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

[henrylbh]

Quite as expected based on your comparison

If based on your RSS till 95 years old
If comparing RSS$1840.00 to CPFlife Basic at $1838.00 both are similiar except one is till 95, the other till death. But on the other hand, basic amt will drop alot from 90 - 95. The other not compare are the bequest left behind which i suspect rss will have a better bequest

If comparing RSS$1840 against CPFLife standard the amount is slight lower but the bequest is definitely bad against RSS$1840.00 , at age 81, bequest will lose out at least $150k

Conclusion : Why change RSS?

Surely there is an misunderstanding in numbers and the calculator used. RSS payout can never be close to CPF Life Payout for the same sum at the start.

Let's reason with the numbers given by the Board.

For his cohort, the min sum in 2012 was $139k and the payout was $1,240 for about 20 years.

The following year in 2013, FRS increased to $148k. And under BP, the payout was between $948 and $1039 for life.

With a 10 year vesting period to age 65, the latter would have a much bigger retirement sum and yet the payout is much lower.

 

[henrylbh]

I am with the last cohort (RSS scheme). Recently, I wrote to CPF to enquire about my monthly payout at 65 (since that was the instruction given on the CPF website as the RSS calculator is no longer available).

For clarity, I topped up my RA to ERS when the option was introduced in 2016. This is their reply to me from CPF (by mail):

"You are currently under the RSS which provides you with a monthly stream of income from your payout eligibility age until your RA balances are depleted. Based on your current RA balances, if you commence your monthly payouts in December 2022, (Age 65) you can receive $1,840 monthly which will last you for 30 years"

Sharing the above, which is hopefully helpful for people on RSS and yet to commence their payout.

That's an interesting reply that you've got. If you stick to your cohort's payout of $1240, your retirement sum will last well beyond age 150. At age 150 the bequest is about 150k

Under RSS, I understand the payout should be for about 20 years from PEA and may be 3 years more because of the additional interest. You may need to reconfirm with them. I for one, wouldn't accept their numbers. Anyway 1840 will not last to 95 unless you did more than one top-up to prevailing ERS subsequent to 2016.

 

[henrylbh]

Which i find a bit hard to understand if I unDerstand correctly for basic withdrawal plan

1) All annual interest earn by basic premium(20%) will be deposit into our RA account

2)All basic premium will be return to RA upon death as bequest (i read it in another thread, not sure how true)

3) So by 90, if you start drawing from the LIF, where and who fund am I drawing from?

Eg, if I live till 93 years old, the whole cohort of mine at basic plan already dead, all their premium already withdrawn, so where will I be drawing out from? And how much will it be?
Unless LIF is pool togthwr with everyone from std/esc plan

2) is not correct statement

3) even at 93, you are actually still withdrawing your own money (if you are under RSS but getting the same payout as what CPFL would pay you)

 

[Battery Operator]

That's an interesting reply that you've got. If you stick to your cohort's payout of $1240, your retirement sum will last well beyond age 150. At age 150 the bequest is about 150k

Under RSS, I understand the payout should be for about 20 years from PEA and may be 3 years more because of the additional interest. You may need to reconfirm with them. I for one, wouldn't accept their numbers. Anyway 1840 will not last to 95 unless you did more than one top-up to prevailing ERS subsequent to 2016.

I did additional top up via RSTU, $15k(2017) and $7.5k(2018). I believe their $1,840 is pretty close for 30 years of monthly payout.

 

[dork32]

Quite as expected based on your comparison

If based on your RSS till 95 years old
If comparing RSS$1840.00 to CPFlife Basic at $1838.00 both are similiar except one is till 95, the other till death. But on the other hand, basic amt will drop alot from 90 - 95. The other not compare are the bequest left behind which i suspect rss will have a better bequest

If comparing RSS$1840 against CPFLife standard the amount is slight lower but the bequest is definitely bad against RSS$1840.00 , at age 81, bequest will lose out at least $150k

Conclusion : Why change RSS?

a payout of 1840 till 105 vs a payout of 1840 for life.

is there any difference?

 

[kelhot2001]

2) is not correct statement

3) even at 93, you are actually still withdrawing your own money (if you are under RSS but getting the same payout as what CPFL would pay you)

I got all information from CPF life which is either not clear or grey

Point 1: If you have chosen the CPF LIFE Standard Plan or CPF LIFE Escalating Plan, the extra interest will be paid into the Lifelong Income Fund. By paying the extra interest into the Lifelong Income Fund, you will be able to enjoy a more stable payout for the rest of your life. The extra interest will be pooled and factored into your monthly CPF LIFE payouts.

If you have chosen the CPF LIFE Basic Plan, we will pay the extra interest earned into your Retirement Account and pay it to you in the year it is earned as part of your monthly CPF LIFE payout. When your combined balances fall below $60,000, the extra interest will reduce. This reduces your monthly CPF LIFE payouts gradually.

Point 2) A bequest is the money that you leave to your beneficiaries after your death.

Under the CPF LIFE plans, we will refund all your unused annuity premium (without interest) and Retirement Account savings, if any, after your death.
We will pay any refund into your CPF account. This will then be paid to your beneficiaries along with your remaining CPF savings.


Point 3)When you join the CPF LIFE Basic Plan, we will deduct about 10 - 20% of your Retirement Account (RA) savings for the annuity premium at the point of policy issuance. The actual percentage will depend on your age and gender. We will inform you on the amount deducted when your policy is issued. The premium deducted will be paid into the Lifelong Income Fund. The rest of your RA savings will stay in your RA.

You will receive monthly payouts from the savings in your RA from your payout start age until one month before you reach 90 years old. Once you reach 90 years old, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live.

Payouts under your CPF LIFE Basic Plan will be reduced when the combined balances in your CPF accounts, including the amount committed to CPF LIFE, falls below $60,000.This is due to the reduction in any extra interest earned and paid to you.

If you used the same FRS$181,000 at 55 to do the calculation, your RA saving is depleted by 90 years of age, meaning your RA will show may $28.78 , so at 90ish month, you will have to start drawing from LIF

Lastly from CPF

Your savings used to join CPF LIFE (i.e. annuity premiums) will continue to earn interest like your Retirement Account (RA) savings, which is currently at 4% per year. The interest earned on the annuity premiums will be paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants. The interest will be paid to you as your monthly payouts for as long as you live.

So that mean I am more or there correct except amount can be anyone call

 

[kelhot2001]

a payout of 1840 till 105 vs a payout of 1840 for life.

is there any difference?

95 year old nia , you have extra 10 years lol

 

[kelhot2001]

Surely there is an misunderstanding in numbers and the calculator used. RSS payout can never be close to CPF Life Payout for the same sum at the start.

Let's reason with the numbers given by the Board.

For his cohort, the min sum in 2012 was $139k and the payout was $1,240 for about 20 years.

The following year in 2013, FRS increased to $148k. And under BP, the payout was between $948 and $1039 for life.

With a 10 year vesting period to age 65, the latter would have a much bigger retirement sum and yet the payout is much lower.

I just request that he used the same amount he is getting from his present RA under RSS, to compare using the CPF life estimator with basic plan withdrawal. It seem to be better with old RSS isnt it?

He belong to the transition group of old rss to new CPF life group. See below for these old RSS group

CPF RSS (From CPF site)

Under the Retirement Sum Scheme (RSS), your monthly payouts from your CPF Retirement Account (RA) can last up to 20 years, taking into account the base interest rate on RA savings, which is now 4% p.a.

To benefit members aged 55 and above, extra interest of 2% p.a. is paid on the first $30,000 and 1% p.a. on the next $30,000 of your savings. The extra interest provided by the Government is used to extend the RSS payout beyond 20 years. In this way, members will enjoy payouts for longer and there's less risk that their savings will run out.

The duration of RSS payouts is capped so that the payouts do not extend past 95 years old. This age cap prevents the payout duration from being overly stretched, while still reducing the risk of RSS members outliving their RA savings. Members can also apply for CPF LIFE which fully addresses this risk.

If you pass on before your RA savings are depleted, any remaining CPF savings will be distributed according to your CPF nomination or according to intestacy law.

 

[dork32]

95 year old nia , you have extra 10 years lol

the point is chances are you will not last a lot more after 95.

and most will not even make it to 95

 

[Mecisteus]

If you have so much, might as well get it started immediately.

One of my family member had only 16k at 55, so chose to delay till 72, the money has compounded to 40+k. The payout period for the rss scheme has more than doubled for this decision.

So confirm in the past one can choose to delay beyond 70?

 

[Mecisteus]

Quite as expected based on your comparison

If based on your RSS till 95 years old
If comparing RSS$1840.00 to CPFlife Basic at $1838.00 both are similiar except one is till 95, the other till death. But on the other hand, basic amt will drop alot from 90 - 95. The other not compare are the bequest left behind which i suspect rss will have a better bequest

If comparing RSS$1840 against CPFLife standard the amount is slight lower but the bequest is definitely bad against RSS$1840.00 , at age 81, bequest will lose out at least $150k

Conclusion : Why change RSS?

Come on. Until now, why are we discussing about this?

CPF Life has an insurance component.

RSS has no insurance component.

Which one is a winner is just a gamble and depending on the future outcome.

 

[kelhot2001]

One interesting question that came up earlier with my old class mate.
If my private company signed a contract with me to pay me 5k per month till my passing, does that consider as pension or private annuity. Can this be use as a wavier for my CPF life exit?

 

[Mecisteus]

One interesting question that came up earlier with my old class mate.
If my private company signed a contract with me to pay me 5k per month till my passing, does that consider as pension or private annuity. Can this be use as a wavier for my CPF life exit?

If you are CPF, what do you think?

Will you accept such possible sham arrangement?

 

[henrylbh]

So confirm in the past one can choose to delay beyond 70?

If I remember correctly, those born before 1949 can defer indefinitely.

 

[henrylbh]

One interesting question that came up earlier with my old class mate.
If my private company signed a contract with me to pay me 5k per month till my passing, does that consider as pension or private annuity. Can this be use as a wavier for my CPF life exit?

If your company is GIC or Temasek and any of the local banks, I am sure it is acceptable. But your private company even with good standing

 

[Mecisteus]

If I remember correctly, those born before 1949 can defer indefinitely.

That's true.

In the news, some had not even gotten their payouts.

That means 100% bequested.

 

[K_E_N_L_A_W]

So confirm in the past one can choose to delay beyond 70?

Yes. Confirm and chop.

 

[Mecisteus]

Yes. Confirm and chop.

Thanks for confirming.

Because there is a CPF champion who said a different story.

 

[havetheveryfun]

One interesting question that came up earlier with my old class mate.
If my private company signed a contract with me to pay me 5k per month till my passing, does that consider as pension or private annuity. Can this be use as a wavier for my CPF life exit?

your company might be willing to do that if they are profitable and still making money...

but 20-30 years is a long time... what if one day the company closes down due to disruption, economy changes, etc.. even if they wanted to continue paying you, they won't have the ability to do so anymore..

 

[Mecisteus]

From CPF,

You are fully exempted from setting aside the retirement sum in your Retirement Account because you are receiving a monthly pension / annuity payout.

Not much information.

But CPF definitely has their own due diligence of checking the reputation of the company that is making the pension or annuity.