SINGAPORE: The CPF Board has decided to reduce the number of CPF LIFE plans from 12 to four. And the payouts for all the four plans will start from the age of 65.
When the national longevity insurance committee released its final report, it had recommended 12 different plans under CPF LIFE.
"The sheer number of plans is simply mind boggling and I seriously wonder how anyone would be able to make a proper choice bearing in mind not all CPF members understand insurance products well," Halimah Yacob, MP for Jurong GRC and NTUC deputy secretary-general, told Parliament.
Hence, Acting Manpower Minister Gan Kim Yong said there will now be just four plans.
Three of them are the LIFE Plus Plan, which offers higher monthly income but leaves behind less for beneficiaries; the LIFE Basic Plan, where members accept a lower monthly income for higher bequest amount; and the LIFE Income Plan, which offers the highest monthly income but members would leave nothing behind when they pass away.
The fourth is the default plan, which is called the LIFE Balanced Plan which will provide a balance between a level of retirement income and some bequest amount if the CPF members pass away early.
To illustrate, if 55-year-old Mr Tan chooses the default plan with S$67,000 in his retirement account, he can expect to receive between
S$570 and S$620 every month from age 65 for as long as he lives.
If Mr Tan passes away at the age of 70, his beneficiaries will receive a bequest amount of between S$76,000 and S$79,000.
So would a protracted economic downturn affect the CPF LIFE payout?
Mr Gan said: "A lower interest would lead to lower payouts. Likewise if interest rates rise, payouts will be higher.
"Therefore, we expect CPF LIFE payouts to be adjusted from time to time. This is in line with the principle that the scheme should be self-funded and sustainable.
"Nevertheless the CPF interest paid by the Singapore government will not fall below the guaranteed floor rate of 3.5 per cent on the first
S$60,000 of CPF balances and 2.5 per cent for amounts above that.
"This guaranteed interest rate is something that commercial providers are not able to offer".
Mr Gan also announced that from September this year, the CPF Board will start inviting older members aged 55 and above to opt into CPF LIFE.
LIFE payouts for the older members will start as early as January next year.
The CPF Board also wants to encourage families to help their older members by topping up their CPF.
Hence, it is liberalising further the rules for this purpose under the Minimum Sum topping up scheme.
In the past, only those with at least one and a half times the prevailing Minimum Sum in their CPF balances could make top ups.
From 1 April, they can make top ups as long as they have CPF balances of at least the prevailing Minimum Sum.
- CNA/ir
When the national longevity insurance committee released its final report, it had recommended 12 different plans under CPF LIFE.
"The sheer number of plans is simply mind boggling and I seriously wonder how anyone would be able to make a proper choice bearing in mind not all CPF members understand insurance products well," Halimah Yacob, MP for Jurong GRC and NTUC deputy secretary-general, told Parliament.
Hence, Acting Manpower Minister Gan Kim Yong said there will now be just four plans.
Three of them are the LIFE Plus Plan, which offers higher monthly income but leaves behind less for beneficiaries; the LIFE Basic Plan, where members accept a lower monthly income for higher bequest amount; and the LIFE Income Plan, which offers the highest monthly income but members would leave nothing behind when they pass away.
The fourth is the default plan, which is called the LIFE Balanced Plan which will provide a balance between a level of retirement income and some bequest amount if the CPF members pass away early.
To illustrate, if 55-year-old Mr Tan chooses the default plan with S$67,000 in his retirement account, he can expect to receive between
S$570 and S$620 every month from age 65 for as long as he lives.
If Mr Tan passes away at the age of 70, his beneficiaries will receive a bequest amount of between S$76,000 and S$79,000.
So would a protracted economic downturn affect the CPF LIFE payout?
Mr Gan said: "A lower interest would lead to lower payouts. Likewise if interest rates rise, payouts will be higher.
"Therefore, we expect CPF LIFE payouts to be adjusted from time to time. This is in line with the principle that the scheme should be self-funded and sustainable.
"Nevertheless the CPF interest paid by the Singapore government will not fall below the guaranteed floor rate of 3.5 per cent on the first
S$60,000 of CPF balances and 2.5 per cent for amounts above that.
"This guaranteed interest rate is something that commercial providers are not able to offer".
Mr Gan also announced that from September this year, the CPF Board will start inviting older members aged 55 and above to opt into CPF LIFE.
LIFE payouts for the older members will start as early as January next year.
The CPF Board also wants to encourage families to help their older members by topping up their CPF.
Hence, it is liberalising further the rules for this purpose under the Minimum Sum topping up scheme.
In the past, only those with at least one and a half times the prevailing Minimum Sum in their CPF balances could make top ups.
From 1 April, they can make top ups as long as they have CPF balances of at least the prevailing Minimum Sum.
- CNA/ir
