Tan Kin Lian's Blog: Make CPF Life more attractive

Thursday, September 23, 2010

Make CPF Life more attractive

Many member are not taking up CPF Life because they find it difficult to decide between the four options. They are also suspicious that it offers low value to the consumer. CPF Life will be made compulsory for those who turn 55 in a few years time. It is likely to be unpopular. I have written this article to suggest how to make CPF Life more attractive to the public. Read www.tankinlian.com/latest.aspx.

6 comments:

rex said...: REX comments as follows,

You are right sir, the FAQ for CPFLIFE link you provided in your article is really confusing. If i may say, the cpf is doing a dirty job of using psychological persuasion like "automatically" included when in fact, the situation is that COMPULSORY inclusion for those who born after 1957. Imagine saying, at age 18 singapore males will automatically be asked to serve the nation as soldiers for two years.

As always, anything which is COMPULSORY begs the question "what rights does one have to impose a compulsory action on another person?" This is outragious!!!

I would also like to suggest that the cpf life scheme is terribly flawed for the reason that it assumes that old people can manage with fixed expenses on monthly basis. In reality life is not like that. In a normal month I could survive on $300 for example. But in some months i have a pressing need perhaps due to medical reason, to draw out $1000. The CPF Life scheme does not appear to allow a member to have that liberty because it forces him/her to fixed $300 each month (correct me if i am wrong... i couldnt find such flexibility stated in their FAQ...), due to the pooling concept of insurance . So my money is there but locked up and compulsory, I cannot take out a short larger burst of it as and when contingency situation arises. It is not acceptable to manage our lives with no regard for contingency factors.

IF the CPF life scheme has an escape clause to allow members to drawdown more (at the expense of lesser drawdown for a few months futurely) in certain contingencies, then I think i will subscribe to CPFLife. Without that kind of flexibility, CPFLife is really really unfair because it deprives a member of using his own money in larger chunks during contingencies.

I am very glad that I have the chance to OPT OUT of CPFLIfe and not "automatically" compulsory drawn into it!!!!!!!!!!!!!!!!!!!!!!!!!!

rex; September 23, 2010 8:43 AM
DareToAct said...: Bravo to you. It's high time the Government, who works for us, really work for us.; September 23, 2010 10:55 AM
Spur said...: Basically there will come a day when CPF money is "untouchable". They are even encouraging people to have your CPF monies automatically pass on *into* your family members' CPF accounts when you die, instead of the usual practice of distributing as cash to your nominees.

This is one reason why people are so nonchalant about wiping their entire possible OA to whack into properties --- many will say I can't even save the Minimum Sum which keeps going up every year; how to withdraw any CPF when reach 55 yr old? Have to wait until 65 yr old before govt starts giving a few hundred dollars a month.

In less than 3 years time, by July 2013, if you don't have the Minimum Sum in your CPF, you can only withdraw at most $5K when you hit 55 yr old. The rest of your CPF they will dump into CPF Life and give you a bit every month only when you are 65 yrs old.

That's why for financial planning purpose and retirement purpose, I always advise my friends and relatives not to count 2 things: your home, and your CPF. Just take it as they don't exist. Focus on your cash savings and cash investments. In future, if you can actually cash out your home at good price or withdraw your CPF, take it as a bonus from heaven.

No point writing in or trying to debate with PAP over this. They are deaf to all criticisms and a gathering of even 1 single person can be unlawful. The only thing they will pay attention to is your vote during GE.; September 23, 2010 6:16 PM
Spur said...: Rex,

Even if you have opted out of CPF Life, your Minimum Sum is still "stuck" inside CPF and cannot be taken out at will.

Under the existing MS Scheme withdrawal, members can modify the amount of their monthly withdrawals, but not if it results in the withdrawal term being shortened. I.e. If the original withdrawal of say $600/mth with withdrawal term of 20 years. If suddenly you need extra $1000 next month, you cannot request from CPF to up next month's withdrawal to $1.6K, as this will shorten the original withdrawal term of 20 years.

This feature of modifying your monthly withdrawal is actually meant for cash rich folks, who would like to preserve their CPF funds as long as possible and earn the 4-5% interest. So CPF allows these people to reduce the monthly withdrawal subject to a minimum amount (was $297 a few years ago, dunno about now). In their later years, when they may have run down their cash reserves, these people will then ask CPF to increase their monthly withdrawals. Of course, CPF is usually happy to keep more of members' money as long as possible.; September 23, 2010 6:30 PM
Unknown said...: When a carrot does not look like a carrot......
The CPF board has writtent to me again to remind me that this is the last chance to opt in. (I am over 55). In the leaflet, which is meant to persuade us, every clause is still as vague as Day one. Even the 2 to 4000 dollar "bonus" which is the carrot meant to entice us is dependent on the balance in the RA. Worse of all, the payouts are still as indefinite as the day the scheme was born.

All of the 4 schemes are inferior to the MS, unless I live beyond 84. Now, you tell me, how to convince me.; September 24, 2010 12:13 PM
rex said...: rex comments on Spur's comments,

thanks pal for your pointers.
I think it is a no-brainer choice, i would rather opt the old system 20 years payout. Why would anyone want less payout in exchange for "LIFElong payouts"??? 20 years payout from age 65 am i correct? that is fine, 65+25=85 is a good "planning parameter" for my life ha ha ha.
Secondly i wonder why we are not allowed to occasionally withdraw more than the usual amounts. Usually when you buy insurance policy there is some flexibility to borrow against the savings, usually with a bit of penalty. In a contingency it is necessary to drawdown a little bit more. At least the cpfLife should provide once off or 2x once off chance for members to draw bigger amounts under certain conditions. It is insane to FORCE everybody who born after 1957 to subscribe to CPFLife. Very unfair!!!

rex; September 24, 2010 2:08 PM