Tan Kin Lian's Blog: CPF Life - does it need to be compulsory?

Friday, July 24, 2009

CPF Life - does it need to be compulsory?

Hi Mr Tan,
Thanks for willing to spend time to write on CPF Life. We all understand the NEED to have CPF Life. But I would like to have an unbiased view on this plan which is made compulsory for everybody.

Our government is taking a significant portion of our hard-earned CPF money and place us on this plan. Is this a reasonable deal for us or simply we have no choice but to swallow this bitter pill?

Among the options available in this CPF Life, is it just choose based on "whether I want to leave some money for our younger generation" and thus opt for "receive minimum payout when I am alive"?

Is it really true that since CPF Board will be administering this annuity plan, it is better and reliable than those offered by insurers which definitely have more experience in this area?

JL

9 comments:

Anonymous said...: The insurance companies have more mouths to stuff and ceos with high salary and agents who want high commission how can they give better than CPF without these cost?
I think the unhappiness is that you are not given a choice to exercise.Having said that, you can't take out your minimum sum. If you were to compare the payouts with the insurers CPF beats them hands down.
The non guarentee is small matter. It has a small risk range of a fraction of percentage, and NOT loss.The average rate of return over the long term should be 4.5% minimum which is NOT BAD as compared to insurers' of 2.5%
Come on , wake up and see things in perspective and stop whining.
The problem with you people is you can't see the good from the evil.; July 24, 2009 12:38 PM
Anonymous said...: For the CPF Life,

It seems there is a lack of guarantee on premiums and payouts in the new law.

The law also allows the CPF Board to stop CPF Life payments unless the Lifelong Income Fund is solvent.

Does this mean that very low payouts or no payouts can happen and it is lawful. What's the point of CPF Life if this is the case?

So is this worse than current scheme where at least there will be payouts for 20 years based on minimum sum available?; July 24, 2009 1:24 PM
Anonymous said...: What is the probability of that happening. It is just a caveat. It is like telling what if Singapore becomes insolvent or DBS goes bankrupt . This is not impossible in today's context. What is the point of guaranteeing you to make you feel good and if it really happens who is there to guarantee you. United Nation? US?
If your CPFLIfe goes , so is your minimum sum.; July 24, 2009 2:20 PM
Anonymous said...: There are many who still do not know about CPFlife or it is better to leave with CPF. These people become victims of unscrupulous insurance agents who lied and conned them into buying their rotten annuity and which they have to live beyond 95 years old to be better than CPF.
Some FAs require their advisers to fact find whether annuity is suitable but insurance agents don't need. Agents conned their victims with this statement,
"CPF can pay finish but annuity is for life". Half truth? Half lies?
This statement is famous with one company's agents. They are the worst. They sure get retributions by conning the old folks.; July 24, 2009 2:40 PM
Anonymous said...: anon 12:38,

:::The non guarentee is small matter:::

If this is a small matter than the govt should guarantee instead. Where is the goodwill in the implementation? It seems the govt is more interested in being able the solvency of CPF Life, then its ability to provide for retirement - defeating the whole purpose of CPF Life.; July 24, 2009 5:12 PM
Anonymous said...: Under current scheme, your payout for 20 years depends only on:

1. Your minimum sum in CPF
2. The interest rate

Under CPF life your life payout depends on:

1. Your minimum sum in CPF
2. The interest rate
3. Your choice of scheme
4. Mortality rates of other people
5. Other people's choice
6. Other people's min sum
7. Due to 3, 4, 5, 6 and other reasons, govt can decide premium and payout, including no payout. No payout also doesn't mean the govt is bankrupt or country finish. Just simply no payout as per the law!; July 24, 2009 8:46 PM
Anonymous said...: July 24, 2009 5:12 PM,
CPF is over paying if compared to any insurers'. There is a range of payouts. How about guaranteeing you the lower range? Defeat what purpose? Your purpose or everybody's purpose? The figures are actuarial figures. Why CPF can give much higher there is very low admin cost unlike private insurers' who have the ceo's salary, the senior managers' and the commission to insurance agents.
Also remember if you live longer your payouts come from those who died earlier.Death is uncertain and so is life but both are compensating each other.
You can choose not to join. You can take an annuity with ntuc income and be exempted from it if you think that ntuc will not collapse but CPF will. If you think so I don't know where you have put your sense of reasonability.

July 24, 2009 8:46 PM,

there is a need to do a fact finding before deciding which scheme suits you BEST. If you think 20 years is enough for you and you won't live beyond 85, it is a fantastic plan. If you kiasu and fear living beyond 85 then a life annuity is BEST. If you are not sure how long you would live choose one in between that has a left over. But becareful, the left over is not forever. It will end at certain age.
CPFlife is an insurance scheme and therefore it is different from a draw down scheme, draw down from your money for a limited time.
CPFlife is forever , if you are an immortal..; July 24, 2009 10:11 PM
Anonymous said...: I think that buy annuity is a very good option for your golden years, because is a guaranteed annuity, you’d could enjoy of better way your retirement, without to worry for her income yearly.; July 24, 2009 10:22 PM
Anonymous said...: National Debt of USA > US$1 trillion

What if......; August 03, 2009 8:48 AM