Dear Mr. Tan,
I am 58 and retired. Three years ago, I used my minimum sum to bought a Life Annuity.
With the recently announced CPF-Life, higher MSRA interest, D-Bonus and V-Bonus, is it better for me to:
(a) Terminate the Life Annuity and transfer the money back to CPF RA (to earn the SMRA interest rate and various bonus) or
(b) Retain the Life Annuity and instruct the insurer to postpone the pay-out age from 62 to 65 (to qualify for the V bonus)?
REPLY
The CPF pays an attractive rate of interest on the retirement account, i.e. 4% plus 1% bonus. It also pays the bonus for deferring the payment.
I know of an annuitant who decided to cancel the annuity and transfer the savings back to CPF. He received a good cash value and found the new arrangement to be finacially better.
Perhaps, you should study both options and make the decision, based on the actual figures. You can ask for the actual figures and carry out a cash flow projection over the next 5 or 10 years, to make a better decision.
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