CPF LIFE Introduced

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CPF LIFE, “Public” Annuity Scheme, was introduced. CPF LIFE is to provide CPF members with a “lifelong” income. Through this scheme, members will receive a monthly income for as long as they alive, the amount depending on the cash savings they have in their Retirement Account (RA). It is compulsory for those born after 1957. For those born on or before 1956 have an option to opt-in to CPF LIFE. CPF LIFE will replace the Minimum Sum Scheme (MSS) in 1987.

Upon a member’s enrolment into CPF LIFE, a portion of the cash savings in his Retirement Account (RA) will be set aside as the premium for an annuity. Combined with the remaining cash savings, the member will get a lifelong monthly income from his Draw Down Age (DDA).

CPF LIFE is an annuity scheme that depends on Retirement Account cash savings being pooled and then paid to members. Property pledges are not cash, but are promises by CPF members to repay into their Retirement Account the amounts represented by the pledges when their properties are sold. Therefore property pledges cannot be used as premium. It would also not be meaningful to treat the property pledge as part of the $40,000 threshold when considering whether a CPF member is auto-included under CPF LIFE. If the member were to sell the property subsequently, the sales proceeds refunded to his Retirement Account can be used to purchase a LIFE plan.

For a 55 year old male with $117K, Basic Plan for members who prefer a higher bequest and lower monthly payouts the monthly – payout $825 after age of 65 (breakeven age is 91). Life Income Plan for members that do not need bequest and higher payouts – the monthly payout $1,042 after age of 65 (breakeven age is 84).

Under the MSS, the monthly payout is $1,040 from 65 to 85 with bequest.

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