CPF Life

CPF Life is a national annuity scheme that allows members to receive a monthly income for life, starting from his drawdown age (DDA). This is an improvement over the Minimum Sum Scheme as members have a high chance of outliving the limited payouts due to Singapore's high life expectancy.

An article written by Goh Eng Yeow and published on the Straits Times on 1 June 2014 explores the choice between CPF Life Standard and Basic Plan.

The key differences of the plans are that under the default plan, Life Standard Plan, the monthly payouts are higher while the bequest left to beneficiaries are lower. Under the Life Basic Plan, the monthly payouts are lower but the bequest left to beneficiaries are higher.

Depending on your year of birth, you will either have to apply to join CPF Life or be automatically placed on it.

Birth Year               Option
1954 or earlier         You can apply to join CPF Life
1955 - 1957             You can apply to join CPF Life when you reach 55 years old
1958 and later          If you have >= $40,000 in your RA at 55 or >= $60,000 in your RA at 65,
                                 you will automatically be included
                                 If you have < $40,000 in your RA at 55 or < $60,000 in your RA at 65,
                                 you can apply to join CPF Life

where RA = CPF Retirement Account which is created when we turn 55 by transferring savings from our CPF Ordinary Account (OA), Special Account (SA) and then Medisave Account (MA), where applicable.

The current DDA for those born in 1954 or later is 65 years old. For a male born in 1954, the monthly payout under the Standard Life Plan is about $1,000 while under the Basic Life Plan is about $930. For a female born in 1954, the monthly payout under the Standard Life Plan is about $920 while under the Basic Life Plan is about $900. The reason why monthly payouts for female is lower is due to longer life expectancy of females. The life expectancy of Singaporean females is about 85 years while for males is about 80 years in 2013.

Ultimately, which plan one chooses to go with is purely based on personal circumstances and preferences. If you are single and without beneficiaries, you can choose the Standard Plan to get a higher monthly payout. However, if you have the intention of leaving a more substantial bequest to your beneficiaries, the logical plan to choose is the Basic Plan.

What will you choose? The Standard Plan or the Basic Plan? What will be your main considerations?

Please refer to the CPF website for more details. You may also use the CPF Life Payout Estimator to estimate your monthly payout and bequest. For other information on growing old in Singapore, please also refer to the Singapore SilverPages created by the Government.