Manulife SteadyPayout

[CaptainWu]

Manulife new saving plan https://www.manulife.com.sg/en/abou...yout-guarantees-4-yield-in-yearly-income.html. Have a first glance seems pretty okay, good for those with SRS investment and planning to drawdown with stable returns in 9 years with 4% yield. Only Cash and SRS not for CPF OA.

 

[deepblueli]

Must buy through agent?

 

[royalmix]

Sounds so similar to CPF Life!

You "loan" to CPFB, they "repay" you every mth, principal only until it becomes zero, then interest. If you die earlier than expected, all interest forfeited*!

It is an annuity lah!

*except Basic, partially!

If you understand how CPF Life works, you will understand this product from Manulife! It is 4% guaranteed, if you can survive till end of 9 year term! If you know how to calculate, as shared by someone on the "LOAN Method". I use my own spreadsheet, it confirmed the 4%pa interest accumulated.

You only get principal "repayment", the bulk of the interest will be paid to you end of year 8 & 9! So you must survive till end year 9, otherwise the bulk of interest accumulated will be forfeited!

They are out to capture the SA Funds which will be released in a few day's time! 4% comparable to SA!

There are already some discussions in the Deposit Thread. I transfer my posts here, you can read the rest there!

 

[addict951]

Yall got scroll down to the bottom on the capital guaranteed part?

From end of policy year 8

What if from years 1 - 7 they ‘take out’ from your capital or they start losing in whatever baskets they’re investing in, just to make up & give you that 4% annually? Say you put in $10K, by start of year 8, left $7K nia?
Shady af sia this manurelife, just like poodential.

 

[stephenbishop]

 

[boredboiboi]

Must buy through agent?

Yes any only exclusive to manulife agents (manulife advisory group and manulife financial asvisers)

 

[stephenbishop]

What if from years 1 - 7 they ‘take out’ from your capital or they start losing in whatever baskets they’re investing in, just to make up & give you that 4% annually? Say you put in $10K, by start of year 8, left $7K nia?

If the policy holder survives, annual payouts of 13.45% of the single premium are guaranteed every year and payable from the end of policy year 1 to 9.

If the policy holder dies before end of year 9, death benefit is the higher of:
(a) 105% of the single premium less total guaranteed yearly income paid; or
(b) one year of guaranteed yearly income.

 

[CaptainWu]

Yall got scroll down to the bottom on the capital guaranteed part?

What if from years 1 - 7 they ‘take out’ from your capital or they start losing in whatever baskets they’re investing in, just to make up & give you that 4% annually? Say you put in $10K, by start of year 8, left $7K nia?
Shady af sia this manurelife, just like poodential.

That's the one I need to ask what is the exact meaning....a bit confusing with the wording.

 

[CaptainWu]

This might be good for those with SA just closed and always max MA every year? Imagine you pull a sum of OA and invest to this plan and get a fixed amount back every year, use the fixed amount to top up to OA/MA as voluntary contribution. This should boost up a better rate of return than the 2.5% and pretty safe?

 

[sglandscape]

Might be better off buying a 10 year bond yielding 4% (or higher), if you're planning to put in at least 250k. The pick up in yield is so minimal that's it doesn't make sense to give up liquidity.

 

[tangent314]

Yes this plan does looks like it was designed with SRS withdrawal in mind

 

[tangent314]

Might be better off buying a 10 year bond yielding 4% (or higher), if you're planning to out in at least 250k. The pick up in yield is so minimal that's it doesn't make sense to give up liquidity.

Bonds pay a small coupon, and return a big lumpsum at the end. This plan pays out the same amount every year for 10 years. Which is better for tax purposes.

 

[sglandscape]

Bonds pay a small coupon, and return a big lumpsum at the end. This plan pays out the same amount every year for 10 years. Which is better for tax purposes.

For purposes of SRS withdrawal (and including the benefit of tax deferral) it'll work perfectly, but outside of that it's less than ideal because of the give up of liquidity.

 

[CaptainWu]

Might be better off buying a 10 year bond yielding 4% (or higher), if you're planning to put in at least 250k. The pick up in yield is so minimal that's it doesn't make sense to give up liquidity.

Bond still has risk so I never intended to buy a big sum like 250k just for one company.

 

[sglandscape]

Bond still has risk so I never intended to buy a big sum like 250k just for one company.

You could get Temasek bonds between 4-15 years tenor for about 3.1-3.2% right now with effectively zero credit risk.

If you have more risk appetite, local banks capital bonds are going for around 3.5-4% which in my view is not enough credit spread to justify it.

The foreign banks capital bonds could give you 5%-8% with more risk for those who prefer it and understand the risk that comed with it.

A balance of them, along with other safer names should give you more than 4% with ease, however you'll need a lot more capital so may not be feasible for most people.

 

[CaptainWu]

You could get Temasek bonds between 4-15 years tenor for about 3.1-3.2% right now with effectively zero credit risk.

A balance of them, along with other safer names should give you more than 4% with ease, however you'll need a lot more capital so may not be feasible for most people.

Gov related bonds might be an option but going through Banks/FSM will charge you platform/admin/custodian fee also, always not my favor. Still exploring.....

 

[surefire888]

This tries to emulate the structure of CPF Life but CPFL is way better

Under CPFL, if a person under Standard Plan dies early, he (and his beneficiaries) only gets back his principal with no interest. But if he lives a long life, CPFL keeps paying for life so there is potential for significant upside

In Manulife's scheme, if the person dies b4 the 8th year, he only gets back his principal plus a tiny bit of interest. But even if he lives to 100, he only gets max 9 payouts and a max roi of 4%. Why gamble on living at least the next 9 years just to get a 4% return with no liquidity? As a cash investment, the loss of liquidity is likely not a worthwhile trade-off.

The main scenario where this product might have some attraction is where a person with substantial srs savings is planning to drawdown his srs. Since the tax-beneficial method of withdrawing srs is over a period of up to 10 yrs, there is no loss of liquidity. A person with say, srs savings of $298,000 would get back $40,081 each year which he could withdraw tax-free. Main risk would be mortality during the 9 years of Manulife payout which would reduce the ROI to ard 1%, which btw is still better than the measly 0.05% being offered by the banks on srs funds

 

[reddevil0728]

This tries to emulate the structure of CPF Life but CPFL is way better

Under CPFL, if a person under Standard Plan dies early, he (and his beneficiaries) only gets back his principal with no interest. But if he lives a long life, CPFL keeps paying for life so there is potential for significant upside

In Manulife's scheme, if the person dies b4 the 8th year, he only gets back his principal plus a tiny bit of interest. But even if he lives to 100, he only gets max 9 payouts and a max roi of 4%. Why gamble on living at least the next 9 years just to get a 4% return with no liquidity? As a cash investment, the loss of liquidity is likely not a worthwhile trade-off.

The main scenario where this product might have some attraction is where a person with substantial srs savings is planning to drawdown his srs. Since the tax-beneficial method of withdrawing srs is over a period of up to 10 yrs, there is no loss of liquidity. A person with say, srs savings of $298,000 would get back $40,081 each year which he could withdraw tax-free. Main risk would be mortality during the 9 years of Manulife payout which would reduce the ROI to ard 1%, which btw is still better than the measly 0.05% being offered by the banks on srs funds

Serves different purpose

with different pros and cons

 

[CaptainWu]

This tries to emulate the structure of CPF Life but CPFL is way better

CPF life is for life while this one is 9 years and of course CPF life with better yield but you will never get back all your funds until you..... not a fair comparison. If your intention is to pass on to your beneficial then yes please go for CPF life.

 

[ZinY]

If the policy holder survives, annual payouts of 13.45% of the single premium are guaranteed every year and payable from the end of policy year 1 to 9.

If the policy holder dies before end of year 9, death benefit is the higher of:
(a) 105% of the single premium less total guaranteed yearly income paid; or
(b) one year of guaranteed yearly income.

... Main risk would be mortality during the 9 years of Manulife payout which would reduce the ROI to ard 1%, which btw is still better than the measly 0.05% being offered by the banks on srs funds

IRR % if the policy holder dies within x years -

1st Yr	2nd Yr	3rd Yr	4th Yr	5th Yr	6th Yr	7th Yr	8th Yr	9th Yr
$ (100,000)	$ (100,000)	$ (100,000)	$ (100,000)	$ (100,000)	$ (100,000)	$ (100,000)	$ (100,000)	$ (100,000)
$ 101,000	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450
1.00%	$ 87,550	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450
	0.53%	$ 74,100	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450
		0.38%	$ 60,650	$ 13,450	$ 13,450	$ 13,450	$ 13,450	$ 13,450
			0.31%	$ 47,200	$ 13,450	$ 13,450	$ 13,450	$ 13,450
				0.27%	$ 33,750	$ 13,450	$ 13,450	$ 13,450
					0.25%	$ 20,300	$ 13,450	$ 13,450
						0.24%	$ 13,450	$ 13,450
							1.66%​	$ 13,450
								4.00%​

Need to survive at least 8 years to earn 4% interest rate.

The best is to die at the beginning of 9th year. IRR can be slightly above 4.00% due to early payment of yearly payout.