an announcement was made by Deputy Prime Minister and Manpower Minister, Tharman Shanmugaratnam during the Committee of Supply debates on the Manpower Ministry's estimates in Parliament on Monday on another tweaking to the cpf life scheme introduced in 2009.
when the cpf life scheme was launched, there were 4 plans available, namely:
1. life plus
2. life balanced
3. life basic
4. life income
as a result of feedback, the government has decided to combine the desired features of the life plus and balanced plans into a new plan called the standard plan which will be the default plan if cpf members have not indicated their choice of which plan they want and will automatically be placed under this plan.
the desired features of the new standard plan are:
a. comparable payouts to the minimum sum scheme
b. the bequest feature and
c. the flexibility to use the retirement account
the other plan available from january 2013 is the existing life basic plan for members who prefer a higher bequest and a lower monthly income.
the cpf board will be removing the life income plan due to very low demand as only 3% of life participatns who have opted for this plan and will no longer be available from january 2013.
how will the change affect existing life participants and cpf members?
for existing life participants which number approximately 73,000 members can choose to stay on their existing life plans or if the new standard plan is their preference, they have until december 31, 2013 to make the switch.
for other cpf members who turn age 55 on january 2013, it means there are now less 'confusion' over the choices available due to the refinement of plans to 2 (from 4 currently).
one of the confusions arose when life participants chose the life income plan only to realise that there is no-bequest feature in this plan and changed their minds when this was explained to them.
another confusion was from feedback garnered since the launch of the cpf life scheme indicated that members found it difficult to choose between the 4 plans.
my comments:
this is a welcome announcement as what was hitherto 4 choices for the cpf life scheme has been narrowed to just 2 plans.
but we are still spoilt for choice because other than the cpf life scheme, cpf members can choose to purchase an annuity from a private insurer.
ntuc-income's participating annuity has been the other so-called default choice of cpf members turning 55 years of age.
why?
because this is the only insurer that offers an annuity that allows the annuitant to receive additional monthly payouts in the form of bonuses which once declared, is guaranteed and enables the annuitant to enjoy a higher monthly payout.
but of course, the flip-side is a lower monthly income from the start of the payouts as compared to the cpf life scheme.
because we are living longer, the ntuc-income participating annuity merits consideration as the higher income (in the form of bonuses declared) from living longer may be more desirable in mitigating the effect of inflation.
"because we are living longer, the ntuc-income participating annuity merits consideration as the higher income (in the form of bonuses declared) from living longer may be more desirable in mitigating the effect of inflation. "
ReplyDeleteI hope you are not implying that NTUC annuity is better. NTUC is NOT better than CPFlife and to exceed CPFlife an annuitant has to live beyond 95 years old. Well........just wonder how it would benefit the annuitant at this age with little more.
Second , the bonus doesn't hedge against inflation...it is so measly amount. It is misleading to say that.
The only difference between CPFlife and NTUC annuity is the commission, right? You don't get commission for recommending CPFlife but for ntuc annuity. Another difference is the seller...those put the client's interest FIRST and those who don't.
Knowing full well that CPFlife is better yet many of the cooperative or social enterprise salesmen still peddle their annuity to their clueless and gullible clients.. this is dishonest!!! but this is how salesmen make their living...rob and steal over the dead body of their clients.Conscience is dead...and hell is waiting to receive them with open arms.
In hell honesty and truth is relative.
Bonus to hedge inflation? did you know the bonus declared averaged only 1%? Can 1% hedge against a 5.5% inflation? Did you ever hear insurance agents tell you the bonus in number when they say that the bonus is inflation hedged? This is fraction of the truth but as good as lies.
ReplyDeleteAnyway salesmen don't tell the truth...they use lies to sell to their unwary trusting customers. They exploit their trust.