WE THANK Mr David Lok for his feedback last Saturday, 'Raise comfort level regarding payout guarantee'. As a national annuity scheme, CPF Life is designed to provide members with a lifelong income.

To ensure the long-term financial sustainability of the scheme, CPF Life is designed to be self-funding - premiums and payouts must be adjusted periodically to reflect actual mortality experience and investment returns.

It is also designed to have less volatile payouts as CPF Life monies are invested in a basket of long-term fixed coupon government bonds to yield stable returns.

In designing CPF Life, the National Longevity Insurance Committee consulted widely and recommended against joint annuities as they add complexity to the scheme.

The committee also recommended level payouts, as inflation-linked payouts would mean significantly lower payouts in the initial period for the same premium.

Farah Abdul Rahim (Ms)
Director, Corporate Communications
Ministry of Manpower

This article was first published in The Straits Times.