CPFB started to talk about Risk Pooling
only in April 2019 after being queried at Parliament. They have
never talked about Risk Pooling since CPF Life was introduced, not
even in any
Life@55 Talks! Do you know
are there other important information CPFB is still not telling you
at
Life@55 or @facebook?
In the past (eg 2014), members have to
decide/choose their CPF Life Plan (ie Standard vs Basic) at 55 and
part-CPF Life annuity premiums would be deducted from their
Retirement Account (RA) for transfer to the CPF Life Pool. Only at
65 when monthly payout starts will the reminder of the CPF Life
annuity premiums be transferred from RA to CPF Life Pool. For
members turning 55 after July 2015, they only need to choose their
CPF Life Plan (ie Standard, Basic or Escalating Plan) if they decide
to start payout at 65 or delay till 70.
Most members will choose their CPF Life
Plan based on guidelines provided by CPFB as follows:
Choose Standard Plan if you want
more monies for yourself, ie get higher monthly payouts and lower
bequest. Usually applies to those who are single or with no
dependents.
Choose Basic Plan if you want to
leave more monies for your loved ones, ie get lower monthly payouts
and higher bequest.
Choose Escalating Plan if you care
for your future, ie start with lower monthy payouts and get 2%
increase every year.
Do you know you should not just choose
the Plan base on CPFB guidelines above?
Do you know why there are differences
in monthly payouts and bequest amounts among the 3 plans?
Do you know what CPFB is not telling
you which could affect your choice of the Plan?
Do you know there is no financial blog,
financial website or journalist articles, which talk about the 3 CPF
Life Plan choices, ever explain this piece of important information
to you?
I explained the major differences
between the Standard and Basic CPF Life plan back in October 2015,
clearly highlighting this important factor. You can read it here:
I am going to highlight the major
differences between the Standard and Basic CPF Life plan with the
table below (taken from October 2015 article above). Hardwarezone is
the only forum where there was active discussion on these since I
highlighted it there. No where else in the internet can you find it
being discussed. And CPFB also do not publish it in their facebook
or the
LIFE@55 talk. You have to read
through the CPFB website line by line to find it!
So do you know what CPFB is not telling
you now?
Risk pooling: they only talk about
the interest on the CPF Life Premium you paid into the CPF Life
Pool. What is the Premium? 100% of RA for Standard and Escalating
Plan, 10-20% of RA for Basic, at the time you choose to start
monthly payout. Because Basic Plan members only pay 10-20% of RA as
premium, they only contribute interest on this amount into the Pool,
resulting in slightly lower mthly payouts but higher bequests.
Risk pooling: what CPFB did not
tell you? With Standard and Escalating Plan, you are also paying
the 2% extra interest on combined CPF balances into the CPF Life
Pool, resulting in sightly higher mthly payout but lower bequest.
If you decide to topup your RA later, will the interest in RA also
go into the pool? (All these does not affect members who choose
Basic Plan).
(Escalating Plan was introduced last
year. It is no different from the Standard Plan, except CPFB lowered
the initial monthly payout so it appears you will be getting 2% more
every year (delayed payment)).
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