Latest Changes to CPF LIFE

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.  

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