RSS old scheme vs CPF life basic ? CPF Life Basic vs Std/Esc

[kelhot2001]

I start a new thread on this as I am keen to know how many will choose
Two question asked ? Please label question 1 or 2 if answering


1) Old RSS scheme vs CPF Life Basic ? (both are similiar)
2) Choosing CPF Life basic over CPF Life std/esc ? (Looking at loss of bequest)

1) Old RSS Scheme only pay 4% fixed throughout from age 55 to the end, CPF line basic will give extra 2 percent first 30K, 1 percent for another 30K, balance on 4% for ensure payment till life


2) Choosing CPF basic withdrawal will ensure your bequest (or whenever you left behind when you die) to be high and fairer to self
Choosing CPF std/esc will ensure higher payout throughout, but the bequest lost if deceased at age (70 - 88) , your bequest losses can be at 60k to as high at 150K

Eg: If deceased passed on at 80 of age, basic leave behind 152K to beneficiaries, while std/esc will get 11K/36k

Let see how if goes

 

[BBCWatcher]

1) Old RSS scheme vs CPF Life Basic ? (both are similiar)

I don’t understand why you’re even asking this question. The Retirement Sum Scheme is closed to everybody born after 1957. This choice is only available to the oldest cohort of readers in our midst. For everybody else, it’s a moot question. It’s like asking “Do you want a unicorn or a chicken sandwich?” Uh, chicken sandwich is all that’s available on the menu.

2) Choosing CPF Life basic over CPF Life std/esc ? (Looking at loss of bequest)

Oh, that’s easy. CPF LIFE is not designed to deliver a particular bequest, even if that’s what I would want to do. (I don’t, not in particular. I’m giving more money sooner to loved ones rather than making them wait. Already doing it.) So I see no point in the Basic Plan, to try to cling to something that CPF LIFE doesn’t defend well. Assuming I’m not gasping for financial air at age 70 — not my plan — Escalating.

2) Choosing CPF basic withdrawal will ensure your bequest (or whenever you left behind when you die) to be high and fairer to self

It doesn’t ensure anything of the sort. Simply live long enough and the bequest is zero. And bequests require your heir to wait until you die to receive wealth. I’m highly confident my heirs will prefer more wealth sooner, and I’d be very surprised if your heirs would object to your greater and earlier generosity.

I don’t plan to use this screwdriver as a hammer, no. I’ll use it as the best screwdriver it can be, and if I also need a hammer I’ll get a hammer.

 

[yoongf]

I believe there are many ppl here whose parents or relatives are currently on RSS and are wondering if parents/relatives shd switch to CPF Life before they reach 80yrs old.

So far, my thinking is that there is no sure win one magic answer that will suit everyone.

 

[maple96]

I believe there are many ppl here whose parents or relatives are currently on RSS and are wondering if parents/relatives shd switch to CPF Life before they reach 80yrs old.

So far, my thinking is that there is no sure win one magic answer that will suit everyone.

Spot on! This forum is not just for people like BBC or thinks like BBC who only has self interest! Oops maybe he dunno how to answer

I don’t understand why you’re even asking this question. The Retirement Sum Scheme is closed to everybody born after 1957. This choice is only available to the oldest cohort of readers in our midst. For everybody else, it’s a moot question. It’s like asking “Do you want a unicorn or a chicken sandwich?” Uh, chicken sandwich is all that’s available on the menu.

 

[Mecisteus]

This question is like asking to have insurance vs no insurance.

If you can look into the future,

1) sign up for Escalating plan if you can live till 120.
2) stick with old RSS if you are going to die soon.

 

[dork32]

I don’t plan to use this screwdriver as a hammer, no. I’ll use it as the best screwdriver it can be, and if I also need a hammer I’ll get a hammer.

wonderful analogy. but if i do not have a nail to whack, i will not get a hammer. i prefer to get a screwdriver such that i can use it for the future.

 

[henrylbh]

1) Old RSS scheme vs CPF Life Basic ? (both are similiar)
2) Choosing CPF Life basic over CPF Life std/esc ? (Looking at loss of bequest)

1) Old RSS Scheme only pay 4% fixed throughout from age 55 to the end, CPF line basic will give extra 2 percent first 30K, 1 percent for another 30K, balance on 4% for ensure payment till life

Far from similar. RSS doesn't exist for those born in 1958 and after. Payout from RSS is for about 20 years (before accounting for extra interest).

It's untrue that RSS pays 4% fixed. Extra interest and additional extra interest is given to RSS to stretch payout beyond the original 20 years as well as CPFL.

When you uplorry, RSS returns what's is left in RA.

Under basic, about 20% of RA is deducted as annuity premium at 65 and you need to live well beyond 90 to get back what's yours had you received the same payout as under RSS. My worksheet in the other post shows age 101 to get back what's you. In other words, under CPFL you are very likely to be shortchanged.

 

[kelhot2001]

Far from similar. RSS doesn't exist for those born in 1958 and after. Payout from RSS is for about 20 years (before accounting for extra interest).

It's untrue that RSS pays 4% fixed. Extra interest and additional extra interest is given to RSS to stretch payout beyond the original 20 years as well as CPFL.

When you uplorry, RSS returns what's is left in RA.

Under basic, about 20% of RA is deducted as annuity premium at 65 and you need to live well beyond 90 to get back what's yours had you received the same payout as under RSS. My worksheet in the other post shows age 101 to get back what's you. In other words, under CPFL you are very likely to be shortchanged.

Ok, I concurred with your facts that RSS will have the extra 2 percent interest which made RSS a better option, but discontinued. But with the 3 limited choices, I think basic withdrawal will still suit me better with higher bequest (or I am more kiasu to bet that I passed on at 85 , and I dont want to lose out the sum of money left behind) while there are others with no one left behind after death will probably chose std/esc

 

[henrylbh]

Ok, I concurred with your facts that RSS will have the extra 2 percent interest which made RSS a better option, but discontinued. But with the 3 limited choices, I think basic withdrawal will still suit me better with higher bequest (or I am more kiasu to bet that I passed on at 85 , and I dont want to lose out the sum of money left behind) while there are others with no one left behind after death will probably chose std/esc

If you quite certain to go before age 90, basic should be the choice.

 

[Tiger9119]

Indeed! for those with no kids, really no point having large Bequest like choosing CPF Basic plan because who are they going to leave their Bequest to after they kick the bucket? Might as well just take the largest amount of money available upfront and enjoy life first!

Can leave the bequest to spouse if no kids.

 

[henrylbh]

under CPFL you are very likely to be shortchanged vs CPF RSS right?

Unfortunately good thing like CPF RSS just don't last!

RSS can last to about 95, if the payout is aligned to CPFL plans.

Under CPFL, all who go before 95 will be shortchanged. I guess many

 

[henrylbh]

Can leave the bequest to spouse if no kids.

Bequest will be zero at about age 92 for basic. If can live beyond 90, forget about bequest and go for the other two plans.

 

[kelhot2001]

Can leave the bequest to spouse if no kids.

Another main reason why I choose Basic, I was just telling my wife I probably die around 80, I will pass all bequest to her, than going with standard plan

 

[Tiger9119]

Another main reason why I choose Basic, I was just telling my wife I probably die around 80, I will pass all bequest to her, than going with standard plan

I intend to choose basic plan, hopefully I don't need to depend on payout during retirement.

 

[BBCWatcher]

Another main reason why I choose Basic, I was just telling my wife I probably die around 80, I will pass all bequest to her, than going with standard plan

If you’re going to try to force CPF LIFE to do something it’s not well designed to do (to deliver a bequest), the most important element is to wait until age 70 before collecting payouts. You could also skip providing CPF with your bank account details, in which case CPF will push your CPF LIFE payments to your Ordinary Account. Do all that and your CPF nominated heir(s) will receive every dollar, plus accrued interest (accrued at 2.5% in OA).

 

[kelhot2001]

What happens to the premium if I pass away?
A bequest is the amount of money that you leave for your beneficiaries when you pass on. If you are on CPF LIFE, the bequest refers to the unused annuity premium and Retirement Account savings, if any, after death. This will be paid to your beneficiaries along with your remaining CPF savings.

However, the interest earned on annuity premiums does not form part of the individual member's bequest as it is paid into the Lifelong Income Fund to provide lifelong monthly payouts to all members under CPF LIFE.

As with all annuity products, CPF LIFE works based on the concept of risk pooling. In order to provide lifelong monthly payout to all CPF LIFE members, the interest earned on the annuity premium has to be pooled. The pooled interest will then be used to pay the monthly payout to all surviving members in the scheme. Therefore, the interest earned on the CPF LIFE annuity premium will not form part of the individual member's bequest upon death.

Asking a question on the above based on basic withdrawal plan on full FRS, our premium is for LIF is say 20% of FRS, when we passed on

1) Will the premium (excluded interest) be return to us
2) Is the premium already included in the CPF Life estimator ?

 

[henrylbh]

If you’re going to try to force CPF LIFE to do something it’s not well designed to do (to deliver a bequest), the most important element is to wait until age 70 before collecting payouts. You could also skip providing CPF with your bank account details, in which case CPF will push your CPF LIFE payments to your Ordinary Account. Do all that and your CPF nominated heir(s) will receive every dollar, plus accrued interest (accrued at 2.5% in OA).

He thinks he bye bye around 80. Basic plan comes with bequest of more than 100k. Give him live another 5 years and there will still be bequest compare to almost zero bequest at about 80 for the other 2 plans.

 

[crimsontactics]

I will choose CPF Life.

Guarantees me payment till I die.

 

[BBCWatcher]

The pooled interest will then be used to pay the monthly payout to all surviving members in the scheme.

Including to you, for as long as you’re alive. And yes, bonus interest is part of that calculation. That’s why the Standard Plan has a higher monthly payout than the Basic Plan, and the Escalating Plan then programs a 2%/year slope atop the Standard Plan. (The 2%/year slope also bends the residual a bit; the Escalating Plan’s residual runs a little above the Standard Plan’s.)

 

[BBCWatcher]

He thinks he bye bye around 80.

OK, but there is zero erosion in the residual if he’s wrong and dies at 69.9, for example, if he hasn’t started payouts until age 70. Pushing out the start date of the residual erosion is a sure fire winner if you’re trying to fold, spindle, and bludgeon CPF LIFE into doing something (deliver a bequest) it isn’t well designed to do.