Can Go Through Different Channels to Understand CPF LIFE Plans
- Lianhe Zaobao, 12 September 2009
Mr Chew Chuan Seng's second letter on CPF LIFE (Lianhe Zaobao, 08 September 2009) indicated some misunderstanding of the scheme.
2. CPF LIFE does not replace the Minimum Sum Scheme (MSS). For those born before 1958, they will continue with the MSS unless they opt to enrol into CPF LIFE. Those born in 1958 and after will be automatically enrolled in CPF LIFE when they turn 55, if they have $40,000 and more in the Retirement Account (RA). If they have less than $40,000, they can still opt into CPF LIFE as there is no minimum amount needed to qualify for CPF Life. If they do not, they will be placed on the MSS.
3. The payouts that a member will receive from CPF LIFE or MSS are determined by how much he has in his RA. The more he has, the higher will be his payout. Payouts from MSS will only last for 20 years whereas CPF LIFE payouts will be made out for as long as he lives.
4. We have since contacted Mr Chew to explain the scheme to him. CPF members can call the CPF LIFE hotline at 1800-LIFE-CPF (1800-5433-273) if they need assistance or clarifications. They can also register for CPF LIFE talks organised by CPF Board. The next talk will be held on 30 Sept 2009, at 7pm at DBS auditorium. Please refer to the CPF website for details.
Questions on CPF LIFE Plans
- Lianhe Zaobao, 08 September 2009
I appreciate the reply from the Director of Corporate Communications from Ministry Of Manpower to my letter "Can choose the current simple annuity scheme?".
I wish the relevant authority could clarify some of my further doubts. I understand that the CPF LIFE scheme has been simplified to alleviate members' confusion. However, what is the Minimum Sum amount required in the Retirement Account (RA) to qualify for monthly payouts at age 64?
In ZB's report dated 8 June, the CPF Minimum Sum has been raised to $106,000 with effect from 1 July. Hence, members who reach age 55 from 1 July to 30 June next year with a balance of $106,000 in their RA will be able to withdraw $910 per month till the age of 84. My questions are:
1. Will the current CPF Minimum Sum scheme be replaced by the CPF LIFE scheme from year 2013? Will the minimum sum required in the RA be reduced to $40,000 or lesser by then? If so, why is there the hassle to raise the Minimum Sum from $99,600 to $106,000 in July and subsequently to $120,000 in 2013? Will the payouts be increased accordingly till then? If both schemes co-exist, will CPF members face the crossroad of either having to opt for the $40,000 CPF LIFE scheme or the $120,000 CPF Minimum Sum scheme?
2. Will the ratio of monthly payouts from the $40,000 CPF LIFE scheme be higher than the $910 monthly payouts based on $106,000 Minimum Sum scheme? If not, isn't it better to retain the current scheme?
3. For members who do not fulfil the $106,000 Minimum Sum requirement, they can either receive "top-ups" from their family members or receive payouts in proportion to their balance in the RA. Since those who have less than $40,000 in their CPF accounts can opt to for the CPF LIFE scheme, I presume that the authority already has the intention to allow these members with insufficient savings to receive reduced payouts. Is it true?