IT GUARANTEES Central Provident Fund (CPF) members monthly payouts from as early as age 65 for as long as they live.
The objective is to ensure that members do not outlive their savings due to their longer life expectancy.
The new plan, also known as the National Lifelong Income Scheme or CPF Life, will be integrated with the current CPF Minimum Sum scheme and be operated by the CPF Board.
Who is it for?
CPF members who hit 50 this year and later will be automatically included in this scheme, which commences in 2013.
Those with less than $40,000 in their CPF Retirement Account are excluded, although they can opt in. Also exempted are those with serious medical conditions and those on pensions or have bought approved private annuities.
How does it work?
WHEN you turn 55, you are required to leave a Minimum Sum in your CPF Retirement Account. The current cap on the Minimum Sum is $99,600, but by 2013, it will be raised to $120,000 (in 2003 dollars) which works out to $134,000.
You will be asked to opt for one out of 12 annuity payment plans.
The Minimum Sum will be split into two parts. One part remains in the Retirement Account and the other, the Refundable Premium, goes to pay for the annuity. The Retirement Account pays a monthly income from age 65 to the desired annuity payout age, which you have opted for. The Refundable Premium continues the same monthly payouts from the desired payout age.
If you die before the payouts start, the unused Retirement Account including interest earned, and the Refundable Premiums will be returned in full to your beneficiaries.
If you die after the payouts start, the Refundable Premiums less the payouts given will be refunded to your beneficiaries.
The interest earned from the premiums are not returned because they are pooled with those of the other CPF Life members.
If you opt for no refunds, your payouts are higher but your premiums will not be refunded to your beneficiaries upon your demise.
What are the options?
THE 12 payment options are broadly divided into refundable and non-refundable ones. Payouts start at age 65, 70, 75, 80, 85 or 90.
For each of these six payout ages, you can choose a refundable or non-refundable option.
