Wait 6months for CPF Annuity Report??

Here I was waiting for the full picture of the CPF changes to come this month, and the most important one I am interested in was missing.

I am very curious. Who is the original person who recommended annuities to resolve the longevity issue? Did this person do enough research on what on earth is an annuity? Who is going to pay for this additional 6months of "research" into this annuities issue? Why isn't this done before the announcement by the PM during the National Day Rally?

Knowing the way politics work, what the PM said during the national day rally will still stand, even if we're totally unhappy about it. Still, my earlier comments still stand on annuity. There is no way anyone (at least me) will put any money into any annuity if we're not guaranteed our principal. However, there can be variations to this stand.

In our current setup, a minimum sum of $120,000 will allow a person to receive $1,275 for 20 years after 62 years old, according to the CPF calculator in the CPF website, after adjusting for inflation. Since the annuity is going to be compulsory, and there's nothing we can do about it, based on the concept of risk-pooling, a larger base of users will mitigate the risk for the insurers.

Therefore, if this whole minimum sum is pushed into the annuity at age 55, we should be able to get at least $1,000 per month, for life from age 65 onwards. This is just my guess though, as I'm not related to the financial industry, and I'm guessing using the trends of the current annuities. I still strongly think that the principal, minus the payouts, SHOULD be returned to the family. We did not pay our taxes (GST included) just so that the government can raise their own pay, and force us to subsidize others when our families might be in need of the money. This doesn't add up.

However, annuities itself is not without risk. That was why I was lamenting the fact that CPF is no longer risk free. We're subjected to policies changes, and now annuities. The risk for annuities, based on my understanding:

1. The risk of the insurer going bankrupt due to various reasons like bad management, bad investment decisions, or just plain unlucky.
   
2. The risk of the payout being insufficient due to a possibility of high inflation in our golden years, thus eroding our purchasing power.
   
3. The risk of not living long enough.
   

Ultimately, insurance is all about risks. The insurers are betting that you will not live long enough, we are betting that we'll live till a 100.