Announced in 2009, Singapore National LIFE Long Income Scheme, CPF LIFE, is a scheme that will provide lifelong income for Singapore Citizens and Permanent Citizens from age 65 onwards. This annuity scheme will be compulsory for those tuning 55 from 1 Jan 2013 onwards. CPF Members will be automatically be included in CPF LIFE if they can set aside at least $40,000 in their CPF Retirement Account (RA) when they reach 55 years old, or have $60,000 in the RA at 65 years old. Those who cannot meet the requirement will remain the CPF Minimum Sum Scheme, which gives a monthly payout for about 20 years.
There are currently four options available for CPF LIFE when it was offered in February 2009:
1. CPF LIFE Balanced Plan (Default Option) — Moderate Income and bequest amount
2. CPF LIFE Plus Plan — Higher Income; Lower bequest amount
3. CPF LIFE Basic Plan — Lower Income; Higher bequest amount
4. CPF LIFE Income Plan — Highest Income; No bequest amount
With effect from 1January 2013, however, the four plans will be further streamlined to the following 2 plans.
1. CPF LIFE Standard Plan — Higher Income; Lower bequest amount
2. CPF LIFE Basic Plan — Lower Income; Higher bequest amount
CPF LIFE Standard Plan is a combination of the current Balanced and Plus Plans, in which the Standard Plan will give higher payout than the Balanced Plan.
When CPF members join the CPF LIFE scheme, some of the money in the CPF RA account will be channelled to pay the premium for CPF LIFE Annuity. Remaining money left in the CPF RA will continue to attract interest which will be credited into CPF Members’ RA. Money paid to CPF LIFE does not attract any interest for individual CPF member’ RA from age 55 onwards.
Under LIFE Basic Plan, about 10% of the RA will go towards the Annuity Premium at age 55. For LIFE Standard Plan, it is probably around 30–50% of the RA will be used to pay the Annuity Premium. CPF members will start getting their retirement income from age 65, first from their RA, then from CPF LIFE Annuity.
The monthly lifelong payout will depend on the actual amount of RA set aside for CPF LIFE. The payout will also depend on the Special, Medisave ad Retirement Accounts (SMRA) interest rate and the mortality experience over the retirement period, which may range from $350 at entry to $1,100 per month for the maximum RA.
You can analyse the monthly payout under the current 4 different schemes using the CPF LIFE Payout Estimator.