From 2013, the Government will be offering only two plans under CPF Life, instead of the four plans that are available now. I agree with this approach, as the public found it difficult to choose between the four plans.
There are still a lot of doubts with the two plans, i.e. the diminishing amount of the bequest as the years go by, and the subsidy given to people with lower savings (i.e. they get a higher rate of payout for each $1,000 of saving, compared to those with higher savings). Some people are still unhappy with the compulsory nature, as they are forced to buy a product that they do not like, using their own savings.
Many years ago, I gave the following suggestion to the CPF Life public hearing committee:
I recommended that they should not make CPF Life compulsory, but make it voluntary and attractive.
I had recommended that CPF Life should only make a payout after age 85, i.e. the CPF member will continue to get the payout up to 85 from the retirement account. I also recommended that the cost of the post 85 CPF Life, estimated to be $10,000, should be 50% subsidied by the Government, and it should be voluntary.
It will be sold as follows.
About 50% of people at 65 will live beyond 85 and will not have any money left, as their retirement account will be depleted at that time. To get a monthly income of $X Isorry, I forgot the amount) payable from 85 to death, you can buy CPF Life. It will cost $10,000 at age 65. If you buy CPF Life, you only need to pay $5,000 as 50% will be subsidised by the Government.
But do remember, the members who die before 85, the money paid will not be refunded, as it will be used to pay the payout to those the members who live beyond 85. This is the concept of risk pooling.
This scheme is voluntary.
Unfortunately, the public hearing committee did not take up my suggestion. Now, we have a messing 4 plan CPF Life wihich will be converted to a 2 plan CPF Life and still many people who are unhappy about the plan.Unfortunately, they did not accept my suggestion and come out with a convoluted (extremely complex and difficult to understand) plan, which is typical in Singapore.