Tan Kin Lian's Blog: Dislike of CPF Life

Saturday, October 17, 2009

Dislike of CPF Life

I met a retiree. He expressed a strong dislike of CPF Life. He said that the four options are misleading. The Government said that there is a refund to the beneficiary on the death of the annuitant. He argued that if the annuitant lives long enough, there will be no further refund.

I disagree with his reasoning. He should not complain about the available of options or the fact that there is no refund, if the annuitant lives to an advanced age. But, he refuses to listen.

I am quite sad at the distrust of the Government expressed by this person. This distrust seems to be quite widespread. It is not justified in this particular instance about the CPF Life.

Tan Kin Lian

32 comments:

Anonymous said...: The Govt must earn the trust.

Dislike:

a) Minister earning millions adn occasionally asking for more while the heartlanders struggle.

b) Show no support when FIs mis-rep MB/HN5/Jubilee as compared to Hong Kong SFC.

c) Too many foreigners taking up Singaporean jobs. Middle age PMET left jobless due to retrenchment, restructuring while SME employers preferred younger and cheaper foreigners. I am one of the jobless PMET for nearly 3 years.

d) Over stressing younger generation to the extend primary school students need tuitions to survive PSLE.

e) High cost of living.

The next election will be shocker to them. More PMET will join the opposition. More Middle age Singaporeans will vote for opposition.; October 18, 2009 12:10 AM
wjsim said...: I'm not very familiar with the exact intricacies of CPF Life. However, I feel that CPF Life is a very good balance between state sponsored social support and independent private financing.

It's not government they don't trust. It's insurance.

It's hard being the gahment. Give people the money back, people spend finish, people blame gahment no support. Help them do planning, complain shortchanging them. I leave the headache to the million dollar ministers.; October 18, 2009 12:15 AM
Don Lim said...: Well, I think the CPF Life brochure is available in all 4 official languages. The contract is in black and white. So if this man is really worried, simply keep a copy of the brochure. What else does he want? Does he expect the Minister for Finance to personally write a letter of assurance for him?; October 18, 2009 4:27 AM
Anonymous said...: i think people are not giving an option to decide whether to join or not. it is compulsory for people later on to join but given 4choices.
for me, as i have a choice and given my financial condition, it makes no sense to join but not for the later batch as that IS NOT AN OPTION FOR THEM.; October 18, 2009 6:27 AM
Anonymous said...: He can choose not to opt in, right?
AT LEAST HE HAS A CHOICE...; October 18, 2009 7:44 AM
Lye Khuen Way said...: Unfortunately, as Mr Tan said,the Government has lost a lot of credibilty along the way and that even the "older generation" are sceptical of any scheme. I personally believe that this CPF Life was long overdue .; October 18, 2009 9:14 AM
Anonymous said...: It is a very worrying trend that so many older people now distrust the garment.
They are the strongest supporters for the past 40 years. Now is the reverse, they trust much less than the younger geration do.
Once you reach 45, you are consider "useless" by pub & pte sectors alike. After the minibond saga, high costs of living, and less and less opp for self-employment, especailly for the older people. You can't really blame them.; October 18, 2009 9:24 AM
Anonymous said...: What's this? A lack of trust amongst the population?

Time to roll out another expensive Public Relations campaign to increase the 'feel good" factor.

Singaporeans need to be reminded about how fortunate we really are. But maybe this is a lost cause.

PR money may be better spent overseas to attract more foreign talent to come to Singapore.; October 18, 2009 9:48 AM
Anonymous said...: Sorry, the minute I hear that it is a Compulsory thing, I don't trust it anymore.; October 18, 2009 10:00 AM
Tan Kin Lian said...: I made a presentation to the Feedback Panel attended by a few members of the Committee.

I said, "Don't make it compulsory. Make it attractive. For every $X put into the account, the Governemnt can top up with $Y. Many people will queue up to buy the CPF annuity. "

They decided to give some top up (but vary the amount based on income and wealth" but still make it compulsory.

I don't know why they still want to make life difficult by varying the bonus. This is Singapore thinking. Never change.; October 18, 2009 10:09 AM
Anonymous said...: CPF Life is full of flaws. It's not due to mistrust of the Government.

Look closely and you'll be able to tell.

And that man is right. If you live long enough, there is no refund.

But then, availability of refund is not the crux of its' flaws.

Look deeper and you'll be able to see the faultlines.; October 18, 2009 11:02 AM
Anonymous said...: We cannot blame people for not trusting CPF Life. Apart from it being compulsory for those under 55 now, there is also the `Opt- in -and- can't -Opt -out' policy.
The $4k bonus is given with exclusion condition. Many living in private properties would be excluded.
We all know that the govt CANNOT give something to some people without taking it from some other people. So where would that $4k come from?
There is also NO guarantee of payout should the fund be unsustainable in the long future.
The premiums are not stated in the brochures. You can only find it in the website. Why the need to hide this fact? Is it because the Life Balance premium would be 30%? The least is 10%?
If one has $100k in the RA, it means, upon joining, $30k would be deducted!
I find the most baffling fact to be the absence of a guaranteed basic amount one could expect to get. All given amounts are estimations.......which mean they could be more, or less.

Since everything has the + and - sides, perhaps the media should also print the - side. Only then can we make an informed choice.; October 18, 2009 11:17 AM
Steve Wu said...: Dear Kin Lian,

The CPF Life program is supposedly the implementation of the Report by the National Longevity Insurance Committee (NLIC) chaired by Lim Pin
http://mycpf.cpf.gov.sg/Members/Gen-Info/CPF_LIFE/NLIC.htm .

However, if you read it carefully, there are many critical provisions in the Report which the CPF Board did not implement, e.g.

1. the choice to opt-out of the program,
2. the choice to purchase alternative annuity from a commercial insurer.

We should understand that an annuity typically is a commercial product governed by a contract. If the CPF Board cannot guarantee the contracted payout (particularly when it is mandatory national program), then it has no business offering the annuity in the first place.

We should also understand that the $40K taken out for the CPF Life annuity payment at age 55 shall cease to receive the 2.5% interest mandated by the CPF Act.

I do not trust this government.; October 18, 2009 11:18 AM
Anonymous said...: Maybe when everyone is in the scheme and election day comes they may say that if they are not voted in then this scheme may go kaput and you lose all your money, or maybe they may say that they are "reshaping the bonus" or payout for your own good, then you will be in the same situation as what many NTUC Income policyholders are in now.; October 18, 2009 11:52 AM
zhummmeng said...: Anon October 18, 2009 11:02 AM,
instead of claiming flaws let us know what are the flaws.
If it is compulsory...this is not flaw... it is good that there is huge number
If there is no opt out options...this is not flaw...it is best for all so that those so who suka suka, want or don't are prevented from screwing up the scheme
If there is no guanrantee....this is not flaw...it is good so that the payouts can be much higher than the range and that inflation can be addressed too in a measured way
If there is no refund after a period... this not flaw....this is NOT a charity..where to get the money to pay forever because all will die.
There is a floor level, that is the interest rate is guaranteed at 2.5+1%.. this rate NO insurance company can guarenatee and pay.
If interest rate goes up the payouts will be above the range
Only idiots or those conned by insurance agents will buy private annuity..CPFLIFE is the best so far. CPFLIFE is a variable annuity with a guaranteed minimum return(3.5%)* and a longevity insurance.

*payout range 3.75%-4.25%; October 18, 2009 3:15 PM
Anonymous said...: Would all the ministers be buying CPF Life too?; October 18, 2009 9:58 PM
Anonymous said...: The ministers don't qualify because they don't have $40K in their CPF.; October 18, 2009 10:22 PM
Anonymous said...: Ministers buy CPF life? Ministers still enjoy pension scheme!; October 18, 2009 10:25 PM
Anonymous said...: If CPF Life is such wonderful, then it should be applicable to everybody from top to bottom.

Why some policies are only applicable to some people and not all?

This is inequality!; October 18, 2009 10:49 PM
Anonymous said...: It is meant for the average man in the street and to help them have money to see them through life. The rich don't need help.
That is why don't let the insurance agents steal your retirement.If yuou kenna conned by them your retirement goes up in smoke.; October 19, 2009 12:38 AM
Lion Investor said...: I find the greatest irony with CPF life is that there isn't a benefit illustration. Insures are required to provide one that shows the guaranteed and non-guaranteed figures of products they sell.

Yet CPF does not lead by example. How then do they expect people to trust the scheme?; October 19, 2009 5:40 AM
zhummmeng said...: Lion Investor,
this is not an insurance company. To provide illustration meanS you get lesser payouts. How aBOUT IT? Cost!!! must be kept down(no commission for insurance agents)
This is a hybrid of variable and gaunranteed annuity with longevity insurance.Range of payouts between 3.75% to 4.25%. Where to get this rate? Guaranteed floor rate is 3.5% and upper limit is limitless depending on interest rate.
Limitless upside????but it comes with a price .....inflation.; October 19, 2009 9:46 AM
Anonymous said...: CPF Life is not so much for those above 50 due to reasons:
a)most of them will not live beyond 90
b)once you join cpf life you cannot pledge your home to withdraw the cash if you need it
c)monthly payment in minimum sum is more than cpf life
d)the govt is planning for the younger generations and as a incentive for those 50 and above is giving some cash to lower income citizens who wants to join.
So for those who have retirement account and think they can lived to 90 years and above, cpf life is for you !; October 19, 2009 10:07 AM
Anonymous said...: Without a BI is even worse than insurers with a BI. At least the BI from the insurers serve as a legal contract. Without a BI, how to argue?
This part is a bit tough swallow.

It is sad to know the CPF Life is meant for the laymen. Yes, poor or average people need this plan.; October 19, 2009 11:22 AM
Vincent Sear said...: I do think that CPF should be subjected to the same requirements as insurance companies are subjected to by MAS. Provide full product disclosure, benefit illustration and more importantly, financial needs based analysis (This can be outsourced to qualified advisers for a fee. With due respect, I don't think that CPF counter staff can help the elderlies choose which plan.)

Yes, that'd add to cost. But cost isn't necessarily wasteful if it brings justified benefit. Then the cost is value for money. Especially now that the scheme has just been launched, the first batch of enrollees mostly elderlies from the past generation when many are less educated.

As for BI, I can't see how a few pages of figures can cost how much more. My point is, it's not about comparing BIs with private annuities. My point is, comparing BIs for Plan A, B, C and D, review personal circumstances, and then make a fully informed choice.; October 19, 2009 2:55 PM
Anonymous said...: Don't buy CPFLIFE with $40K in the end also finished..maybe a few years only.There are alot of smart people out there who can turn $40K into $400K at the casino. Should let them have the money so long they don't come back and cowpeh cowbu.If they do suggest to them to jump from the twin tower in KL to make sure they are dead and don't cause nuisance.; October 19, 2009 6:56 PM
Anonymous said...: Anon 6.56pm,

If let them opt out and take out the money, the consequences will be as follows.

They lose the money and come back to the govt to ask for aid and handouts. The govt has no choice but to do it or else it loses that vote.

What will happen to the rest of us who opt in? We will be frustrated by the those who got govt aid and handout and also taken their cpf. We will also vote against govt out of frustration.

In order to avoid this scenario, the govt just make it compulsory for everyone. Case Closed.; October 20, 2009 9:37 AM
Anonymous said...: Some even ask whether they can take out the medisave... Can... if they have medical bills to pay but not for casino or buy toto or 4Ds. It is very clear, right?; October 20, 2009 7:53 PM
Vincent Sear said...: Since someone mentions Medisave here, I think that the Medisave cap of $32k is too high, considering that there's Medishield to cover the larger portion of the bill, if any.

As CPF Life has offered Plan D for those without any beneficiary, why should their Medisave cap be so high and at the end of their life leaving it to nobody (i.e. government). I think that CPF should reduce the Medisave cap for members who have Medishield and opted for CPF Life Plan D.

However, I'm not suggesting refunding excess Medisave in cash. I'm suggesting a lower cap and excess Medisave funds should go into the RA, eventually still used to boost CPF Life benefits.; October 21, 2009 3:01 PM
Anonymous said...: I don't think the current Medisave cap is high. Even with insurance coverage for hospitalization bills, a serious illness can be really a costly affair.

starlight; October 21, 2009 9:33 PM
Anonymous said...: Vincent,
the medisave cap is $37,000 and not 32K which is the medisave minimum sum when one hits 55 for withdrawal calculation.Between now and 2013 one can withdraw any amount in excess of 32K.; October 21, 2009 10:54 PM
Vincent Sear said...: Anonymous 10:54PM:

Thanks for the correction.; October 22, 2009 5:16 PM

Saturday, October 17, 2009

Dislike of CPF Life

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