Anonymous
Can CPF be used as an endowment plan?
Hi,
I am 40 yo. Recently I have been invited to buy Endowment Plan for my child education - which can be withdrawn after 15 years (i.e when I am 55 yo). Given that at the age of 55, I can withdraw money from CPF, instead of buying an endowment plan - which has lower than 4.5% return and same withdrawal restriction - shall I top up to the same amount my CPF annually? By topping up to CPF, I also have the flexibility in term of annual amount and timing to top up. At 55, I can withdraw the amount that I top up or use the amount that I top up for retirement account while withdrawing SA/OA for my child's education.
Would like to seek your help to validate my understanding of CPF withdrawal at the age of 55. Anything wrong in above understanding because it seems that this is not a popular way of planning ....
Let's assume that at 55, my total SA + OA (besides the above top up) will be at least equal to FRS.
Many thanks!
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Tan Choong Hwee
01 Nov 2022
Solutions Specialist at Providend
This is a repeat question which I have already responded.
Just to point out that this method doesn't seem to be popular way of planning, because it was framed as retirement cash withdrawal meant for any purpose, not targeting at child education alone.
And insurance agent like to use specific usage (like child education) to entice people into their products. It is marketing tactics, easily understood by people with such needs. It doesn't benefit them by promoting CPF top up.
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The key difference is the death coverage and premium waiver component that usually comes with endowment plans. One is part insurance part savings, the other is pure savings.