CPF Life plan with rising payouts to start Jan next year

SINGAPORE — A Central Provident Fund (CPF) annuity scheme with increasing payouts would kick off next January, and members hoping to switch from their existing plan to the new option would be given a one-year window to do so, Manpower Minister Lim Swee Say said in Parliament on Monday (March 6).

CPF Life provides Singaporeans or permanent residents aged 65 and onwards with lifelong monthly payouts from their CPF retirement accounts. Two existing plans — the Standard Plan and Basic Plan — offer constant payouts. The default Standard Plan offers higher monthly payouts and a lower bequest (sum left for beneficiaries after death), whereas it is the opposite for the Basic Plan. 

Under the new plan recommended by the CPF advisory panel last year, members will see payouts increase by 2 per cent every year. However, this also means that payouts start about 20 per cent lower than those offered by the existing Standard Plan if they take up this third option.

CPF members may also choose to delay the starting age of their CPF Life payouts until they are 70 under this new option. So far, around 900 members — of which 70 per cent are still working — have opted for this deferment with the existing plans.

Giving an update on CPF enhancements that took effect last year, Mr Lim said during the Manpower Ministry’s debate on the Budget on Monday that around one million CPF members have benefited from the Government raising the CPF salary ceiling (the maximum monthly salary that is subject to CPF contributions) from S$5,000 to S$6,000, and one million members have also benefited from the extra interest of 1 per cent on the first S$30,000 of their savings.

Last year, the CPF advisory panel also proposed to review the CPF Investment Scheme (CPFIS) to cater to investment-savvy members. Mr Lim said that the changes would be announced later this year. They include a new self-assessment tool for members to gauge whether a high-risk scheme is suitable for them to grow retirement savings.