a) It is a good scheme, as it provides the security of a lifetime income through pooling longevity risk
b) The Government gives a bonus of $4,000 for people (except the wealthy) to join the scheme
c) The annuity gives an imputed interest rate of 3.75% to 4%, which is attractive compared to the market return on low risk investments
Some of the remarks made by people who dislike the CPF Life are:
a) The Government will keep the money and may not pay it back
b) The Government makes a profit when the annuitant dies at an early age
c) The scheme will have a big surplus due to the low payout (based on the experience of other Government schemes)
I hope that these points can be addressed by the Government and that people can learn to trust the Government.
a) The Government will keep the money and may not pay it back
b) The Government makes a profit when the annuitant dies at an early age
c) The scheme will have a big surplus due to the low payout (based on the experience of other Government schemes)
I hope that these points can be addressed by the Government and that people can learn to trust the Government.
Tan Kin Lian
Under the CPF Act, the floor rate interest now is 2.5%.
ReplyDeleteBut can or will the Govt amend the Act to make it lower in future? After all PAP will always have a parliamentary majority.
Or change any other things that make it unfavourable to members?
Any comments?
I personally prefer to withdraw money at age 55, as there is no transparency in the way CPF
ReplyDeleteinvests our moneys. Are these funds involved in the two SWFs' investments abroad? It's unnerving to guess the billions lost may involve our CPF moneys. But there may be people
who have no confidence in managing their money,
then it's better to join the scheme.
Mr Tan,
ReplyDeleteIt is not just a matter of trust. It is one thing for Tharman to say to people to trust the government when they open the reserve with unconvincing argument, it is another when the minister says there is no strategic advantages and benefit in opening transparency. When a product sell and make huge money for shareholder, we can agree that recipe of success should be made public and be scrutinized, but when a product lose extraordinary amount of money without accountability, how can the same Tharman says that they should be scrutinized because of "secret recipe" ? It is insulting to one's intelligence.
Hence, it is a matter of action. Trust is no use when their action speak otherwise. Their words and action that keep flip-flopping does not make them deserve the word "TRUST"
For the current young generation, whether you like this CPF LIFE or not, it is beyond your control.
ReplyDeleteInstead of hating it, learn to accept it and make the best out of it.
I have asked if it is possible to just put part of the money in CPFLife. But the answer is, it is either the full amount or none at all.
ReplyDeleteI do not feel comfortable to transfer all money in my RA to CPF life so I think it is better not to join.
To join or not? For over 55s, CPF in letter to us, has given a latest date we must make our decision. Personally, I will take two factors in my decision: (1) My life expectancy which I confirmed with my doctor 2nd time in August this year. (He already told me after surgery how long more I can live.) I said "I can't afford to make a wrong decision." And my doctor's professional opinion hasn't changed either. (2) CPF law on my cpf money: For CPF Life, CPF Law says at future date payout can be changed depending on Fund. There is CPF Life Seminar on 30th September. Seminar is free. I have already registered on website to attend. I am indeed grateful that I don't have to make decision so soon. Like I said, check your letter for date when you must decide.
ReplyDeleteSo far, the Government (whether it is intentional or unintentional) did not stress that the new CPF Life is optional. Actually, people have a choice. People can don't opt-in and will still be getting regular payout after retirement, and the family will get the remaining money in the CPF account if die prematurally.
ReplyDeleteFrom the Government's point of view, it will be good that all CPF members join the new scheme so that it will not face a big problem of need to take of people who live older than, says 82 years old, and without income. So, in future, those who live shorter life will "take care" of those who live longer life. In the mean time, Government just take care the people's money and hopefully without taking any profits.
I would not want to join. cpf rules always change from time to time. Better take out whatever you can.
ReplyDelete"For the current young generation, whether you like this CPF LIFE or not, it is beyond your control.
ReplyDeleteInstead of hating it, learn to accept it and make the best out of it."
The same can be said for any government policy which always beyond your control. But when you become too flexible, adaptable and docile, you become the target for exploitation. Just look at the minibomb saga. Will the investor learn to accept their fate and make the best out of it ?
CPF Life does not grow in tandem with in tandem but yet your money is locked in for a long time. Of what use is $600 in 30 years time? Our money should not be locked in like this.
ReplyDeleteAnon at 3.20pm, this is not a voluntary scheme! ;)
ReplyDeleteFor those who have the options, one of the important factors to be considered is whether we can leave beyond 85 years. If you think you can live beyond 85, then opt-in. Otherwise just remain at the present policy of RA for 20 years.
ReplyDeleteCPF life is a good life annuity plan for the younger generation but not for those who have retirment account,that is why the govt gave incentive for of up to $4000 for those who wish to join before dec 2010,
ReplyDeleteYou still can join CPF LIFE befor the age of 80 but there is no L bonus after dec 2010,
CPF LIFE is also good for those who wants to contribute to their parents or wife who has liitle or no cpf balance eg if they put in $20,000 the govt will give up to $4000 depend on flat type and income of parents or wife. He also benefit from tax relief
Hi Sept 17 12:44 pm - Am I mistaken or are there two different payout dates? If money remains in RA, I think the draw-down date (payout - 20 Yrs) is age 63. If opt in for cpf life, draw-down is age 64? So L-bonus is actually interest for one year delay in payout. But really decision shd be based on personal circumstances and after careful consideration.
ReplyDeleteMr Tan,
ReplyDeleteI disagree with you that CPF Life is a "good" form of annuity. By the way, I would call it Mortality Tax because it is a tax by the govt for dying young.
The monthly payout is so meagre that one cannot possibly survive on, especially after factoring in inflation. Also, how many of us will live long enough such that this Mortality Tax makes economic sense. You will recall that the govt did not dare disclose the actuarial report that reported "proved" that S'poreans are "living longer". The govt is obviously trying to hide something by not being transparent. I would like to know how the actuary arrive at their conclusion.
All the CPF Life plans, arranging various ways and options for people with sizeable sums in the CPF. Begs the question, what about those who don't have. It gives me the impression that the the government wants to take care of our money, not us. And this begets another question, if I got money, why do I need you to take care of me? Should go take care of those who don't have money and need care.
ReplyDelete