Hi Mr Tan I am a housewife. I need your advice on the following options:
Option A - Ask my husband to top up my cpf account minimum sum to be eligible for the CPF lifelong annuity. For $50,000 I can get an estimated $438 monthly at age 65 (under R65).
The CPF website stated that this is an estimation and the payout amount can be changed over times. However once opt in, we cannot opt out should the payout amount changes. This statement bothers me. I feel that the payout amount is not guaranteed but act as a trap to get people to join in by inflating the payout amount to make it attractive.
Option B - Use the cash $50,000 to buy into annuity with NTUC at age 50 and starts the payout at age 65 for lifetime. How much will I get lifelong monthly payout commencing at age 65?
REPLY:
It is better to buy the CPF Life annuity. The CPF uses a good interest rate to calculate the payouts. They also have low expense charge, and are able to give an attractive return to the annuitant.
The CPF is not able to guarantee the payout, as it depends on future interest rate. I believe that it will continue to be better than market rate. You do not have to worry that the payout is not guaranteed.
Your first prioirty is to buy the CPF Life annuity. If you still have additional savings, you can use it to buy the life annuity from NTUC Income. You can ask them to quote you the payout and compare it with the payouts offered by other insurance companies for a similar plan.
CPFLife is ideal as it draw down on minimum sum from age 65, assuming if one takes R80.
ReplyDeleteI believe government will keep the interest favourable.
The problem is draw down age is age 65, I hope it will not push back further or it will be very discouraging, having it deferred from age 60 , 62 and now 65.
If one wish to retire early from 55 to take it easy, perhaps taking an annuity to start draw down from 55 will be ideal with other savings as well to be available.
With CPFLife taking care of post age 65, now we can concentrate on planning retirement needs before age 65.
I have since transfer from OA for my wife and myself to SA to make it max to prepare for the CPFLife to kick in.
Hopefully I can survive to age 65.
Mr. Tan., MAS might have visited your blog . I say this becuase what had been decried and advocated in this blog have been echoed by MAS during a keynote address in a LIA annual function.(just guessing)
ReplyDeleteThe issues of adequate coverage for consumers and what is fair remuneration of agents have been raised. We hope LIA will take the cue from here and remind its members of the primary role of insurance and is not about enriching the agents and achieving #1 market share..This has been the case with one insurer in the recent year where the insurer panders to clients' preference with useless product and not needs and the outcome is to the detriment of the customers.
We hope that you will continue to champion term or pure protection as the an efficient means of addressing personal risk. The views or comments by your visitors will be noticed too and go to formulate guidelines for fair dealing outcome to the consuming public.
Keep up the good work. We hope to see every one in the insurance company, from the CEO to the advisers responsible for the outcome and top down supervisory to ensure the consumers get the "best advice" which means meeting the customers' needs fully and adequately with the best products.
An example of a need of $500,000 that was compromised with just $50,000, was used as example of poor advice or advice that was glaringly obvious not in the interest of the client, yet not spotted by senior management, becuase agents overly promoted the saving component of the product at the expense of coverage needs. Isn't this example
has been centre of contention in this blog, BTITD?.The unethical agents on one side and the poor and helpless customers on the other corner.
Zhumeng:o)
The poor and inappropriate advice was deliberately "overlooked" by the supervisor. He or she too must be held responsible and so all the way up to the ceo. Both the supervisor and the ceo have conflict of interest. Both want sale and close 2 eyes to all the malpractices by the agents. This is well known and should be stopped otherwise the whole industry exists to steal from the unwary customers whom it is supposed to help.
ReplyDeleteCurrently, ntuc annuity pays much lesser than CPF. Of course ntuc agents would argue that their annuity is a participating but their payouts only catch up with CPF when you are a round 90 years old, assuming bonus rate of 2.75% which is unlikely to be consistent. A fairer rate would 1.5-2% and this poor. So don't be fooled by ntuc agents by this false arguement.
ReplyDeleteYou know why CPF has 12 options,? having so many options is actually not good but the feedback is that not many people think they are going to live beyond 85 years.To accommodate these people the 12 options were born.
So based on this feedback how many will actually benefit from ntuc annuity. They will benefit when they can live beyond 90 years which is a bit far fetched , don't you think so? You might be dead before ntuc pays the equivalent amount.
So, don't let ntuc agents give you the crap about lifelong income when you have to live to such an old to have what CPF gives you now. This is unethical and mis-selling and dsihonest and the agents who sell on this line have no conscience at all.
Put your money with CPF for security and shut out all those craps by agents.