per month...
I calculate that at the age of 75 I only get back $90k...
So I need to live beyond 79 to break even?
Am I correct or my math is wrong

 

[Value.Matrix]

No, that’s incorrect.

On a specific age band where some members are forced to choose cpf-life (the legacy before current cpf-life rules), it is correct.

There is some truth to this statement for those that had to choose their life plan.

 

[BBCWatcher]

Agree that we cannot just look at the member only…

If you’re trying to evaluate whether the owner of the CPF Retirement Account is better or worse off with a particular payout plan then that’s exactly what you must do. That part isn’t complicated at all. It’s a certainty. Residual money, if any, is utterly worthless to dead people.

(Different question: ) Are other people better off if the member with the Retirement Account chooses the CPF LIFE Basic Plan instead of the CPF LIFE Standard Plan? Maybe, maybe not. The answer to this different question varies depending on the circumstances, and they’re largely unpredictable.

 

[DevilPlate]

CPF Life is indeed mandatory. There is NO option that is better than CPFL unless you choose to leave the country for good.

CPFL is not only mandatory but a scheme in which everyone is forced into a betting position. It's a scheme in which some MUST lose for the benefit of others in order for the scheme to be viable. To ensure solvency, the fund manager will invariably build a buffer as the manager cannot and will not guarantee payout. If the buffer is too large, everyone as a whole from an earlier cohorts is a loser.

CPFLife is sort of longevity insurance.

So if u view any form of insurance as a bet, then Ok lor…thats yr POV

 

[dork32]

Hmmmm... So for example using top up to 65 yrs old I need to pumped in extra $120k to get extra $750 per month...
I calculate that at the age of 75 I only get back $90k...
So I need to live beyond 79 to break even?
Am I correct or my math is wrong

did not go into the specific details but you should be somewhere there. if you are on standard, you get back all your principal at 80.

but your maths is wrong. you are totally ignoring the time value of money. you 120k is going to earn you significant interest, unless you deposit it to the biscuit tin bank ltd. depending on what interest you use, you break even is much later than 80

 

[dork32]

CPFLife is sort of longevity insurance.

So if u view any form of insurance as a bet, then Ok lor…thats yr POV

let's be fair. i think cpf is quite ok. it allows you to varying the amount of insurance you want. brs, frs and ers.

insurance of 100k is not a lot. especially for henry who probably have 1 mil in his cpf.

 

[dork32]

Agree that we cannot just look at the member only but should also take into consideration the bequest amount. At what age you pass on is Basic better than Standard, and how much is the difference, this should be transparent so the member can make their decision accordingly.

if you have followed us before, standard is better than basic if you survive beyond 87- 88 years old

 

[DevilPlate]

let's be fair. i think cpf is quite ok. it allows you to varying the amount of insurance you want. brs, frs and ers.

insurance of 100k is not a lot. especially for henry who probably have 1 mil in his cpf.

Also sort of act as a protection during old age from scammers etc haha

Ownself also cannot withdraw lolol

 

[ablurcat]

[url=https://postimg.cc/RN21jfFf] [/URL]

 

[anddrool]

I will choose CPF life basic plan.
Upon reaching 65 years old and start receiving payout, if there is spare cash available which I foresee I will not use, I will top up to ERS.

I will get higher monthly payout, reasonable interest rate (after discounting the premium paid for CPF life, at least able to get 3.2% in RA for the top-up), although I will need to deposit 1 lump sum but I'm able to enjoy the benefit immediately.

I will still continue earn interest in RA and leave more for CPF nominee.

 

[edmwing]

After cpf life payout started and I'd like to put my payout back into RA say every month... If I am on standard plan, does these go into RA and then automatically to top-up CPF Life premium? If on basic plan, it mostly stays in RA less some 10-20% paid to CPF Life premium?

 

[anddrool]

After cpf life payout started and I'd like to put my payout back into RA say every month... If I am on standard plan, does these go into RA and then automatically to top-up CPF Life premium? If on basic plan, it mostly stays in RA less some 10-20% paid to CPF Life premium?

For basic plan, around 10%-20% is used to pay for CPF life basic premium. The remaining is in RA earning RA interest.

For standard plan, FRS is used to pay for CPF life premium. Whatever interest earns remains in the CPF life pool. In other words, the interest earn does not belong to you. Bequest will be significantly lesser since there is effective no interest earn for yourself.

 

[edmwing]

I will choose CPF life basic plan.
Upon reaching 65 years old and start receiving payout, if there is spare cash available which I foresee I will not use, I will top up to ERS.

I will get higher monthly payout, reasonable interest rate (after discounting the premium paid for CPF life, at least able to get 3.2% in RA for the top-up), although I will need to deposit 1 lump sum but I'm able to enjoy the benefit immediately.

I will still continue earn interest in RA and leave more for CPF nominee.

I personally will choose basic plan as well but feel that most should go for escalating plan to buffer inflation and contribute to the pool for greater good.

 

[edmwing]

For basic plan, around 10%-20% is used to pay for CPF life basic premium. The remaining is in RA earning RA interest.

For standard plan, FRS is used to pay for CPF life premium. Whatever interest earns remains in the CPF life pool. In other words, the interest earn does not belong to you. Bequest will be significantly lesser since there is effective no interest earn for yourself.

Hey thanks - I meant say I am 72 and receiving payout. If I'd decide to put $1000 into RA...

Under Basic plan, I suppose $800-900 remains in RA, whereas under Standard plan $1000 should go into paying for CPF Life premium?

 

[dork32]

I will choose CPF life basic plan.
Upon reaching 65 years old and start receiving payout, if there is spare cash available which I foresee I will not use, I will top up to ERS.

I will get higher monthly payout, reasonable interest rate (after discounting the premium paid for CPF life, at least able to get 3.2% in RA for the top-up), although I will need to deposit 1 lump sum but I'm able to enjoy the benefit immediately.

I will still continue earn interest in RA and leave more for CPF nominee.

you will not get a higher payout with basic. you get a higher payout with standard.

 

[anddrool]

Hey thanks - I meant say I am 72 and receiving payout. If I'd decide to put $1000 into RA...

Under Basic plan, I suppose $800-900 remains in RA, whereas under Standard plan $1000 should go into paying for CPF Life premium?

Yes. That is my understanding.

 

[dork32]

I personally will choose basic plan as well but feel that most should go for escalating plan to buffer inflation and contribute to the pool for greater good.

i key this into the cpflife estimator.
born 1958 male, $200k
for standard the payout is 1120
for escalating the payout is 890
890/1120 = 80%

you get a 20% cut in payout to get 2% increase every year. i think this is not a good deal. i will not go escalating

if you get 10% cut in payout to get 2.5% increase in payout every year, i will jump in.