Tuesday, May 06, 2008

Transfer back to retirement account before 62

A policyholder told me that he decided to withdraw from a life annuity before payments starts at 62. He was surprised to learn the following:

> The cash value for the life annuity gave quite an attractive return from the past 6 years

> The CPF was willing to accept the cash value back into the retirement account

> The retiree was able to get a deferment bonus of $1,600 (not sure about the exact amount) a year X 3 years for deferring the withdrawal to 65 years.

This turn out to be a good deal!
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2 comments:

Anonymous said...

If you transfer your money back to the retirement account, you will earn interest at 4%, bonus at 1% and deferment bonus of $1,600 (about 2%) Total 7%. Better than life annuity!

You also enjoy a higher payout from CPF, compared to an annuity. Transfer back to CPF now.

May 07, 2008 11:24 PM
Anonymous said...

This rate is not forever, CPF board guarantees it for 2 years and then the floor rate of 2.5% holds with bonus interest depending on floating interest?

GIC and Temasek need not be fully transparent to be able to be more flexible in their investment.

Hope we will get them than 4%?

May 08, 2008 9:40 AM

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