Wednesday, November 30, 2016

Payout under CPF Life

I have obtained some quotations on CPF Life. It shows the payout rate for a person at age 65 under the standard and basic plans, and for a male and female. This payout rate is useful to judge the annuity that you can buy from the market using your non-CPF savings.

If the "private annuity" offers a payout that is similar or better than CPF Life, then it is "worth buying". If it offers a lower payout, it may still be worth buying, if the difference is small. The reason is that the CPF annuity gives a payout that is based on a yield of 4%, but the private annuity is likely to give a slightly lower yield.

However, if the difference in payout is more than 10%, it is better to invest your savings in other types of investments, such as an index fund (ETF).

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