sources from www.cpf.gov.sg: 6 Mar 2012
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Showing posts with label Your Retirement matters. Show all posts
Showing posts with label Your Retirement matters. Show all posts
Friday, March 23, 2012
A Simpler CPF Life
Monday, October 19, 2009
Close to 12,000 opt for CPF Life
Source: Straits Times Oct 18, 2009Close to 12,000 opt for CPF Life
By Jamie Ee Wen Wei
It has been a busy month at the Central Provident Fund (CPF) Board.
Members have been flooding its offices and phone lines with questions about the new CPF Lifelong Income Scheme For The Elderly (CPF Life), which was opened last month to those aged 55 and above.
Payout of $360 a month on retiring
In two years' time, when she turns 62, Madam Yeo Ai Kiaw (above) will get a payout of about $360 a month from her CPF Life Basic plan.
The plan, which has the lowest payout among the four options, will allow her to leave more money to her beneficiaries when she dies.
'My husband and I are now living with our son. He and his wife take care of all the household bills. I don't have to worry about anything,' said the sprightly 60-year-old.
Preparing himself for a longer life
Mr Palaniappan Kannappa is not afraid of death but he is worried about 'living too long'.
'The Minimum Sum in my CPF will dry up in about 20 years. What will happen if I live longer than that?' he said. So the 59-year-old accountant started shopping for a retirement policy a year ago.
Around that time, he read about the CPF Life plan, which was introduced to the public last year.
Mr Cheng Yew Fatt wants to remain independent in his old age
Mr Cheng Yew Fatt wants to remain independent in his old age.
For this reason, the 55-year-old, who is unemployed, signed up for the CPF Life Plus plan last month.
It provides him with a higher monthly payout than the Life Balanced plan, but leaves less for his beneficiaries. It suits him because he feels his three children are already well protected financially.
His savings will run out in 5 years
Mr Lee Poh Lee is a family man, but last month, he signed up for the CPF Life Income Plan, which will give him the maximum payout from his CPF from next year.
The 63-year-old, who runs a crane rental company, decided on this plan because his CPF savings are low.
'I've only about $19,000 in my CPF so it'll run out very fast.'
He's not signing up
When Mr Christopher Seet turned 55, he invested $70,000 from his CPF in an American International Assurance (AIA) annuity plan.
Early this year, he started getting a monthly payout of $562.
Now 62, Mr Seet does not intend to sign up for CPF Life. He said it does not bother him that the monthly payout he is getting now will last for only 17 years, unlike the CPF annuity scheme, which is for a lifetime. 'What is important is the present. If I really outlive my savings, then I'll just have to find some way to make ends meet.'
Thursday, September 17, 2009
what you should know about CPF Life
Source: Straits Times 13 Sept 2009
| What you should know about CPF Life | ||
By Lorna Tan, Senior Correspondent |
In the coming weeks, about 700,000 Central Provident Fund (CPF) members aged 55 and above will be invited to join the CPF Lifelong Income Scheme For The Elderly (CPF Life). The annuity scheme offers a choice of four plans that pay a monthly income for as long as you live.
These plans offer various combinations of two key elements that are traded off: monthly payouts and refund amounts upon death or withdrawal from the scheme
In other words, if you want higher monthly payouts, that will reduce any final payout to your beneficiaries.
The initiative has been widely welcomed as being superior to the current CPF Minimum Sum (MS) scheme, which gives monthly payouts for about 20 years, but not necessarily for as long as you live.
The MS is the amount you are required to set aside at age 55 for retirement needs in your Retirement Account. The Retirement Account is set up when you turn 55 with savings coming from your Ordinary and Special accounts. CPF Life payouts come from the Retirement Account.
With rising life expectancy, it is prudent to ensure that your retirement savings will last for all your days.
The opt-in system began on Sept 5 and is open to older CPF members who wish to join the annuity scheme ahead of 2013, when it will be implemented for those turning 55 then. For older CPF members, the monthly payouts will start as early as next January.
While many are still undecided, some, like Madam Wong Kwai Sim, 55, have taken the plunge. She has opted for the CPF Life Balanced Plan, which will give her an estimated monthly payout of $856 to $948 when she hits 65.
Madam Wong, who works part-time as a clerk, currently has $117,000 in her Retirement Account, which is also the prevailing MS.
'By the time I can get the monthly payout, my children will be independent. I can get some from CPF Life and keep some for them when I pass away,' she said.
The Life Balanced Plan gives a moderate payout and a moderate refund. If she had stayed on the current MS scheme, her monthly payout would be some $910 for about 20 years.
Storeman Tay Lee Kheng, 61, said it was his son Benjamin, 32, who helped him choose the Life Plus Plan, estimated to pay $463 to $492 monthly when he turns 62 next year. He has about $80,000 in his Retirement Account.
'I'm not looking to get anything from him when he passes away. It is better that he gets a higher payout...All the money is his anyway,' said Mr Benjamin Tay. The Life Plus Plan provides for higher monthly payouts and a lower refund.
For those who have not decided, here are some things you should know about CPF Life. You must choose the most suitable plan as you cannot change it after you join the scheme. You cannot withdraw either, except under certain conditions.
Q Who can join CPF Life?
You can join CPF Life if you are a Singapore citizen or permanent resident aged between 55 and 80, with savings in your Retirement Account.
Those aged 55 to 79 have up to the time they reach age 80 to sign up for CPF Life. But those aged 80 and above have to do so by December next year.
A bonus of up to $4,000 is given to Singapore citizens who do so by December next year. To qualify, your annual income and the annual value of your property must not exceed $54,000 and $11,000 respectively.
Q What is the monthly payout?
Your monthly payout depends on your Retirement Account savings used to join CPF Life.
There is no minimum amount required, but note that members with lower balances will receive correspondingly lower monthly payouts.
Other factors that will affect the monthly payout include your gender, the age at which you join the scheme and the CPF Life plan chosen. Generally, females will receive lower payouts as they tend to live longer.
If you wish to have a higher payout, you may make cash and/or CPF top-ups to your Retirement Account up to the prevailing MS.
You can use the CPF Life Payout Estimator at the CPF website www.cpf.gov.sg to find out how the monthly payout varies with your Retirement Account balance.
Q Is the monthly payout fixed?
No, the monthly payout may be adjusted every year to take into account factors such as CPF interest rates and mortality experience.
The adjustments will usually be small so that payouts are stable.
The current estimated payout range is based on CPF interest rates of between 3.75 per cent and 4.25 per cent and do not necessarily represent the lower and upper limits of the payout.
Q When will I start receiving my monthly payouts?
If you join before your drawdown age (DDA), you will start to receive your monthly payout from your DDA.
If you join after your DDA, you will start to receive the monthly payout from the following month after you are included in the scheme.
If you were born in 1943 or earlier, your DDA is 60. For those born between 1944 and 1949, their DDA is 62. If you were born in 1950 or 1951, your DDA is 63 and if you were born in 1952 or 1953, your DDA is 64. For those born in 1954 or later, your DDA is 65.
Q Can I change my plan after I join?
No, you can't. This is because changing your plan will affect other members who are already in the scheme.
Q Can I withdraw after I join?
No, except on the following grounds:
- Medical grounds of shortened life expectancy;
- Leaving Singapore and West Malaysia permanently with no intention of returning to either country.
If you are on one of the three CPF Life plans with a refund feature, you will receive a discounted refund of the savings used to join the scheme less the monthly payouts that you have received prior to your withdrawal. There may not be a refund if your savings have been fully paid out in monthly payouts.
If you are on the Life Income Plan, which is a non-refund plan, you will not receive any refund if you withdraw from the scheme.
Q What happens when I die?
Let's assume you have opted for a CPF Life plan with a refund feature. If you die before any payout is made, the full savings will be refunded. If you die after monthly payouts have started, the savings less monthly payouts will be refunded.
Do note that there may not be a refund if you die after the savings used to join CPF Life have been fully paid out in monthly payouts.
Any refund will be made to your CPF account and paid to your beneficiaries, together with the rest of your CPF savings.
If you had chosen the CPF Life plan without a refund feature, that is, the Life Income Plan, there is no refund upon death even if monthly payouts have not started.
Q How do I choose the most suitable CPF Life plan?
The four plans differ in the level of monthly payout and the refund amount that may be left to your beneficiaries. The refund, also known as the bequest, is based on the savings used to join CPF Life less monthly payouts already received.
Alpha Financial Advisers' business unit director, Mr Tan Siak Lim, says that a CPF member should try to strike a balance between his retirement lifestyle and the bequest amount.
'You should consider the effect inflation will have on the payouts over your life. As these are level payouts, the value of payouts will shrink over time as prices of goods rise.'
Here are the four plans:
- Life Basic Plan
This plan gives a lower payout than the Balanced Plan, but leaves more for your beneficiaries. It is recommended if you are in the pink of health or have sufficient savings outside your CPF, says Mr Patrick Lim, associate director at financial advisory firm PromiseLand Independent.
- Life Balanced Plan
If you wish to strike a balance between your monthly payout and the bequest, the Life Balanced Plan may be more suitable for you. This is also the default plan for members who are automatically included under the scheme from 2013, if they do not choose a particular plan.
Mr Thio Eng Huat, vice-president at ipac financial planning Singapore, believes that those who are fortunate to have supplementary income in their retirement may find the Life Basic or Balanced plans more suitable.
- Life Plus Plan
This plan provides a higher payout than the Balanced Plan, but leaves less for your beneficiaries.
Mr Lim says this will appeal more to individuals with chronic medical conditions who want the higher payouts to cope with the cost of living, and yet wish to leave something behind for their beneficiaries.
- Life Income Plan
This plan gives the highest payout, but does not leave anything for your beneficiaries. Although it is logical to conclude that this plan may be more suitable for those who do not have beneficiaries, Mr Lim does not recommend this for anyone. This is in case the member changes his mind or if his personal circumstances change. Another reason is that there is no refund upon withdrawal from the scheme.
Q What else should I consider?
You should not depend on CPF Life to meet all your retirement needs as the payouts may be insufficient.
Start saving more and plan your retirement early. To bridge the gap, you can consider additional income plans like annuities from insurers, says Mr Tan.
Mr Lim recommends NTUC Income's annuity, which comes with a guaranteed monthly or annual payout, with a potential to receive higher payouts the longer the policyholder lives.
Also, ensure that you have funds set aside for medical expenses and insurance, says Mr Thio.
This article was first published in The Straits Times.
Wednesday, August 19, 2009
'No needy' left behind
Source: Straits Times Aug 19, 2009
'No needy' left behind
The needy get a lot of help, said Mrs Yu-Foo. -- ST PHOTO: HOW HWEE YOUNG
NEEDY Singaporeans do receive substantial help from the Government, and in fact the Government ensures that 'no needy Singaporean is left behind'.
Mrs Yu-Foo Yee Shoon, the Minister of State for Community Development, Youth and Sports (MCYS), said this in response to criticisms of Singapore's social safety net made on Tuesday by Nominated Member of Parliament Viswa Sadasivan.
Recent increases in the quantum of Public Assistance (PA) allowances means that the total sum that a large family gets can be very close to what a low-wage worker earns, she pointed out.
And the PA scheme is only one of many administered by her ministry to help the poor, she noted.
Citing another example, she said families with a monthly income of $1,500 or less receive childcare fee subsidies of at least 95per cent. They pay only $10 a month for childcare and $5 for kindergarten. As of April, an individual person on the PA scheme now gets $360 a month, up from the previous $330. Those with families get more.
MCYS provides children from PA families with additional assistance of up to $130 per child every month. Along with other aid, this means that a family of two adults and two children could get up to $1,210 a month, Mrs Yu-Foo pointed out.
This is comparable to the bottom 20per cent of wage earners in Singapore, who make $1,200 or less a month. There are fewer than 300,000 resident workers in this category.
PA recipients also receive other cash handouts and utilities and rental rebates from the Government, as well as meal vouchers and other forms of support from community organisations.
Mr Sadasivan had taken issue with what he called a 'very basic level of assistance' provided by the Government to very needy Singaporeans, which had to be supplemented by welfare organisations. He felt the Government was in a strong enough financial position to provide the necessary assistance directly.
In reply, Mrs Yu-Foo said that while MCYS could afford to give more to the 3,000 or so PA recipients, 'the greatest danger in doing so would be taking away the incentive of the much larger number of Singaporeans who are working hard, albeit in low-paying jobs'.
CLARISSA OON
Grow old in own homes
Source: Straits Times Aug 19, 2009
Grow old in own homes
By Tan Weizhen Although nursing homes are a necessity as the population ages, the Government wants to help elderly Singaporeans to grow old in their own homes as far as possible and will expand services to help them, said Lim Boon Heng. --ST PHOTO: STEPHANIE YEOW |
ALTHOUGH nursing homes are a necessity as the population ages, the Government wants to help elderly Singaporeans to grow old in their own homes as far as possible and will expand services to help them, said Lim Boon Heng, Minister in the Prime Minister's Office on Wednesday night.
He said services such as day care, home care, escort, transport, befriending services are required and will be expanded over time.
Caregivers will also get support by tapping on volunteers and non-profit organisations like churches.
Speaking at the 50th anniversary dinner of the Catholic Welfare Services, Mr Lim said the Government will do more to provide information and referral, develop relevant services, and promote the use of the caregiver training grant, which provides $200 subsidises to train a caregiver.
He also urged the private sector, such as nursing homes and other organisations, to work with the government to achieve this, as well as to provide the elderly more opportunities to be socially active.
Mr Lim said as Singapore enters the 'threshold of rapid aging', the demand for nursing home beds will rise to cope with the growing aging population.
'Our baby boomers will join the ranks of 'elderly' in a few years. Assuming the same level of demand we have now, the need for nursing home beds will double in 10 years, triple in 20 years,' he said.
He disclosed that discussion to expand two nursing homes - St Theresa's Home and St Joseph's Home - is underway.
They are under the care of the Catholic Welfare Services (CWS), and its third nursing home, Villa Francis, is already being relocated and expanded.
The dinner, held at Bliss Garden Restaurant at Singapore Expo, was also attended by Health Minister Khaw Boon Wan, Reverend Nicholas Chia, Archbishop of Singapore, and Archbishop Salvatore Pennacchio, Apostolic Nuncio to the Republic of Singapore, along with 600 guests, staff from nursing homes, VWOs, volunteers and board members.
Sunday, August 16, 2009
Don't shirk responsibility
Aug 16, 2009
PM'S NATIONAL DAY RALLY SPEECH
Don't shirk responsibility
By Melissa Pang He said at a recent meeting with some managers from nursing homes, he was told that some elderly folks had been abandoned by their families. -- ST PHOTO |
CARING for elderly parents may not be an easy task but it is a responsibility Singaporeans must not shirk, said Prime Minister Lee Hsien Loong on Sunday night.
Speaking in Mandarin at the National Day Rally at the University Cultural Centre Speech to a gathering of over 1,600, PM Lee said: 'As Asians, we deeply value fillial piety. Family love and warmth cannot be replaced by nursing homes or hospitals.'
He said at a recent meeting with some managers from nursing homes, he was told that some elderly folks had been abandoned by their families.
These elderly parents were sent to the nursing homes by their children, who would then disappear, some even going to the extent of changing their address.
When contacted, they said they would not care even if the homes turf out their parents.
To deal with this problem, PM Lee said the Government will explore how best to use the Maintenance of Parents Act, and other ways, such as building more community hospitals, to alleviate the burden of those with sick elderly parents.
Mr Lee also devoted a substantive part of his address in Mandarin on the stresses to the healthcare system brought about by an ageing population.
Turning to healthcare issues, he touched on the rising obesity rates in Singapore.
'Maintaining a healthy lifestyle is every man's responsibility. It is the best way to avoid diseases and cut back on medical expenses,' he said.
He noted that in China, rising obesity has led to a boom in weight loss businesses. Giving an example, he said one firm in Shanghai is charging customers by the amount of weight they lose.
'Here, the annual healthy lifestyle campaign helps everyone lose weight for free,' he said, drawing laughter from the audience.
Despite the national healthy lifestyle programme, the number of obese Singaporeans is also gradually rising, said Mr Lee.
'We must work harder to prevent obesity...or there will be more illnesses, increasing the burden to society and ourselves,' he added.
Mr Lee also addressed the economic outlook for Singapore and the need to maintain racial and religious harmony in his speech.
He will expand on these issues in English at 8pm.
The End Age of Retirement
Check out this post, extreme insightful read. Talks about the pension trap, aging population and declining birthrates. read on http://www.psyfitec.com/2009/05/end-of-age-of-retirement.html
Annuity: your No.1 Asset Class for Retirement
by Christopher Pua
What is an Annuity?
Annuities are plans that allow you to accumulate tax-deferred funds for retirement and then you (the annuitant) can opt to receive a guaranteed income usually payable for life or for a specific period of time. Alternatively, you can call it your retirement income for life. The objective of an annuity plan is to ensure that you will have a continuous stream income during your retirement years and for as long as you are alive. So, it protects you from outliving your resources. Thus a life annuity is a form of longevity insurance, where the uncertainty of the annuitant’s lifespan is transferred to the insurer. And the insurer is able to take on this risk by applying the law of large numbers and hence reduces the uncertainty by pooling many clients. Currently, annuity plans are sold by insurer through their appointed Financial Planners/Advisors or other authorized Financial Institutions under the regulation of the MAS.
Single vs. Regular Payment Annuity.
Typically, there are two modes of payments available to an annuitant. One can either pay a lump sum premium, in which case is called a Single Payment Annuity or choose to pay a series of regular premium, in which case is called a Regular Payment Annuity, prior to the onset of the annuity.
Stages or Phases
There are usually two stages or phases in an annuity plan. The first stage is referred to as the accumulation phase. During the accumulation phase, the annuitant deposits and accumulates money into an account for the plan over a period of time. The second stage is referred to as the distribution phase. During the distribution phase, the insurer starts the annuity and pays out a regular income to the annuitants on a monthly/quarterly/semi-annually/annually basis for as long as the annuitant is alive. Having said these, there is also immediate annuity in which there is no accumulation phase. A lump sum payment is made by the annuitant and the annuity income starts immediately until the annuitant’s death. The annuity plan with both accumulation phase and distribution phase is called a deferred annuity plan.
Types of Annuity Plans
There are many types of annuity plans available in the market. The most common of these are immediate annuities, fixed annuities, equity-indexed annuities and variable annuities. Immediate annuities pay owners a set amount of money on a predetermined schedule (monthly, quarterly, annually, semi-annually). Fixed annuities are interest-based vehicles similar to bank-issued CDs, but they offer a higher minimum interest rate and are extremely low-risk. They typically offer returns of between 3% - 10% for essentially no risk and hence they are popular choices for conservative investors. Equity Indexed annuities on the other hand, can achieve a greater return than the annual minimum rate because it earns interest that is linked to a stock or other equity index. Variable annuities are extremely flexible and are typically invested in mutual funds, therefore are subject to the same risks as stocks, bonds and mutual funds. Variable annuities are best for more aggressive investors.
Is CPF Life an Annuity?
Yes, CPF Life is an annuity and currently all CPF members who turned 55 starting Sept 2009 will be able to buy into this plan using the money from their RA(Retirement Account). The money in the RA is actually the CPF money set aside as your minimum sum and transferred over from your SA(Special Account) and OA(Ordinary Account) when a CPF member turns 55. At the present moment, I would always recommend my client to buy into the CPF life as their first annuity plan as it pays the highest rates in the market right now. Then, to supplement the CPF Life you should take up another private annuity plan from one of the private insurer. Currently Manulife has two annuity plans that pays up to 4.2% per annum on the sum insured for the duration of the annuitant’s life. One of the plan called 3-Gen comes with a life insurance component, whereas the second plan i-Gen does not and hence also do not require any medical underwriting, make it an ideal plan for annuitant who may have a medical condition.
A Word of Caution
Setting up an annuity can be an incredibly confusing and complicated process and many people interested in annuities have questions about the process: Are annuity payments taxed? Are withdrawals from a deferred annuity taxed? Which is the best annuity choice for me and my family?
Your best bet is to consult a Financial Planner to ensure that the annuity you pick is the best possible fit for your family and your financial situation.
a blog on: Financial Planning Advice - Christopher Pua
Easi Investors will beat putting money in FD
Given the low fixed deposit interest rate the banks are currently offering, do you know how much interest can you earn if you were to put $20,000 into Fix Deposit account?
That works out to be $111 per year.. The interest earned is not even enough to cover inflation.
For a limited time only, Manulife is offering our innovative program, called EASI-INVESTOR, to grow your savings at a faster rate and at the same time, maximise your returns.
Here is how Easi-Investor Gives you higher expected returns on your savings!
Easi-Investor is the perfect balance for your savings!
-Endowment component provides higher guaranteed returns (2.1%/pa for 5 year term & 2.3%/pa for 8 year term)
-Endowment component is capital guaranteed even with early withdrawal
-no medical underwriting
-top up investment anyimt to benefit from dollar cost averaging
feel free to contact me should you want to find out more about how Easi-Investor can help you fulfill your goals!
Christopher Pua
9239 0070
chrispua@yahoo.com
a blog on: Financial Planning Advice - Christopher Pua
Wednesday, July 29, 2009
How to plan for your retirement?
I you think you are too young to start planning for retirement, think again. If you are 50, and think you are too late to plan for retirement, think again.
Watch this video from www.howdini.com. it will open up your mind.
a blog on: Financial Planning Advice - Christopher Pua
ABC to a secured Retirement:
by Christopher Pua 29 July 2009
What does Retirement means to you?
Some dictionary defines retirement as follows:
re⋅tire⋅ment [ri-tahyuhr-muhnt] Show IPA
–noun
- the act of retiring or the state of being retired.
- removal or withdrawal from service, office, or business.
- the portion of a person's life during which a person is retired.
- a pension or other income on which a retired person lives: His retirement is barely enough to pay the rent.
- withdrawal into privacy or seclusion.
To you and me, retirement may mean one or more of the above or something totally
different. Some may see retirement as a final departure from their 9 to 5 job. Another
may want to continue working maybe at another capacity or in a volunteer
organization, yet another may wish to spend his or her retirement years travelling
with loved ones, meeting up with old friends, spending more time in their hobby or
looking after their granchildren.
Whatever it is, it's entirely up to your imagination, your desire and your physical and
financial ability. I remember when my father in law retired some 11 years back when
he turned 55. My mother in law whom has been a housewife since she was married
to my dad, could not adapt to seeing her husband lazing in the couch the whole day
doing nothing. She tried her best trying to nag at him to go back to work, but he
didn't budged. After about 2 years of trying, she finally gave up and resolved in her
that he isn't returning to the work force. Now they have learned to live with one
another, watching tv together, traveling on a bus to different parts of Singapore to
explore delicacy from different hawker centers and restaurants. And once in a while
pop by their sons' and daughter's home to visit their grandchildren, they are enjoying
their golden years.
ABC of a secure Retirement
Research shows that when a person comes to their retirement age, there are 3 things
in their life that would become more important to them:
1. To have constant streams of money during their retirement years: Annuity
2. To have a healthy lifestyle, good, mental, physical and spiritual health: Body
3. To have good relationships with their loved ones and friends: Companion
That's why I have titled this article the ABC of a secure retirement.
A for Annuity
Is money or income important during your retirement years? You bet, If you think
that when the time comes, everything will take care of itself, you are in for a big
surprise. Guess what if you did not plan for your retirement, and did not manage
your finances well during your working years, you will have no finances to manage
when you retire. And if you think your CPF will be sufficient to see you through,
think twice. The new CPF Life scheme may give you a good start with your first
annuity plan, it is usually not enough to see you through your monthly expenses.
I heard from one of my friend who is in his senior years, he said:" when you are
working, and have a family, which day of the week do you spend the most?" I said:
" I guess that would be the weekend, or Sunday." Then he said to me: " When you
retire, everyday is a Sunday." I thought it was quite funny but when I think harder,
it is true, you will see that everyday you spend in your retirement years, you will be
spending money on a daily basis, and if you have opt to stop work completely, there
is no income but out expenses. So, as a financial planning, I have always advise my
client to start working on their retirement planning. Be it a small plan or a big one,
at least you set the ball rolling.
So, why is annuity so important when we retirement? It is important and you should
make it your top priority when it comes to your asset allocation, because this
financial instrument will be able to give you a lifetime monthly payout for as long
as you live, let me repeat that, for as long as you live, got it? If you were to put this
money into an annuity plan over 10 years before you retire, it could give you an
annual payout of $6000 per year for as long as you lived from the 11 years onwards.
And after you have passed on, there will still be a residual sum to be given to your
loved ones.
So, the bottom line is, an Annuity plan will protect you against outliving your
resources, because the drawdown monthly payout is for your lifetime. In this sense,
you will be rest assured that you will be able to receive a constant stream of income
during your retirement years.
B for Body
Next, your body, mind and soul would also be an important area for you to put your
focus and attention on. As the proverbs says, Health is wealth. We need a healthy
body, a sound mind, and a peaceful soul at all stages of our life, not just during or
retirement years. But as we all know, when we age our body and mind would start to
age as well. I've read an article about an interview with our Minister Mentor Lee on
how he heed the sign on his aging body and begin to change his living habits, quitting
smoking in his late 30's, cutting down on consumption of alcohol, going for regular
jogs etc.. Likewise, we should all follow his footstep, don't stop exercising. If you can't
do what you used to be doing previously, do something that you enjoy and are able to
cope with. Stay active, stay engage with your friends, community, loved ones. Seek your
own solace, to find inner peace thru meditation, prayer etc. Keep your mind sharp, read,
engage in conversation with your friends, your children, volunteer. Whatever it is, keep
yourself busy and continue to contribute in your capacity and gifts and talent that
God has given you. You will become more fulfilled, happy and energetic.
C for Companion
And finally, we must not neglect our loved ones. Don't get me wrong, I'm not saying
not to neglect them when you have retired, you should do that, but more so, now
and everyday. Because human relationship is like a garden, we need to sow the seeds,
tend to the garden, prune it once in a while, nurture it with our love and care and all
this takes time, effort and sacrifices. If you are not tending to your garden right now,
it may become a wilderness by the time you are looking for the garden. Tend to your
garden with love. Next, start making new friends again when you reach your retirement
years, because you will find that some of your old friends may meet our creator before
we do, so if we do not continue to make new friends, our circle of friends will continue
to shrink day by day. We are not an island, we are created to be an interactive and
interconnected being, so we need friends and companionship.
Take on this new stage of your life with great enthusiasm and hope. Because many
of us are always waiting for the day we retire. so, if you have planned well for it, enjoy
every moment of your golden years.
I hope this ABC steps will help you in planning for your dream retirement. God bless.
a blog on: Financial Planning Advice - Christopher Pua
CPF Minimum Sum. What's it all about?
CPF Minimum Sum. What's it all about?
by Christopher Pua 29 July 2009
I have always been asked this question whenever I conduct a retirement planning workshop:
"What is this minimum sum? How much must I have in the CPF? What is this CPF minimum
sum all about?"
What is the Minimum Sum?
So, I thought it would be good if I could share my thoughts and views on this matter. The
CPF minimum sum was initiated by the CPF board in 2003. Under this scheme, all CPF
members turning 55 would have to set aside a Minimum Sum of CPF money from their
Special Account(SA)and their Ordinary Account(OA) into a new Retirement Account(RA),
before they could withdraw the balance from their OA.
The reasons for the implementation of this scheme are many. In my opinion, I would say
that this is a fantastic system to help CPF members managed their hard earned CPF savings,
and to help them to drawdown the cash from the RA for their retirement years.
Before this system was in place, we have heard many stories of how retirees CPF money was
completely spent in a blink of an eye soon after they withdrew their CPF money at age 55.
You may have heard this saying, that Singapore knows how to make money, but most are
quite bad when it comes to managing their hard earned cash.
How much must I have in the Minimum Sum?
So, since 2003, CPF members who turned 55 have to set aside this minimum sum to the RA.
When it first started, the minimum sum was $80,000. And as you may have already known,
this figure will increase on a yearly basis and would also be subject to an additional
adjustment to inflation. As of today, the minimum sum, for those turning 55 between 1 July
2009 to 30 June 2010, would be $117,000. for a table of projected minimum sum till Jun
2014 please visit this CPF site
So, if you have the minimum sum, all is well and good, you set aside the $117,000 or more
depending on when you turn 55, then you are free to withdraw out the remaining OA
balances, (btw, all you SA balances will be used to set aside for the minimum sum first, if it
is insufficient, they will take the balance from the OA).
But what if you do not have enough? Does it mean that you will not be able to withdraw a
single cent after you turned 55? No, there is a formula for you to work out how much money
will be set aside from your SA and OA for the minimum sum.
Take for example you turn 55 this year, the new minimum sum is 117,000. However, you only
have 50,000 in your OA and 40,000 in your SA. When the time comes for CPF to set aside the
minimum sum, they will first calculate the total OA and SA balance, which in this case is
$90,000. Then, they will apportion 60% of this total amount to the RA (90,000 x 60% =
54,000). Remember, I said earlier that they will deduct from SA first, so in this case they will
move the $40,000 from your SA to RA, and another $14,000 from your OA to RA(total $40k
+ $14k = $54k). Then the remaining $36,000 ($50k - $14k) from your OA can be withdrawn
by you.
Any subsequent contribution into you CPF account in the future will be channelled as follows:
60% to RA, and 40% to OA. I hope I have managed to explain it clearly.
What's it all about? What's the use of it?
So, now that you have set aside the minimum sum to the RA, what are you doing to do with
this money? Good question! CPF gives you 4 alternatives to make use of this cash in your RA.
1. Leave it inside CPF, earn the yearly interest(currently 4%) from CPF and drawdown the
money for your retirement.
2. Put this sum into a bank and drawdown the money for your retirement.
3. Buy a Private annuity take pays you a monthly income till you kick the bucket. Current
annuity payout is between 3.5% to 4.2%
4. Buy into CPF life annuity that pays out a monthly coupon till you kick the bucket. Current
CPF annuity payout is between 8% to 11%.
So, needless to say, you should know which is the best way to go. CPF life of course. and if
you still have excess, buy another private annuity.
Why do you need so many annuity during your retirement years? That's because, by now you
should have re-allocated your portfolio and ensure that in your different class of asset
allocations, annuity should now occupy the centre stage, not investment, not insurance, gold
or other assets classes, they will now form your satellite assets in your portfolio. Because
annuity will ensure that you will have a constant stream of income until you pass on, it's a
way of protecting you against depleting your resources before you die.
Hope this is helpful for all.
a blog on: Financial Planning Advice - Christopher Pua
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