Opt-in for CPF LIFE
- Shin Min Daily News (12 September 2010) : Opt-in for CPF LIFE
- Shin Min Daily News (18 August 2010) : 94% of senior citizens resist CPF LIFE Scheme
Opt-in for CPF LIFE
- Shin Min Daily News, 12 September 2010
We refer to the article on CPF LIFE which appeared in Shin Min Daily News on 18 August 2010.
2. CPF LIFE was made available last year on a voluntary opt-in basis to older members who would not be auto-included in the scheme in 2013, in response to public feedback that they would like to join LIFE. The majority of CPF members aged 55 and above either have low balances or have already started drawing down under the Minimum Sum Scheme. Hence, CPF LIFE is not suitable for these older members, unlike younger cohorts who will be turning 55 in 2013 or later.
3. Many of these older members may also have already made their own financial plans for retirement, prior to the introduction of CPF LIFE. We should therefore interpret sign-up numbers in this light. Each older member should decide whether to opt-in to CPF LIFE according to their individual situation, such as their personal finances, family support available and health condition.
94% of senior citizens resist CPF LIFE Scheme
- Shin Min Daily News, 18 August 2010
Since September last year, CPF Board has invited 700,000 aged 55 years members to join CPF LIFE. However, as at 30th June, only 40,842 members have joined the scheme, a mere 5.8%.
Why are so many eligible members not opting to join the scheme?
According to a small survey SMDN carried out, the main reason for opting out is to avoid having the CPF savings from being locked in Other reasons include insufficient savings and those who are unclear of how the scheme works.
54-year old Mr Lee, a shipping manager, said that he has $100,000 in his CPF account. “I don’t want to join the scheme as I do not wish to lock in my CPF savings. I want to use the savings to purchase an annuity from other financial institutions”.
53-year old Lim Ban Chai who works at a trading firm said that he uses his CPF savings to repay the housing loan for his executive condominium, which will be fully paid in two years. “I do not understand the details of CPF LIFE. With around $30,000 in my CPF account, I will decide later.”
MOM Minister: Number of members who join the scheme will increase
Although the percentage of members joining the scheme is not high, MOM Minister Gan Kim Yong expressed his confidence that the situation will improve.
He pointed out that for members who reach 55 in 2013, an estimated 70% of them will at least have $40,000 in their accounts and will automatically be included in the scheme.
On the other hand, members who will join the scheme later will have more time to accumulate their CPF savings, with interest earned. Hence, he believes that the percentage of members joining the scheme will eventually increase.
Members aged 55 years who missed out joining the scheme due to insufficient funds will have another chance of being automatically included when they reach 65 years old.
Financial Planners: CPF LIFE is the best national annuity
Financial planner Dennis Ng pointed out that joining CPF LIFE equates to buying the best national annuity. As it is a non-commercial scheme rolled out by the government, the number of joiners will be the highest and the returns will be higher compared to other annuity scheme.
He said that if the situation allows, children should top-up their parents’ CPF accounts to allow them to join CPF LIFE.
On the fear of CPF savings being tied down, First Principal’s financial consultant Lim Boon Yam said that from the angle of retirement planning, a stable “cash flow” is important. Instead of using CPF savings to purchase shares which have a high fluctuation, joining CPF LIFE is more secure.