Assumptions:
A lower monthly payout is not a
major concern for you.
You have max Full Retirement Sum
(FRS) in your Retirement Account (RA).
You still have more than 60k in
OA/SA/MA.
With or without dependents.
When the CPF Life scheme was first
started and my brother was required to make a choice, I advised him
to opt for higher monthly payout as his income was/is low. He only
has one child and I told him he need not worry about bequest to him
as he should know how to take care of himself. At that time, I did
not study the scheme in detail, only comparing monthly payouts and
bequest amounts.
Now I study the plans in detail.
Under The Standard Plan:
1. If I do not have dependents and should
I die early after joining CPF Life, I do not mind donating my money
under the Standard Plan to fellow Singaporeans in the CPF Life Pool
since my beneficiaries will get less or nothing in bequest monies.
2. However,
should I not die early but instead suffer from a
medical condition which causes me to be permanently unfit for any
employment, to have a severely reduced life expectancy, or to be
terminally ill, I would want to get more money back when exiting CPF
Life. But under the Standard Plan, this is not possible as you can
see from the lower Bequest Amounts you can get. The key reason why
we will be getting a lower Refund Amount is the interest earned on
CPF Life premium contributions, extra interests earned on CPF
balances (first 60k) and CPF RA will remain in the CPF Life Pool:
these are not considered your money when u exit. (hahaha, we dun
know how they pay you back in the monthly payouts)
Conclusion:
I
have prepared a table below to summarise the above, highlighting the
key differences between the Basic Plan and the Standard Plan. I'll
base my decision, not on the monthly payout amount, but on more money
back should I need to exit from CPF Life. CPF Life is an insurance
plan, so it should do what it should do, ie provide me with funds
when I need it most when I exit, not just monthly payouts. Choose the Basic Plan!
(CPF
Board allows changing of plans now, you have to cancel CPF Life then
rejoin at age 65. However, if the above assumtpions dun apply to you
and you have been on CPF Life for some years, it might not be
worthwhile to change now.)
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