All About CPF LIFE

Singa­pore National LIFE Long Income Scheme, CPF LIFE, is a new scheme that will provide lifelong income for cit­izens from age 65 onwards. This annu­ity scheme will be imple­men­ted in year 2013 for those who are age 50 and below in 2008. Cit­izens will need to set aside Min­imum Sum (MS) in their CPF Retire­ment Account when they reach 55 years old. The MS can be made up all in cash, or part cash and part prop­erty, with the prop­erty form­ing up to 50% of MS. Part of this MS will be used to pay for the CPF LIFE premium at age 55.

There are twelve options avail­able for CPF LIFE as shown below:

Draw-down age 65 70 75 80 85 90
Refund Option

Yes

No

Yes

No

Yes

No

Yes

No

Yes

No

Yes

No

CPF mem­bers will start get­ting their retire­ment income from age 65, either from their MS or CPF LIFE. Draw-down age is the age that the retire­ment income will draw from CPF LIFE. The earlier the draw-down age, more money will be channeled to CPF LIFE and less money left at MS. Unlike MS, money paid to CPF LIFE does not attract any interest from age 55 onwards. The Refund option gives the CPF mem­ber the option to refund the remain­ing CPF Life premium to the bene­fi­ciar­ies if he were to pass on earlier without deplet­ing the premium. No-refund option is suit­able for those without any depend­ents or whose depend­ents do not require the money. The stand­ard default option is Refund 80, which is most suit­able for the major­ity since it strike a bal­ance between monthly pay­out and CPF LIFE premium.

The monthly lifelong pay­out will depend on the actual amount of MS set aside. The pay­out will also depends on the Spe­cial, Medis­ave ad Retire­ment Accounts (SMRA) interest rate over the retire­ment period, which range from $350 at entry to $1,100 per month for the max­imum MS.

CPF mem­bers who are 50 years old and below in 2008 and with at least $40,000 in their MS will be auto­mat­ic­ally included in the CPF LIFE scheme. For mem­bers with less than $40,000 in their MS, but want to par­ti­cip­ate in the CPF LIFE Scheme, the Singa­pore Gov­ern­ment will assist by giv­ing them LIFE-Bonus (L-Bonus). But the monthly pay­outs will be lower. Mem­bers with less than $20,000 in their MS will receive a pro-rated L-Bonus upon opt­ing in to the scheme. They will receive the full L-Bonus if they top up their Min­imum Sum to at least $20,000.

L-Bonus will be provided for the first five cohorts of Singa­por­eans who join the LIFE Scheme i.e. those aged 46 to 50 in 2008, with up to $54,000 Assess­able Income (AI) and live in a prop­erty of up to $11,000 Annual Value (AV) at the time of enrol­ment. Mem­bers in the old­est cohort, those aged 50 in 2008, can expect to receive between $2,200 and $4,000. The young­est cohort, those aged 46 today, will get 30 per­cent of what the 50-year-olds receive. L-Bonus will also be exten­ded to those aged above 50 in 2008 who opt in.

The amount of L-Bonus you can receive depends on the following: 

  • Your age in the year 2008; and
  • The Annual Value (AV) of your home as assessed by IRAS based on your NRIC address as of 31 Decem­ber of the year pre­ced­ing the year that you enrol in the CPF LIFE Scheme; and
  • Your Annual Assess­able Income (AI) for the Year of Assess­ment pre­ced­ing the year that you enrol in the CPF LIFE Scheme (if 2009 is the year you join, Year of Assess­ment will be 2008, which takes into account income earned in cal­en­dar year 2007).

 Mem­bers in the old­est cohort, those aged 50 in 2008, with at least $20,000 in their Min­imum Sum, can expect to receive between $2,200 and $4,000 (Table 1).

 

Annual Value (AV)

Annual Assess­able Income (AI)

$6,000 or less

More than $6,000 and up to $11,000

$24,000 or less

$4,000

$3,200

More than $24,000 and up to $54,000

$3,200

$2,200

Table 1: L-Bonus for those 55 and older in 2013

The young­est cohort, those aged 46 today, will get 30 per­cent of what the 50-year-olds receive.

The eli­gib­il­ity cri­teria to receive the L-Bonus are as follows:-

  • Be a Singa­pore cit­izen; and
  • Be aged 46 or above in 2008; and
  • Enrol in the CPF LIFE Scheme; and
  • Have up to $54,000 Assess­able Income (AI) and live in a prop­erty of up to $11,000 Annual Value (AV) at the time of enrolment

CPF Mem­bers aged 56 to 65 in 2009 who opt in will also receive the V-Bonus of up to $1,800, which is inten­ded to encour­age them to vol­un­tar­ily defer their draw downs. The V-bonus is set at 2% interest on mem­bers’ bal­ances up to $30,000 in their RA.  A mem­ber there­fore can get up to $600 for each year deferred, which means he can get up to $1,800 if he defers draw down for 3 years.

Use­ful Resource:

CPF LIFE Pay­out Estimator

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