What Is It?
What is CPF LIFE? How is it different from CPF Minimum Sum?
CPF LIFE is the new version of the Central Provident Fund’s retirement scheme. Previously, the retirement scheme was called the CPF Minimum Sum Scheme, later renamed as the CPF Retirement Sum Scheme. The old scheme is being phased out, so CPF LIFE will be the default scheme for most of us. The older CPF Retirement Sum Scheme draws its payout from your CPF Retirement Account (RA), essentially treating it as a retirement fund. But this means your payouts will stop when your account balance dwindles to $0. As of 2019, the Retirement Sum Scheme payouts will end by age 90. CPF's new scheme, CPF LIFE (Lifelong Income For the Elderly), works differently. First, you need to pay a lump sum premium, deducted from your RA, when you join the scheme. This means there’s a chance your Retirement Account will be depleted right from the start. On the other hand, as the “Lifelong” bit suggests, your retirement payouts will never stop. In short, CPF LIFE is a much more attractive retirement scheme for the simple reason that you just don’t know how long you’ll live.
Who is eligible for CPF LIFE? How do you sign up?
You'll be automatically enrolled in the scheme! Anyone who meets these criteria will be auto-enrolled in CPF LIFE:
Singapore citizen or PR
Born on 1 January 1958 and after
At least $60,000 in your CPF before age 65
If you’re not automatically placed on CPF LIFE for some reason, you can still opt in for CPF LIFE anytime from age 65 to 79. Yes, even if you’ve already started receiving Retirement Sum payouts. Here's how:
Login to my cpf Online Services with your SingPass
Click on My Requests > CPF LIFE > Apply for CPF LIFE
The cut-off date is 1 month before your 80th birthday
What's the minimum sum you need to join CPF LIFE?
Here's where things get slightly complicated. There is no minimum amount of CPF savings you need to join CPF LIFE. I repeat: There is no minimum sum required to join CPF LIFE. But if you join CPF LIFE with only a small amount of CPF savings, you'll get correspondingly small monthly payouts. Which may defeat the purpose of a retirement plan.
There's no minimum required to join CPF LIFE... but there IS a minimum sum you cannot touch when you reach age 55. This is called the CPF Retirement Sum. Actually there are 3 Retirement Sums: Basic, Full (Basic x 2), and Enhanced (Basic x 3). They increase every year.
If you own a home in Singapore
You can withdraw CPF savings above the Basic Retirement Sum (so if you're 55 this year with $200,000 in CPF, you can withdraw up to $200,000 - $96,000 = $104,000)
The property's lease must last you up to age 95
If you sell your home in the future, you must top up your CPF up to the Full Retirement Sum
If you DO NOT own a home
You can withdraw CPF savings above the Full Retirement Sum (meaning you can withdraw up to $200,000 - $192,000 = $8,000)
This also applies to home owners who do not want to top up their CPF after selling their home
If you have less than the Basic Retirement Sum in your account, you can withdraw up to $5,000 at age 55.
How much CPF LIFE payouts will you get when you retire?
You will only start getting CPF LIFE payouts from age 65 (you can defer this payout age up to age 70). So if you retire before 65, you'll need some kind of income stream until then.With that out of the way, CPF LIFE payouts simply depend on 2 variables:
Your CPF Retirement Account balance
Which CPF LIFE plan you choose
The more you have in your CPF, the higher your payouts.
CPF LIFE Standard vs Escalating vs Basic plans: which is better?
1. CPF LIFE Standard Plan
100% of your RA savings will be used to pay a lump sum premium when you join. You then receive stable monthly payouts for life
This is the simplest plan to understand.
2. CPF LIFE Escalating Plan
100% of your RA savings go into the lump sum premium
Payouts start out lower than that of the Standard plan
Every year, they increase by 2% to keep pace with inflation, eventually overtaking that of the Standard plan
3. CPF LIFE Basic Plan
Only 10-20% of your RA savings is deducted for the CPF LIFE premium; the rest remains in your RA
Monthly payouts come partly from CPF LIFE and partly from your CPF RA savings
Once your RA falls below $60,000, your monthly payout will decrease
This is a "legacy" plan and is likely to get phased out in the coming years
Choose carefully because you can only switch plans within 30 days of joining the scheme. To request a change within the 30-day timeframe, request it on the CPF website via My Mailbox.
What if you want higher CPF LIFE payouts?
If you’ve done the calculations and found your projected CPF LIFE payouts rather dismaying, there are 2 ways to boost them from within CPF.
1. Top up your CPF Retirement Account
Remember: The higher your RA balance, the higher your CPF LIFE payouts. You can increase your retirement income by topping up your RA with cash, up to the Enhanced Retirement Sum (currently $288,000). Don't worry — you can even do this after CPF has already deducted the premium for CPF LIFE. After the top-up has been credited, you can submit an "Apply to Increase CPF LIFE Premium" form.
2. Defer CPF LIFE payout date
By default, we start receiving CPF LIFE payouts at age 65. To increase your payouts, you can defer the payout starting date up to age 70. This gives your retirement savings up to 5 more years to grow in your CPF. You end up with a larger lump sum premium which, in theory, results in larger payouts. However, you need to write it to CPF via My Mailbox to get an estimate of your new payouts. To defer your CPF LIFE payout date,
Login to my cpf Online Services with your SingPass
Click on My Requests > CPF LIFE > Apply to Defer CPF LIFE Payout
If you have exhausted these options or are unwilling to pursue them, we have some more options in the final section — scroll down. Back to top
What happens to your CPF LIFE when you die?
CPF will refund the unused portion of your annuity premium back into your CPF account. This amount, along with any CPF Retirement Account savings left over, will be bequeathed to your CPF nominee(s) in cash (by default) or their CPF (if you so choose). If you haven’t made any CPF nominations at the point of death, the money goes to your next-of-kin according to Singapore’s intestacy laws.
Is it possible to opt out of CPF LIFE?
Most of us will be automatically placed on CPF LIFE once we retire, whether we like it or not. Is there any way to opt out of the scheme? Yes, you actually can — if you buy your own retirement insurance (a.k.a. private annuity) plan. In fact, you can be exempted from the CPF Retirement Sum as well. But not just any plan will do. To apply for exemption:
You must be age 55 and above
Your private annuity must give you lifelong monthly payouts
The annuity can be paid using cash or under CPF Investment Scheme
The monthly payouts need to meet certain benchmarks (example: a 55 y/o male must receive $1,534/month from the private annuity to be fully exempted)
You may be fully or partially exempted depending on how much payouts you get
Otherwise, you can only leave CPF LIFE under the following circumstances:
Medical reasons (e.g. terminally ill, physically/mentally incapacitated)
You are leaving Singapore and West Malaysia permanently with no intention of returning
You are a Malaysian citizen and have left Singapore permanently for West Malaysia
If you successfully leave the scheme, CPF will refund the unused portion of your CPF LIFE premium minus any monthly payouts you’ve already received.
How to supplement CPF LIFE with your own plan?
There is a maximum for CPF LIFE: It's pegged to the Enhanced Retirement Sum ($288,000 this year). So for those who are 55 this year, the highest CPF LIFE payout is $2,120 to $2,280 a month. And that's for the Standard plan. If you opt for the Escalating plan, it will be even lower. Here are a couple of ways to supplement your retirement income:
As mentioned above, private annuities are basically like CPF LIFE but with private providers. You can get one without applying for CPF LIFE exemption — CPF has absolutely no problem with that. In that case, you can enjoy 2 retirement income streams. You can tailor the plan depending how much much income you’d like to receive. Plus you might be able to fund your private annuity with y0ur SRS account or under the CPF Investment Scheme, which reduces your out-of-pocket expenses.
Your own investments
If your objective is just to increase your retirement income but not to get exempted from CPF LIFE, then you can also look beyond annuity plans. Any kind of investment would work as a CPF LIFE supplement, as long as it's stable enough to provide steady income.
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