FRS vs ERS

[kelhot2001]

For some strange reason(s) kelhot2001 is upset when, after taking a hammer and bashing his/her head with it, he/she has a headache.

Yes, if you want to try to maximize a non-guaranteed residual, and if you then make two choices (age 65 payout start, Standard Plan) that run counter to your residual aspirations, then die years earlier than the median Singaporean, you will end up with a hammer/headache situation of your own choosing. (A mild headache, though — you could have chosen Hyflux bonds or shares instead, i.e. a sledgehammer.)

What an odd thing to complain about. If you don’t like that particular combination, no problem, choose a different combination — it’s your choice. As CPF itself tells you in all its advisory CPF LIFE publications.

Generally speaking, I don’t think you should try to maximize a CPF LIFE residual. If you merely live long enough, your CPF LIFE residual falls to zero no matter what choices you make. I think it’s better to use something else (MediSave for example) to defend and to preserve a particular residual, if that’s what you want to do. But you’re free to make other choices.

LOL, I am not upset but rather amusing since I have not been to MBS for almost 6 months already. I am taking the free time with forum and works.
What terrified me is the people who being brainwashed to a point of no return

Prior to 2009, CPF is about retirement funds and giving you interest at higher than market rate so that even in death you leave all your bequest to your beneficiary.

Based on old RSS system, if you are the 50% that passed on before 85, all your monies goes to your beneficiary. Today, CPF life brainwashed your mind and say look let me give you unlimited payout till you die, but forget about your bequest.

Two advantages of doing so for CPF, firstly CPF saves estimate 1 billion payout which they promise 20 years ago because of the bequest they have not had to pay. Secondly, they probably save another billion because they are using this saving to provide for those living.

Questions maybe to think and ask

1) Had CPF flawed ?
2) Did they not see this amount of payout during the last 20 years?
3) Or are they trying to save this payout which they promise to made?

What are the alternative solutions?

How about drawing $1000 per month using FRS at $181,000.00 that will last you till age 115 years old and yet guarantee you your entitle bequest? or
Drawing $950.00 using FRS at $181,000.00 which guarantee you a fixed bequest of $278,000.00 no matter what age you passed on ?

I am pondering hard at those questions.... hopefully someone can help me to answer

 

[Mecisteus]

kelhot when it comes to insurance, you need to plan for the worst case scenarios.

How do you cater to those who want to withdraw an amount that rises with inflation? This is what a true longevity insurance is about.

And if they happen to live long enough, how are you going to fill up the deficit?

 

[a4973]

LOL, there is no conclusion on this, if you are a not risk taker, and think that you probably wont live by 89, and want to minimise losses in case you pass on before 90 , the 2 solutions

1) BRS plan at 55
2) basic withdrawal at 65
3) Keep the rest at SA (using shielding method)

your losses with be on premium interest say your BRS at $90,500, premium let take the max at 20% which is 19K, if you suay suay pass on at 89, your losses on interest will be around $30,000.00

I like your summary. I am sure I fall into the category you have described. However say 1 month before 55, I shield max SA leaving min 40k in SA.
At 55 RA created with SA 40k + OA up to FRS.
When I opt to drawdown from FRS to BRS is it certain that the drawdown will come from FRS in RA & not from SA?

Sent from Nextbit ROBIN using GAGT

 

[kelhot2001]

kelhot when it comes to insurance, you need to plan for the worst case scenarios.

How do you cater to those who want to withdraw an amount that rises with inflation? This is what a true longevity insurance is about.

And if they happen to live long enough, how are you going to fill up the deficit?

Mike, for one CPF have never been an insurance company. They are 25 years back a retirement/pension board. Secondly, you should not be depending on just CPF retirement funds. Thirdly if they want to , the can do thier own esc plan as per the own FRS in SA, it still works the same calculation

 

[Mecisteus]

Mike, for one CPF have never been an insurance company. They are 25 years back a retirement/pension board.

So you prefer to go back to 25 years ago?

 

[kelhot2001]

So you prefer to go back to 25 years ago?

Let not start an 25 years compare to now. But 25 years, CPF is an pension company and still is today. But never an insurance company.

So I have medical insurance that protect me from hospital bill, I have full BHS
I have 2 term insurance, I have my own plans, now showing all this to CPF, do they do a opt out option ?

When CPF change the PEA, I think is a good idea, they set minimum to fight inflation, that is a good idea, but when they start CPF life, I think the whole ball game change.

If you are buying an saving insurance, at maturity , the insurance company tell you now it have change to annuities insurance, can you accept that?

 

[Mecisteus]

Let not start an 25 years compare to now. But 25 years, CPF is an pension company and still is today. But never an insurance company.

So I have medical insurance that protect me from hospital bill, I have full BHS
I have 2 term insurance, I have my own plans, now showing all this to CPF, do they do a opt out option ?

When CPF change the PEA, I think is a good idea, they set minimum to fight inflation, that is a good idea, but when they start CPF life, I think the whole ball game change.

If you are buying an saving insurance, at maturity , the insurance company tell you now it have change to annuities insurance, can you accept that?

You should try to understand why the RSS came about. And how CPF Life came about.

 

[kelhot2001]

You should try to understand why the RSS came about. And how CPF Life came about.

I am open to explaination, try me

 

[Mecisteus]

I am open to explaination, try me

Maybe for you to find and for us to know?

 

[kelhot2001]

Maybe for you to find and for us to know?

Lol, i thought you had more information
Well then I read through already and still say, stand as what you are in the first place

 

[SKenny]

What's the likelihood of losing when practically everyone wins

How to leave everything in SA? You can opt for BRS when RA is created and money is taken out of RA and can't go back to SA.

Not everyone wins. It is a zero sum game. In fact, if you consider the cost, the majority loses.

 

[tangent314]

So what's the conclusion? Which plan is best for people who is not sure when to die? With kids to pass to also?

A lot of people forget that their kids will be all grown up earning their own living by the time you reach 65, so while it would be nice to leave something for them, the priority would be to make sure that you have yourself taken care of for the rest of your life.

All the 'debate' you see in here is mostly really pointless because in the end no one here can prove that one plan is actuariarily better than another without access to a full cohort life table. Because of that it's fair to assume that they should be, as there is no rational reason for CPFB to make any one better than the other.

So I think it's really best to go back to CPFB's summary, because it's absolutely accurate and more than good enough description for most people to decide

1) Standard plan - more for self
2) Basic plan - more for loved ones
3) Escalating plan - more for future

 

[kelhot2001]

I would say i just start looking at CPF this year and learn alot here. But in the end, finding how disappointing the plan are.

I take the opportunity to point out the pitfall of CPF against the benefit. The point of bequest is important to many as alot of them depend on it regardless how old you are.

If I will to say, it is to choose the lesser of the three evil and highlight the extreme unfair point against the benefits to let the general member know

It is and will be a point of argument as all discussion will come back to the root of the problem

 

[Mecisteus]

How long have you been in Singapore to understand RSS?

 

[lifeafter41]

I would say i just start looking at CPF this year and learn alot here. But in the end, finding how disappointing the plan are.

I take the opportunity to point out the pitfall of CPF against the benefit. The point of bequest is important to many as alot of them depend on it regardless how old you are.

If I will to say, it is to choose the lesser of the three evil and highlight the extreme unfair point against the benefits to let the general member know

It is and will be a point of argument as all discussion will come back to the root of the problem

Maybe the next step would be to check or clarify with CPFB on which is the annuity that is acceptable to enable one to make full withdrawal in OA and SA.

If the lesser evil is not even an option.....
Short of migrating............

 

[kelhot2001]

Maybe the next step would be to check or clarify with CPFB on which is the annuity that is acceptable to enable one to make full withdrawal in OA and SA.

If the lesser evil is not even an option.....
Short of migrating............

Nah, never be a quitter, we should let more people know what the losses are and the the opinion be known

 

[Mecisteus]

https://www.asiaone.com/singapore/risk-pooling-secret-cpf-lifes-lifelong-payout-feature?amp

 

[lifeafter41]

Nah, never be a quitter, we should let more people know what the losses are and the the opinion be known

The main concern is once CPF Life starts to commence payout, after all it’s still in the infant stage as it was only enacted not too long ago, will there be big accumulation of surplus funds like elder shield?

 

[henrylbh]

Nah, never be a quitter, we should let more people know what the losses are and the the opinion be known

Nothing's really bad about CPF Life except all are forced to take a bet.

 

[BBCWatcher]

Nothing's really bad about CPF Life except all are forced to take a bet.

Not all -- there are many exceptions. And that, the existence of so many exceptions, might constitute a flaw in CPF LIFE.

The only alternative is that individuals transfer their longevity risks onto society at large, and everybody who pays taxes in Singapore -- I pay an awful lot, but those who pay GST (practically everybody) also pay taxes -- is forced to assume the "bets." And that's not at all consistent with the Singapore government's strong inclination to require individuals to be individually responsible for their own welfare, insofar as they're able.