How good is the enhance cpf life plan over the standard plan? - Seedly
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Ng Kwok Fei

Asked on 26 Feb 2019

How good is the enhance cpf life plan over the standard plan?

Heard the value wise its not better. Pls comment

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Lyndon Wong
Lyndon Wong, Dad at Dad Pte. Ltd.
Level 3. Wonderkid
Updated on 01 Nov 2019

The CPF Lifelong Income For The Elderly (CPF LIFE) is an annuity scheme that provides an individual with monthly payouts for as long as he lives. His Retirement Sum (RS) will be used to buy CPF LIFE. He can choose to receive his monthly payout anytime from his Payout Eligibility Age, which is age 65 if he is born in 1954 and after, up to age 70. Enrolment is automatic if an individual is a Singapore Citizen or Permanent Resident, and have at least $60,000 in his RA six months before reaching his Payout Eligibility Age. An individual need only choose his preferred CPF LIFE plan (Standard, Basic & Escalating) at the point when he wishes to start receiving monthly payouts, which is anytime from his Payout Eligibility Age to age 70. If he does not choose a plan before age 70, he will be automatically placed on the Standard Plan. The Standard Plan offers higher monthly payouts but a lower residual sum that can be left under estate upon death. The Basic Plan offers lower monthly payouts but a higher residual sum that can be left behind under estate. The Escalating Plan offers lower initial monthly payouts but increases gradually by 2% annually. The monthly payouts for each plan is a range estimate, and the actual amount an individual will get depends on:

a. Which plan and how much is spent on the plan

b. Gender, payout age, CPF interest rates, mortality rates

How good the Escalating Plan is over the Standard plan is dependent on the objectives of the individuals. The monthly payout for the Escalating Plan starts to break even with the Standard Plan after around age 77 (it may differ with individuals) and increase in payout difference beyond that. However, if we were to look at overall payments received over your lifetime, the Standard Plan wins unless you age above 100. *All figures are tentative and subject to change.

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I suppose you mean the 'escalating' plan among the three options listed in the link below. (choices being standard, escalating and basic)

https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-life

Basically depends on your view of how long will live - if feel healthy and worried about long life then escalating best.

If (for whatever reason) feel mortality would be higher than normal - then go for basic.

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