CPF LIFE Members Assured of Income for as Long as They Live

CPF LIFE Members Assured of Income for as Long as They Live
- The New Paper, 3 August 2009

      We write in response to Mr Leong Sze Hian's letter on CPF LIFE payments (The New Paper, 28 July 2009).

2.   The legislative provisions governing CPF LIFE require the CPF Board not to make payments if the LIFE Fund is insolvent. The intent is to require the Board to adjust payments, so that the LIFE Fund remains solvent. This protects LIFE members, and is in line with the recommendations of the National Longevity Insurance Committee.

3.   CPF LIFE members can be assured that they will receive an income for as long as they live.

Why Make It Law To Stop CPF LIFE Payments If Fund Becomes Insolvent?
- The New Paper, 28 July 2009

I refer to the debate in Parliament on CPFLife.

The Manpower Minister has given his assurance in Parliament that the monthly payouts will be paid for life, despite the provision in the new law which allows the CPF Board to stop CPFLife payments if the Lifelong Income Fund becomes insolvent.

Then why have this provision in the first place?

Years down the road, the law will prevail, regardless of what the minister said in a past parliamentary debate.

Moreover, 'the minister cannot make changes at will but must base his decisions on sound actuarial principles to ensure that fund solvency will not be compromised'.

Is this not somewhat self-contradictory? How then can the fund become insolvent and thus stop payouts?

I understand that historically, no country has ever had to stop pension payouts due to fund insolvency.

Even insurance companies' annuity contracts are usually backed by the full faith and credit and assets of the company, and are not subject to the solvency of the pooled annuity fund. So, why is CPFLife so different?

Despite the vigorous debate, I think some Singaporeans may be disappointed that Parliament has passed a law which effectively changes the current guaranteed returns on monthly payouts from age 62 to one which can stop payouts altogether if the fund is insolvent.