Using an example of a Male, with $67,000 in CPF:
Refund 65: $645/month
No-Refund 65: $689/month
The difference is only $44/month! The problem is that by choosing the No-Refund 65, you will be sacrificing 100% of the $67,000 with no options for refund for the annuity premium, just for a measly $44/month. Based on this calculation, I'm sure the same group which projected the budget deficit for 2007 is the same group which projected this return.
This is totally ridiculous. I run the risk of losing $67,000 (No-Refund means my beneficiaries will not get this amount) all for an extra $44/month. The benefits do not add up at all! $44/month only adds up to about $1.50 per day. Saving $1.50 a day is not a problem to all of us. Just drinking plain water will do the trick.
Although I still have a long way to using this benefit, based on the information that is currently available to us, I would think a No-Refund 85 would be the best bet.
The standard package would be Refund 80, which will pay out $604/month. The annuity premium will amount to $16,235 (x) , and $50, 765 (y) will be in your retirement account. For the calculation of your estate, the premium refunded will only be (x - the payouts given out), plus the amount left in $y (this is refunded regardless of the plan chosen).
The estimated premiums and monthly payouts for $67,000, Male, are:
LIFE Plan | LIFElong Income (CPF LIFE) | Minimum Sum (MS) | |||
| LIFE Payout Start Age | LIFE Premium | LIFE Monthly Payout | MS Payout Start and End Age | MS after paying LIFE Premium | |
| 65 | $67,000 | $645 | N.A. | ||
| 70 | $43,961 | $638 | 65 to 70 | $23,039 | |
| 75 | $27,508 | $622 | 65 to 75 | $39,492 | |
| 80 | $16,235 | $604 | 65 to 80 | $50,765 | |
| 85 | $8,707 | $583 | 65 to 85 | $58,293 | |
| 90 | $4,023 | $558 | 65 to 90 | $62,977 | |
For No-Refund 85, the payout will be $597/month. The annuity premium will amount to $7,463 (x), and $59,537 (y) will be in your retirement account. For the calculation of your estate, it will only consist of the amount left in $y.
The estimated premiums and monthly payouts for $67,000, Male, are:
LIFE Plan | LIFElong Income (CPF LIFE) | Minimum Sum (MS) | |||
| LIFE Payout Start Age | LIFE Premium | LIFE Monthly Payout | MS Payout Start and End Age | MS after paying LIFE Premium | |
| 65 | $67,000 | $689 | N.A. | ||
| 70 | $42,641 | $676 | 65 to 70 | $24,359 | |
| 75 | $25,767 | $653 | 65 to 75 | $41,233 | |
| 80 | $14,594 | $627 | 65 to 80 | $52,406 | |
| 85 | $7,463 | $597 | 65 to 85 | $59,537 | |
| 90 | $3,290 | $566 | 65 to 90 | $63,710 | |
At first glance, most would choose the standard package. However, one should not forget the power of compounded interest. For your retirement account, your beneficiaries will get back all the money, plus the interest generated. Using an example of 4.5% average interest for the retirement account, $59,537 would amount to $92,459.14 for the period where your money is locked-in at 55 years old, to where your payout will start at 65 years old (10 years). Thereafter, a fixed amount will be withdrawn from your account. However, one must remember that at this point of time, the account is still generating interest. The amount left in your retirement account would be far more than the $7,463 that you'll stand to "lose" for the annuity premium.
If one is more worried about leaving behind more for your children, then the No-Refund 90 would be the way to go.
The amounts mentioned here is as of 1 March 2008. Knowing the Singapore government's constant tweaking mentality, the plan might be tweaked again. If I am 55 years old now, I would choose the No-Refund 85 over the standard Refund 80. But that is just me. :p
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