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A Simpler CPF LIFE

Members to enjoy simple yet significant improvements from 2013, with monthly payouts for as long as they live

Employment practices

05 March 2012

  1. In his Committee of Supply (Manpower) speech today, Deputy Prime Minister, Minister for Finance and Manpower Tharman Shanmugaratnam announced refinements to CPF LIFE.
  2. Singapore has one of the highest life expectancies in the world. For Singaporeans who are aged 65 today, about half of them are expected to live beyond 85, and a third are expected to live beyond 90. Future retirees, including those who will be turning 65 in the next few years are expected to live even longer. A growing proportion of retirees would therefore outlive their CPF savings if they were on the Minimum Sum Scheme1. CPF LIFE is therefore a timely and significant enhancement to our retirement adequacy system. It will provide members with an income for life.

    Members' Feedback During the Opt-in Phase
  3. Currently, older members may opt into CPF LIFE, and choose from among four plans offering different levels of payouts and bequests. Since CPF LIFE was made available in September 2009, about 73,000 members have opted to join CPF LIFE. The majority of these members who opted-in chose the Plus and Balanced plans (90%), indicating that they preferred the features of these two plans that include relatively high monthly payouts with a bequest.
  4. Members who opted into CPF LIFE gave feedback that it took significant effort to understand and choose among the four plans. A simpler choice was preferred.

    Features of Simplified CPF LIFE Scheme
  5. Taking in members' feedback since CPF LIFE was launched in 2009, the CPF LIFE scheme will be simplified from the current four plans to two:
    • The new Standard Plan combines the best features of the two most popular plans (Balanced and Plus Plans), and will be the default CPF LIFE plan. The Standard Plan provides members with higher monthly payouts while preserving flexibility to use their Retirement Account (RA) monies for housing until 65 years old. Members also leave a bequest for their beneficiaries under the Standard Plan.
    • There will be no change to the Basic Plan. It will be retained for members who prefer a higher bequest and lower monthly payouts. This plan also provides flexibility for members who wish to use their RA savings for housing even after 65 years old.
    • The Income Plan, the least popular plan (only 3% of members who opted into CPF LIFE selected this option) which does not leave a bequest for beneficiaries, will be dropped.
  6. With these changes, CPF LIFE will comprise the new Standard Plan and the current Basic Plan. These two plans provide a simple yet meaningful choice for members. The Standard Plan, with higher monthly payouts and a bequest, should meet the needs of most members and will serve as the default plan. The Basic Plan will continue to cater to members who prefer a higher bequest and are willing to accept lower monthly payouts. (The payout illustration of the Standard and Basic Plans can be found in the Annex.)
  7. To help increase CPF LIFE payouts for all members as they work longer, members turning 55 from 2013 will see an automatic transfer of their accumulated post-55 contributions from the Ordinary and Special Accounts savings into their Retirement Account when they reach the draw down age (DDA, or 65 years), if they have not met the Minimum Sum. This will increase the amount of savings used to join CPF LIFE, hence translating to higher monthly payouts for members. The amount of CPF savings a member can withdraw in cash remains the same, as under existing withdrawal conditions.
  8. The simpler CPF LIFE scheme will be effective from 1 January 2013. The majority of members who turn 55 in 2013 will receive their CPF payouts after they reach 65 via CPF LIFE. More information on the new Standard Plan will be released in the third quarter of 2012. Members who turn 55 from 1 January 2013 will receive their customised CPF LIFE packages before they turn 55, and will have sufficient time (six months after their 55th birthday) to choose their preferred CPF LIFE plan, before the default Standard Plan applies.
  9. Existing CPF LIFE policyholders on any of the current 4 Plans can continue to remain on their existing plans – no further action is required from them. However, if an existing policyholder decides that the new Standard Plan can now better meet his or her retirement needs, he or she will have up to 31 December 2013 to switch to the new Standard Plan. Existing LIFE policyholders will receive customised information packages from the third quarter of 2012, to help them better understand the differences between their existing plans and the new Standard plan.

    PUBLIC ENQUIRIES
  10. For more information, please visit CPF or call the CPF Call Centre at 1800-227-1188.

1 Minimum Sum Scheme payouts last for about 20 years.