private annuities

[soaresb]

You are very sharp to point out such half-truth indeed!
I don't understand why people cannot just tell the whole truth that:

1) CPF Life payout amount is NOT guaranteed!

2) If you died before 92 years old, you lost money (i.e. For the policy-holder and heirs didn't get back breakeven invested amount after interest considered) which CPFB will use to subsidize others (who live longer than 92)!

Because it's not such a nice truth.

Essentially the winners in the scheme wins twice, once in terms of long life, then another time financially, in terms of getting out more than they have put in.

But longevity risk is real. I guess our government thinks Singapore as a society does not have much experience with the downsides of longevity, hence they think they need to sell it in a more palatable way.

 

[tangent314]

I'm also wondering, if everyone lives longer lives than anticipated by the actuaries, then the fund will run out of money?

Probably not. The CPF website does say that the monthly payout can be adjusted to adapt to changes in interest rate and mortality rates. So if people from one cohort is not dying as often as they should they can adjust the monthly payout downwards a bit, and if more people are dying than expected they can adjust the monthly payout upwards.

 

[foozgarden]

It depends on lifestyle.

I got myself an annuity as I intend to retire earlier that age of 55 which is earlier than when I can get my CPF benefits. Though i planned in such that the duration lasts till my CPF kicks in.

Though this is risky as I have more than 3 decades before this happened. It is either I am still alive and there would be changes to when I can get or I am already dead.

Plan wisely but don't reply.

As of now, CPF annuity is much better.

second that..

you boought an annuity at 25?
nice.. whats the BI like, premium and payout ?

 

[BBCWatcher]

Life Annuities Offered in Singapore

Updated February 8, 2019

Here is the current list of life annuity (a.k.a. longevity insurance) products available in Singapore (in alphabetical order, including some whole life insurance policies with lifetime payouts):

Aviva MyLifeIncome
China Life Lifetime Income Plan
CPF LIFE (1)
Etiqa ePREMIER eternity presto
Great Eastern Prestige Life Rewards 2 (2)
Manulife RetireReady (3)
NTUC Income Guaranteed Life Annuity (4)
Tokio Marine Retirement GIO
Tokio Marine Retirement PaycheckLife

Notes: (1) CPFB is a sovereign agency and clearly offers the best value for money among Singapore dollar denominated life annuities, even before accounting for its unique tax advantages and protections against creditors and court judgments. If available to you, CPF LIFE should be the first and most important part of your life annuity strategy. (2) Offered in a choice of two currencies: Singapore dollars and U.S. dollars. (3) With NTUC Income’s departure, Manulife is now the only carrier offering a fully SRS qualified life annuity, meaning that the life annuity can be purchased in a single premium with SRS dollars and, per IRAS rules, effectively extend the 10 year window for tax favored withdrawals. (4) NTUC Income has withdrawn its Guaranteed Life Annuity for new policyholders, effective November 23, 2018, although some existing NTUC policyholders can exercise their life annuity options to add this policy.

Some other life insurance companies in Singapore offer term annuities with payouts to advanced ages such as age 99 or age 100, but these are not genuine life annuities. For example, AXA’s Retire Happy Plus with its 3.5%/year escalation feature can approximate/simulate a genuine life annuity if you hold back some of the escalation and reinvest it in safe assets, such as Singapore Savings Bonds and/or CPF deposits. Life annuities are available from offshore insurance carriers (and occasionally from sovereigns if you qualify, through working abroad for example), usually in other currencies (U.S. dollars, euro, yen, Swiss francs, etc.) but very occasionally in Singapore dollars. The offshore private life annuity products are fairly exotic if you have a right of abode in Singapore and plan to retire in Singapore. Offshore life annuities can have stronger, weaker, or similar regulatory and government backstop insurance protections compared to onshore life annuities.

Unfortunately, there is no “perfect” Singapore dollar denominated life annuity product. “Perfect” would mean options for joint/survivor payouts (for a spouse/partner, in particular), inflation-linked guaranteed payouts, and full SRS qualification (to extend the tax favored SRS withdrawal period beyond 10 years in effect). (Joint/survivor terms and full SRS qualification might be mutually exclusive given tax rule limitations.) However, you may be able to combine products and/or CPF LIFE to arrive at a near perfect solution.

 

[blurpandasg2014]

Does anyone know what is aviva current reinvestment rate?

 

[BBCWatcher]

Life Annuities Offered in Singapore
Updated February 28, 2019

Here is the current list of life annuity (a.k.a. longevity insurance) products available in Singapore (in alphabetical order, including some whole life insurance policies with lifetime payouts):

Aviva MyLifeIncome
China Life Lifetime Income Plan
China Taiping Infinite Harvest
CPF LIFE (1)
Etiqa ePREMIER eternity presto
Great Eastern Prestige Life Rewards 2 (2)
Manulife RetireReady (3)
NTUC Income Guaranteed Life Annuity (4)
Tokio Marine Retirement GIO
Tokio Marine Retirement PaycheckLife

Notes: (1) CPFB is a sovereign agency and clearly offers the best value for money among Singapore dollar denominated life annuities, even before accounting for its unique tax advantages and protections against creditors and court judgments. If available to you, CPF LIFE should be the first and most important part of your life annuity strategy. (2) Offered in a choice of two currencies: Singapore dollars and U.S. dollars. (3) With NTUC Income’s departure, Manulife is now the only carrier offering a fully SRS qualified life annuity, meaning that the life annuity can be purchased in a single premium with SRS dollars and, per IRAS rules, effectively extend the 10 year window for tax favored withdrawals. (4) NTUC Income has withdrawn its Guaranteed Life Annuity for new policyholders, effective November 23, 2018, although some existing NTUC policyholders can exercise their life annuity options to add this policy.

Some other life insurance companies in Singapore offer term annuities with payouts to advanced ages such as age 99 or age 100, but these are not genuine life annuities. For example, AXA’s Retire Happy Plus with its 3.5%/year escalation feature can approximate/simulate a genuine life annuity if you hold back some of the escalation and reinvest it in safe assets, such as Singapore Savings Bonds and/or CPF deposits. Life annuities are available from offshore insurance carriers (and occasionally from sovereigns if you qualify, through working abroad for example), usually in other currencies (U.S. dollars, euro, yen, Swiss francs, etc.) but very occasionally in Singapore dollars. The offshore private life annuity products are fairly exotic if you have a right of abode in Singapore and plan to retire in Singapore. Offshore life annuities can have stronger, weaker, or similar regulatory and government backstop insurance protections compared to onshore life annuities.

Unfortunately, there is no “perfect” Singapore dollar denominated life annuity product. “Perfect” would mean options for joint/survivor payouts (for a spouse/partner, in particular), inflation-linked guaranteed payouts, and full SRS qualification (to extend the tax favored SRS withdrawal period beyond 10 years in effect). (Joint/survivor terms and full SRS qualification might be mutually exclusive given tax rule limitations.) However, you may be able to combine products and/or CPF LIFE to arrive at a near perfect solution.

 

[vling]

If we managed to be exempted from RSS & CPF Life with a private annuity plan that pays out more, what will happen to the sum in RA at age 65? It will have to be withdrawn in full?

 

[JuniorLion]

If we managed to be exempted from RSS & CPF Life with a private annuity plan that pays out more, what will happen to the sum in RA at age 65? It will have to be withdrawn in full?

If you have a private annuity plan, regardless of whether it pays out more or less (what matters is it has to be sufficient payout), then you get exempted from CPF Life. I believe the money in RA is yours to keep and yours to withdraw "on-demand".

Please clarify further with CPF Board on this.

 

[maple96]

If we managed to be exempted from RSS & CPF Life with a private annuity plan that pays out more, what will happen to the sum in RA at age 65? It will have to be withdrawn in full?

Dear Sir,
I would like to ask a few more questions. I will probably topup 14K annually for my SA
Assume I have topup 150K using cash topup until age 55
Cash topup in CPF: $250K till 55
CPF in SA : $21K
OA: $10K
Assuming FRS at 55 is $181,000.00 , My total in CPF is $281,000.00 , what will be the amount I can withdrawal at full
1) Can I withdrawal full lump sum $100K ?
2) If I have a private annuity plan that is provide more than CPF life, I choose to opt out of CPF life at 69 years of age, at the point of time, do I have to withdraw all the full amount from my RA, or I have the option to leave it in RA or transfer into my SA or OA account and withdrawal at age 80
Or can I request to withdrawal as an when I like by sending withdraw request to CPF bimonthly

We refer to your enquiries of 7 March 2019.

1) Based on the scenario you provided, the withdrawable amount would be $100,000 including any remaining topped up monies.

2) Members aged 55 and above and are receiving lifelong monthly payouts from a pension or a private annuity (bought using cash or under the CPF Investment Scheme) may apply to be exempted from setting aside a retirement sum in the RA.

They may be fully or partially exempted, depending on the lifelong monthly payout amount from their pension or annuity.

Only members who qualify for full retirement sum exemption may opt to exit from CPF LIFE. Members who qualify for partial exemption will remain covered under CPF LIFE and receive monthly payouts for as long as they live.

Assuming you are fully exempted, the withdrawable monies from the RA will be paid to you in one lumpsum. These monies cannot be retained in your CPF account.

Aiyah, my plan cannot works this way

See highlighted in red above, extracted here "Assuming you are fully exempted, the withdrawable monies from the RA will be paid to you in one lumpsum. These monies cannot be retained in your CPF account."

 

[BBCWatcher]

You probably shouldn’t opt out of CPF LIFE even if you have a private annuity or pension. However, if you plan to do that, one choice you have is to defer CPF LIFE payouts (i.e. simply take no action) until age 70, then make your opt out decision.

 

[vling]

Ah.. i see.. thanks for sharing! Am checking out private annuities to complement CPF Life and one of the agents told me about the exemption so i was curious

 

[maple96]

Ah.. i see.. thanks for sharing! Am checking out private annuities to complement CPF Life and one of the agents told me about the exemption so i was curious

am also curious that since your agent said exemption is allowed, can u ask the agent will their pte annuity get u an exemption from CPFB, if so pls share, am interested to know which insurer's pte annuity is acceptable to CPFB, thanks

 

[Geeezz]

which annuity can get better payout than cpf life? cpf life pays fr life wor, pte annuity pays fr limited yrs only, if u look at those lifetime annuity it’s actually more expensive than cpf life fr similar payout. unless you are talking abt rss then it’s possible.

 

[tangent314]

There are some private annuities available that do lifetime payouts.
Generally their payout rates aren't as good as CPF Life

 

[Belle69]

There is a 3rd gen anunity where grandchild get to encash the 2 million after the grandparent and parent got the payouts.

Is it too good to be true

 

[tangent314]

It's probably legit, but the starting principle is going to be quite high already and the regular payouts are low. Calculate the XIRR and you will likely get 4.0% on a PAR fund performance of 4.75%

But really, plans with accumulating principle have pretty much zero longevity insurance component, and is therefore trivially easy to DIY at a lower cost.

 

[moejoseph]

There is a 3rd gen anunity where grandchild get to encash the 2 million after the grandparent and parent got the payouts.

Is it too good to be true

$2mil is likely a non-guaranteed sum.

AXA recently came up with something similar as well, but can be paid up to over 30 years.

Did an illustration and found that
- $13k/year over 15 years ($195k) will give a $6k/year annual payout starting from 16th year, up till age 120*
- If an age 30 starts this plan, he can start receiving payout frm age 45
- Let say he dies at 85, 40 years of payout = $240k
- His 2nd life assured can continue receiving the remaining 35 years (till his supposed age of 120) = $210k
- Upon maturity, a non-guaranteed lumpsum (up to 7 digits) will be paid out as well

To me, is quite a pretty powerful annuity + legacy planning product, if one is willing to neglect the IRR and can afford the slightly higher premiums at the start.

 

[Belle69]

$2mil is likely a non-guaranteed sum.

AXA recently came up with something similar as well, but can be paid up to over 30 years.

Did an illustration and found that
- $13k/year over 15 years ($195k) will give a $6k/year annual payout starting from 16th year, up till age 120*
- If an age 30 starts this plan, he can start receiving payout frm age 45
- Let say he dies at 85, 40 years of payout = $240k
- His 2nd life assured can continue receiving the remaining 35 years (till his supposed age of 120) = $210k
- Upon maturity, a non-guaranteed lumpsum (up to 7 digits) will be paid out as well

To me, is quite a pretty powerful annuity + legacy planning product, if one is willing to neglect the IRR and can afford the slightly higher premiums at the start.

You think its a good deal? I am very tempted by this product

 

[moejoseph]

You think its a good deal? I am very tempted by this product

If you are more towards leaving a legacy, this is a powerful product. The maturity benefit upon age 120*, which is non-guaranteed, can be up to 7 digits.

The annual payout may not be a lot ($6000), but it helps to defray some cost of necessities or future premium for shield plan/medical cost.

Let me know if u need help

 

[lifeafter41]

You think its a good deal? I am very tempted by this product

Key word is non guaranteed......