Singapore Retirement: What is CPF Life & 5 facts of CPF Life


What is CPF Life?

According to CPF, it is CPF Lifelong Income For The Elderly (CPF LIFE) Scheme a longevity insurance scheme that insures you against running out of your retirement savings. Thus, the objective of CPF Life is to provide CPF members a monthly income for as long as they live to supplement their retirement expenses. On CPF website, it also mention that with increasing advances in technology and healthcare, we are likely to live longer than our previous generations, the generation of our parents and grandparents. This also means that we will need to spend more years in our retirement, thus, require more retirement living expenses.

Singapore retirement LifeExpectancyStatistics

According to CPF board, source from Singapore Department of Statistics shows that Singaporeans are expected to live longer. Living longer is a good news, but it also means that you need to save for a longer retirement needs, else you may end up outliving your savings. Thus, start planning for your retirement early has become even more important and having a guaranteed stream of income for as long as you live has therefore become crucial. One part of retirement planning is your CPF LIFE, which helps to ensure that you have a lifelong monthly income stream to supplement for your retirement living expenses, for a greater peace of mind. CPF LIFE is a life annuity that provides you with a monthly payout from age 65 (the current payout eligibility age) for as long as you live. CPF members will be placed on CPF LIFE using their retirement sum they have set aside in their Retirement Account (RA). Currently retirement account (RA) is form at age 55, which is transferred from your CPF-OA + CPF-SA accounts to form retirement sum. The retirement sum from the RA, will be used to buy CPF LIFE. The exact amount of retirement sum that will be deducted as annuity premium will depend on the plan type you have chosen and will be made known to you when your CPF LIFE Plan is issued. The interest earned on the annuity premium you pay into the Lifelong Income Fund is then pooled, example. is used to pay the monthly payout to all surviving members in the scheme. There are three types of CPF Life plan, Standard Plan, Escalating Plan and Basic Plan.

Thus, start planning for your retirement early has become even more important and having a guaranteed stream of income for as long as you live has therefore become crucial.

Can I Opt Out of CPF Life?

Yes, you can opt out of CPF LIFE if you are in receipt of a monthly pension or life annuity payout and are fully exempted from setting aside your retirement sum. If you are aged 55 and above and are receiving lifelong monthly payouts from a pension or a private annuity (bought using cash or under the CPF Investment Scheme), you may apply to be exempted from setting aside a retirement sum in your Retirement Account. You may be fully or partially exempted, depending on the lifelong monthly payout amount from your pension or annuity. Thus, you will have to provide proof to CPF board and seek their approval if you want to opt out of CPF Life scheme.

5 Facts of CPF Life

Fact No. 1: No One Will Knows How Long They Can Live To



As mentioned previously, according to CPF board, it is a fact that Singaporean are expected to live longer due to medical and technology advances, 1 in 2 will live to age 85 and 1 in 3 will live to age 90. Thus, many wonder if their savings is able to last them through their retirement as people are generally living longer. What are your thoughts about living longer? Does medical and technology advances play a part in our mortality? And what are your concerns in having to live longer and your retirement?


Fact No. 2: CPF Life Gives Peace of Mind


According to CPF board, with CPF LIfe, life long payouts, you do not need to worry about having nothing to live on when your saving are depleted. As CPF Life provide CPF members a stream of monthly income for as long as they live, to supplement for their retirement living expenses needs, thus, giving you a peace of mind. Do you feel a peace of mind with CPF Life alone as your retirement plan?

And according to Straits Times (PUBLISHED MAY 22, 2019, 10:51 PM SGT) Singaporeans need $1,379 a month to meet basic living standard and a couple aged 65 and above would need $2,351 base on current value in year 2019. How much do you agree with and is the suggested amount sufficient for your retirement?


Fact No. 3: Members Will Always Get Back Their CPF Savings Used to Buy CPF Life


According to CPF board, CPF LIFE not only assures you of a retirement income for life, it also ensures that you will always get back at least the amount you put into CPF LIFE, no matter how long you live. The CPF LIFE premium will earn 4% base interest and extra interest of up to 2% (on the first $60,000 of your combined CPF balances). Thus, in the end you will receive equal or more than the amount you put into your CPF Life. What is your personal view in this, when do you think you will receive more payouts than the amount you put in?


Fact No. 4: There are Different CPF Life Plans to Suit Different Needs


There are three types of CPF Life plan, Standard Plan, Escalating Plan and Basic Plan. Standard Plan, offer the highest monthly payouts and it is also the default plan, meaning if you did not select any plan, Standard Plan will be selected for you. You may consider Standard Plan if you prefer a higher payouts and relatively level throughout for as long as you live. Escalating Plan, will have a lower initial payouts, by increases by 2% every year. For example, Escalating Plan payouts will eventually catch up with Standard plan payouts amount, by providing an equal or more payouts at age 80 or 85 onwards. For a more accurate calculation you may try using CPF LIFE Estimator.  Basic Plan will offer a lower monthly payouts, and progressively lower due to less extra interest earned when your combined CPF balance eventually fall below $60,000. Which plan will you opt for?


Fact No. 5: CPF Life is The Best Product For A Secure Retirement


According to CPF Board, their CPF Life plan is the best plan in the market for retirement that payouts for life, as other private retirement products does not payouts as long. And that it is a safe product with high, risk free returns, as the monies are guaranteed by Singapore Government. It is also a lower cost product, as it does not incur agents’ commissions. How much do you agree with the above, and do you agree CPF Life is the best product for retirement? Do you have other alternative retirement strategies?


One Last Thing

Overall, CPF Life is one (of many) good retirement instrument by itself, as it relatively act as an enforced retirement saving, which will provide a stream of monthly income to supplement for your retirement needs. You may check out my other article on 6 sources of income for retirement. There are 6 sources of income for retirement, as each source of income has their own uniqueness, advantages and disadvantages, and CPF Life is just one of them.


It is good to have a healthy mix of multiple sources of income for your retirement portfolio. For example, property and stocks will be providing you a good returns in the bull market (market is doing well), and your private retirement plan (and CPF Life) will provide you with a fixed guaranteed stream of income with higher variable returns. But during the bear market (market in bad, example during a pandemic) your property and stocks investment returns will be affected or collapses. And your private retirement plan and CPF Life will continue to provide you with a fixed guarantee streams of income for your retirement.


Thus, private retirement plan, helps to act as a hedge to your overall portfolio. Current private retirement plan had evolved greatly, and is very customizable, it will even provide a guaranteed monthly income during retirement, and payouts beyond age 100. Remember, a retirement planning is about having a product or a plan that will gives you a stream of guaranteed income when you retire, no matter where you are, what you do or what condition you are in.


I created some infographics that will help you understand retirement planning visually, visit my Blog on Infographics on What is Retirement Planning and Examples.  Please seek help from your friendly financial consultant to help you with your retirement planning when required, or contact me for a holistic Insurance and Financial Planning.



Note: Opinions expressed are solely in Mr. Chan Kong Meng’s personal capacity and neither express the views or opinions of Prudential nor represent any professional advice in Mr. Chan Kong Meng’s capacity as a PACS representative.



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