Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Wednesday, 24 June 2015

CPF LIFE versus Private Annuity Plan

18:50 Posted by cheez , 1 comment
Today's post is on the difference between CPF LIFE versus a Private Annuity Plan.
We took quite a few to do this post because there were a lot to read about Private Annuity Plans and a lot of the plans came with different terms and conditions.
We had spend quite some time to simplify and put them in ways comparable to CPF LIFE.

What is CPF LIFE? Click HERE
What is a Life Annuity Plan? Click HERE

Topic CPF LIFE Private Annuity Plan
Interest Returns Guaranteed 4%+1% for your Special & Retirement Account*.Potential yield of up to 4.25% upon maturity (AIA). Highest return we found.
Potential & non-guaranteed returns.
Annuity PaymentDepends on perspectives**1) Fixed monthly payment while you work
2) 1 lump-sum payment
Money Paid toCentral Provident Fund (CPF)Insurance Companies
Duration Distribute money till death 1) Distribute money till death
2) Distribute up to certain years (eg;20 yrs)
Early Death Your money that are undistributed to you in your monthly payouts will be given to your beneficiaries upon your death Some policies will allow you to give the undistributed funds to your beneficiaries. However, not all allow this.
Outliving your FundsCPF will continue to distribute to you your monthly income until death.
However, no money will be given to your beneficiaries upon your death
Insurance companies will continue to distribute to you your monthly income until death.
However, no money will be given to your beneficiaries upon your death

*4% interest on Special & Retirement Account, and +1% for first combined $60k of Ordinary Account, Special Account, Medisave Account & Retirement Account.

**Could be 1-lump-sum payment because you are only enrolled into the CPF LIFE plan at age 55.
At age 55, your Retirement Sum is used to pay for your CPF LIFE.
You can also look at it as a monthly payment while you work. Because every month part of your salary is being channeled to the different CPF accounts, and ultimately that money is what forms your CPF LIFE money.

We will be posting about the limitations and disadvantage of using Private Annuity Plans instead of CPF LIFE.
Stay Tune!

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1 comment:

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