I would like to draw attention to the macroscopic picture. If all of the estimated presently eligible 700,000 CPF members opt in at $40,000 a piece, it represents an immediate transfer of $28 billion to CPF Life. Of course, in reality, a fraction of this group of the CPF members will voluntarily enroll.

Moving forward, when CPF Life becomes mandatory in 2013 (with no option to opt out), it has the effect of reducing the CPF withdrawal to a slow draw. We recall that CPF members enroll at 55 but do not receive any payout until 65. The obvious question is why. The official reason is unconvincing, to say the least.

The reason why they are not projecting based on 4 percent is because the eventual interest will be less.

the 1% (extra) will be taken away the year after next and will not be available for all the other years.

Honestly, how much do you think the 80 years in order to benefit from CPF life?

Let’s not forget that it is not really possible to compare CPF life with the old scheme because the payment under CPF life can increase or decrease or halt. The old scheme doesn’t allow that.

Gd questions, suggestions.

Hopefully CPF will respond.

Mr Leong,

Very good points.

Did you send this letter to CPF Board or Straits Time for answers.

“CPF Life: Helping Singaporeans to decide?”

I disagree with this title.

Why? Because singaporeans ALREADY Decided.

Else, it could not have been implemented it already is.

Its really the people.

CPF is nothing new.

The PEOPLE DECIDED LONG BACK!

The proof is in the results of the last many elections.

Which policies did the people , highly educated paper-qualification-wise,
officially rejected, IF ANY?

I have done some calculations over the last weeks after speaking and getting clarifications from CPF Board.

The biggest disadvantage to an individual is that the interest earned on the annuity premium will go to the CPF LIFE fund from age 55 to the respective draw-down age of 90, 80 or 65, and thereafter. There is no rebate on the interest earned in the event of death of the member.

The interest forgone is significant in sum. For example, a 55 years old, Male, with just $40000 in his CPF, and enrolled in LIFE Balance, will stand to lose about $19990 in interest (from age 55 to 80) as a result of the $12000 annuity premium, as the interest earned will be credited to the CPF LIFE Fund instead.

That means the lost of bequest of up to $19990 if the person signs up for the LIFE Balance and does not live up to age 80 or a loss of up to $11780 for LIFE Basic if the person does not live up to age 90.

This would not be the case if the sum was retained in the CPF Retirement Account (RA) and earning interest that is credited back into the RA.

Assuming the same withdrawal of $343 from age 65 onwards (as per LIFE Basic), the $40000 in the CPF Account can last up to age 96.

Assuming the same withdrawal of $362 from age 65 onwards (as per LIFE Balance), the $40000 in the CPF Account can last up to age 92.

US actuarial life table (2005) indicate that for a 55 year old male, life expectancy is 24 years or age 89.

That indicates for the vast majority, limiting the withdrawal to the above monthly limits, but leaving the sum in the CPF RA would yield a far greater benefit than participating in the scheme.

The L-Bonus distorts the above for those above 53 of age.

If you are already above 55, you may consider signing up for CPF LIFE because of the $4000 L-bonus.

The best deal would be to sign-up for LIFE Basic. By doing so, you would minimise the amount that will be treated as annuity payment, whereby all interest (expect the additional 1%) will go to CPF LIFE Fund and not to your retirement account.

Those that sign up with only $20000 in the RA will stand to gain the most.

wah! now CPF board also want to ply tikam tikam games with all the singaporeans! suddenly so many types of options A-Z to confuse the people just to get away with the peoples life saving fund.

//LWL

This scheme is another manipulation.

Initially we were not told that the interest is lost and not return to our children as bequest amount.

Now, they unilaterally decided on that.

So, it is all planned.

The lost in interest is actually an estate tax (in disguise).

so the govt has remove estate tax for the rich but introduced to the middle class so that these middle class stay middle or even downgrade.

PAP is afraid that the rise of middle class will result in it being displaced through democratic elections.

So, it is implementing the CPF life in this manner.

To LWL,

That was a good analysis. Thanks.

BTW, you said “US actuarial life table (2005) indicate that for a 55 year old male, life expectancy is 24 years or age 89.” Shouldn’t it be 79 instead of 89? If it is 79, the gap is HUGE!

no matter how the money is being calculated, the true fact is that it has been locked….so don’t depend too much on it……having other savings or investment on yr own is far more a better choice…..

Instinctively, when you need to investigage or do research on any investment plans or policies, dont bother. I have rejected the invitation, which is lacking in details. Moreover, the bonus is not a bonus as it is subjected to “means” testing, or eligibility. to me it is utterly disappointing. Mr Leong, in your professional opinion, would you subscribe to this scheme ( that is to opt in) if you have the option. Thanks

dont subscribe for CPF Life if you still have a choice.

under the old CPF scheme, the PAP puts forward the scenario that you will have nothing left for retirement when you live pass 80.
this is not true, elderly who pass 80 can apply for Public Assistance @ $360/month(inflation-correlated) with free meals and occasional hongbaos from hearty volunteers and philanthropists.

I like ministerial-calibre citizens like Mr Leong for his contributions to society by way of educating the public on matters that concern them like financial matters.

I like to know why is CPF so rigid?
I mean can it allow middle-aged citizens withdraw their hardearned CPF in times of crisis such as this Financial Crisis or when they are Retrenched and they now need money to start a business to feed themselves and their dependents?

I hope candidates with would stand for election voice this up and fight for citizens to get their CPF money for use in times of crisis.

What if people commit suicide due to financial difficulties? But why is there financial diffculty if they own money in CPF?

It is time to act, use your vote in the coming GE to send a signal that enough is enough, we don’t want pap to run our lives, especially by not giving us a choice…

ToLWL

Thanks for pointing out the error. It should read as 79 years old instead of 89.

And yes, the discrepancy is therefore huge, even if you take into consideration that I am using out-dated data, and that the US life expectancy is slightly lower than Singapore.

CPF life will be stuff down our throat…so what will happen if we give them another 5 years of mandate…

during this past 5 years, how much has been stuff down our throat? and how much of our hard earned money has been “locked” up?

I don’t know why people would think that our govt is honest.

This scheme is evidently a scheme to not return our hard saved monies.

The average pay in Singapore is 2000 a month.

Take home is say 1600 a month.

take away 150 for transport and 300 for food. You have 1250 left.

If you have a mother to support, then you don’t have much monies left.

// LWL

so effectively, we are lending monies to the govt at an even lower interest rate than 4%.

What is more surprising is:

if we use the old scheme, and we keep 60K at 55 and we use the current tier interest system (under 60K 4% int, excess 60K 2.5% int), and we take out 500 a month, but we defer the monthly withdrawal by 18 months,

the monthly withdrawal of 500 can last for 23.5 years until the person is 23.5+66.5
=90

If we keep the old interest scheme where anything is subjected to 4% interest, the 60K can last even longer.

How many of us live beyond 90?

This CPF life scheme is just to suck us of our monies.