CPF Advisory Panel has just released their last 2 recommendations on the CPF enhancements.
New CPF Life option with escalating payout
In future, CPF members will have 3 options to choose for their CPF Life, which is an annuity scheme administered by CPF board to give monthly payout to retirees from age 65 in his lifetime. The first two options are CPF Life Standard and CPF Life Basic with level payout throughout, with the prior giving higher monthly payout and less to the beneficiaries when member passes on and there is any money left; and latter one giving lower monthly payout and more to the beneficiaries when member passes on and there is any money left.
The new option is one with escalating payout set at 2% increase a year, but the initial monthly payout will start at about 20% below in monthly payout compared to CPF Life Standard plan, assuming same premium amount and payout age.
The new option is good for those who will get level payout from their private retirement plans, as the monthly payout will increase over the years from their CPF Life scheme. It is also good for those who may want to continue working beyond age 65 and thus have income and do not require higher payout in the initial years but more later when they cannot work at a more advanced age.
Lifetime Retirement Investment Scheme
Besides the current CPF Investment Scheme in which CPF members can invest in the unit trusts offered by the private investment firms and also the Investment-linked plan offered by insurers, CPF members can now look forward to a simpler future Lifetime Retirement Investment Scheme (LRIS) that the government will work on to offer to CPF members later.
LRIS will offer a small number of well-diversified passively managed funds, which are simpler for CPF members to choose from, and one which do not need active rebalancing, likely a market life-cycle investment approach. CPF member can liquidate their LRIS anytime up to the age 70, the latest date that CPF Life payout can begin, so that they are not forced to do so at age 65 (CPF Payout Eligibility Age) during the market downturn.
This new CPF Investment option may be good for those who want to grow their CPF OA fund more for their retirement. I personally feel that the 4%-5% interest guaranteed in our CPF Special Account is best to be left there for diversification and no risk with high interest.