[Napoleon Porlumpar]

What you said is not true for a simple reason.

The scheme pays in Singapore dollars which the govt can always print more if needs.

It does not adjust for inflation....and this can wipe you out jn terms of buying power but scheme will not collapse ...you suffer instead.

Instead of reducing risk the scheme merely pass the risk from govt to the people....exposing them to inflation.

$1300 q month to live on ....until you die? ...inflation can just wipe off buying power quickly.

if PAP can print more money...............why borrow and pay interests ?...............our national debt already more than our GDP.................

we don't own or control our central bank..................it belongs to outsiders..............

[lylcnn]

That is why CPF is confusing.

There are 2 dimensions.
1. The amount you want to participate in CPF Life....BRS vs FRS. BRS is half of FRS. BRS = basic retirement sum.

2. After you choose the amount,  you select between basic cpf life vs standard cpf life.

You can choose BRS + Basic; FRS+Basic...etc 4 combination.

In the above example it illustrate FRS+basic vs FRS + standard...meaning the participation sum is same.

To understand alone is complicated never mind making the right decision. Most people don't bother.

Hope I answered the correct question.

Oic...thanks...didn't know can select one of the 4 combi...any idea what's the IRR and if favourable to choose BRS + Basic ?

[sgbuffett]

Oic...thanks...didn't know can select one of the 4 combi...any idea what's the IRR and if favourable to choose BRS + Basic ?

Within CPF Life it is the same as FRS+Basic.


If you choose BRS+Basic you put half in CPF Life.
The other half you keep in CPF SA for 4%.

This gives you tye best in terms of returns and bequest.

[p1acebo]

That is why CPF is confusing.

There are 2 dimensions.
1. The amount you want to participate in CPF Life....BRS vs FRS. BRS is half of FRS. BRS = basic retirement sum.

2. After you choose the amount,  you select between basic cpf life vs standard cpf life.

You can choose BRS + Basic; FRS+Basic...etc 4 combination.

In the above example it illustrate FRS+basic vs FRS + standard...meaning the participation sum is same.

To understand alone is complicated never mind making the right decision. Most people don't bother.

Hope I answered the correct question.

You are not exactly correct. CPF Life has more combinations than what you mentioned.  For example, there is also ERS with the 3 combinations i.e. Basic Plan, Standard Plan and Escalating Plan.

[p1acebo]

What this means is if you have above 250k in SA.

1. One should opt for basic cpf life  to minimise participation.

2. Rest of the money just keep in CPF SA for higher returns.

And your Loo Loo friend keep exhorting everybody in his group to go for the ERS instead of the FRS

[sgbuffett]

And your Loo Loo friend keep exhorting everybody in his group to go for the ERS instead of the FRS

He is wrong. 

ERS means you participate more into CPF Life and this leads to lower rate of return.

Lower participation in CPFLife BRS and keep the excess money in CPF OA.

Unless you think you can live above 95 to 100+ yrs old.

If you have many health problems and die young CPF life is pretty bad.

[p1acebo]

He is wrong. 

ERS means you participate more into CPF Life and this leads to lower rate of return.

You dare criticise your master?

[sgbuffett]

You dare criticise your master?

Everyone can be wrong.
He is not my master just someone giving pretty good advice on Internet. But he is not perfect

[p1acebo]

Everyone can be wrong.
He is not my master just someone giving pretty good advice on Internet. But he is not perfect

Have a read below.  This guy also thought FRS was the way to go.  And later changed his mind to ERS.  

https://www.firepathlion.com/top-up-cpf-...or-invest/

[sgbuffett]

Have a read below.  This guy also thought FRS was the way to go.  And later changed his mind to ERS.  

https://www.firepathlion.com/top-up-cpf-...or-invest/

The logic is given below is wrong!


You put more in RA as ERS of course you get more.
But if you die at 85 the bequest is zero. While your children still get 90K if you put in SA instead of topping up the RA to ERS

The govt is using the imoney of those who die early to pay those who die later. But if you die before 95 the total you get less.

[p1acebo]

The logic is given below is wrong!


You put more in RA as ERS of course you get more.
But if you die at 85 the bequest is zero. While your children still get 90K if you put in SA instead of topping up the RA to ERS

The govt is using the imoney of those who die early to pay those who die later. But if you die before 95 the total you get less.

It's not a one size fits all solution.  Some folks have no children or do not see the need for a behest to the NOK.  Then the Standard Plan's payout is better, especially as a hedge against longevity.

Also, the behest is already 0 for Standard at 80 and not 85.  At around age 90, all behests are ZERO.  So there are many variables.  CPF Life is not an investment plan.  You need to look at it in terms of an Annuity Plan instead.

For those who think they have a rather short life ahead, granted, the Basic Plan is the way to go.

[p1acebo]

The most important chart is this.

If you choose basic scheme for cpf life you get a bit less each month but your bequest is much larger.

If you die at around 80 the standard and enhance have zero bequest and the basic has 100k to give to your children...



By taking just 100$ a month less than standard, the basic gives 100k more in bequest at age 80.

The difference is so large it make no sense to go for standard scheme which is the default.

Many will make this mistake of choosing standard because they  did not bother to check......and took things for granted.

l

So those above 55 now....which did you choose?

Even your chart you depicted shows the behest for Standard Plan is 0 at age 80.  How did you arrive at 85?

[sgbuffett]

It's not a one size fits all solution.  Some folks have no children or do not see the need for a behest to the NOK.  Then the Standard Plan's payout is better, especially as a hedge against longevity.

Also,  the behest is already 0 for Standard at 80 and not 85.  At age 90, all behests are ZERO.  So there are many variables.  CPF Life is not an investment plan.  You need to look at it in terms of an Annuity Plan instead.

For those who think they have a rather short life ahead, granted, the Basic Plan is the way to go.

I am looking as a total package. If person just wants highest cashflow until death at uncertain age its a no brainer to put as much as possible into an annuity to get it.

However if one wants to leave children something the idea of take just $100 less each month to give $100K more to children if one lives to a average age of 80+....it is much better as a whole.

[[[ForeverAlone]]]

Is CPF Life a good scheme or bad scheme ....how does one evaluate the scheme....to say it is good or bad.

The answer is internal rate of return. Some one worked out already if you collect CPF Life the die at age 85 or age 90 collect monthly until that age plus the residual sum given to your children ...what is the return?

The internal rate of return is 3.5%-4%  unadjusted to inflation. 



So the real real return if you include 1-2% inflation is 1-2%.


This return isn't guaranteed.  But likely mechanism is to loan to GIC which pays the return underwritten by sizable reserves. So for all intent and purposes you can say it is more or less guaranteed.


So you get higher return  if you can just leave it in CPF SA.


Unless you are one of those who live to 120....for most people it's return is lower than Special account.

So knowing this one is better off to apportion between CPF SA and CPF life in RA properly

GO ASK YOUR IDOL LOL " Mr Loo " lah , Your Idol claim CPF IS THE BEST no wonder can take photo with tharman, disgrace chan chun sing so call First non civil servant get a public service award.

[sgbuffett]

Even your chart you depicted shows the behest for Standard Plan is 0 at age 80.  How did you arrive at 85?

85 correspond to median lifespans most people will die before this.i want to show most people will get bequest of above 100k based on most people dying before 85.

[p1acebo]

GO ASK YOUR IDOL LOL " Mr Loo " lah , Your Idol claim CPF IS THE BEST no wonder can take photo with tharman, disgrace chan chun sing so call First non civil servant get a public service award.

His idol Loo Loo ask his followers to top up CPF to the max ie ERS bur sgbuffet for once disobey's his master

[sgbuffett]

His idol Loo Loo ask his followers to top up CPF to the max ie ERS bur sgbuffet for once disobey's his master

He is not my master lah.
I don't agree with him on all topics.

[sgbuffett]

simi wrong choice?

Just tell us what you choose for CPF life I will tell you whether you made a  mistake.

[p1acebo]

85 correspond to median lifespans most people will die before this.i want to show most people will get bequest of above 100k based on most people dying before 85.

Cut n paste

average life expectancy in Singapore

Total: 83.9 years
Male: 81.5 years
Female: 86.1 years

[sgbuffett]

5 years ago when I turned 55

I made sure I have ERS in my RA account

I already said 5 years ago

I will select BASIC CPF Life plan when I reached 65

For maximum bequest to my wife and 3 kids

Who will all have equal 25% share of my CPF savings

Which I will try my best to maintain at $1M

Throughout the rest of my life

Song boh?

ERS is suboptimal.
Basic is correct choice.

You should have chosen BRS and kept the rest jn CPF SA to earn 4%. Because the Internal rate of return of cpf life is lower than 4%.

[p1acebo]

Cut n paste

average life expectancy in Singapore

Total: 83.9 years
Male: 81.5 years
Female: 86.1 years

The womenfolk give us guys a hard time in sg 

[sgbuffett]

The womenfolk give us guys a hard time in sg 

Women are better off as they live longer...men subsidise their longevity.

[sgbuffett]

lj talk

You cannot opt for BRS in your RA and keep the rest in CPF SA

You can keep the rest in SA after setting aside FRS in your RA

You can pledge property and select BRS.

To.kepp money in SA you do another trick called shielding.

I am surprised you keep so much money in CPF without knowing the hacks and optimisation. Not that it is need but you are so free since you are retired.

[Ernesto]

Dun stress too much. Live your life fruitfully joyfully while you are still able to contribute. Whether you will wake up or collapse the next moment you dun even know. Let God be part of your life.Even you live simple life, you will be happier.

[Ola]

Listening to PAP and following their stupid ideas

will make us broke faster

Lucky we are not as stupid as Jac Lau= Fart Sun King

[p1acebo]

After digesting the various inputs from here and from friends, and tonnes of articles... I have come to this conclusion.

1. The way to go is FRS, not BRS because I don't like to pledge anything to chenghu, and also unless you really can guarantee your drawn out monies work even harder for you and earn you more than 2.5% or 4% plus totally risk free (all investments will carry risk, and even more so especially if already lau kok kok aged 55yrs and above).

2. There is no need to top up your RA amount to ERS to enjoy a better payout from age 65yrs (remember to take it out at 65yrs else the default age for drawdown is 70yrs). Because even if you leave your monies in SA, it will also earn 4% same as RA 4%. But the difference is there is flexibility in your SA account. It is still YOUR own money and you can withdraw it anytime. In the RA it is locked up from 55yrs onwards to 65 where it will then transit to CPFLife. At 65yrs, where CPFLife starts, your interests on the entire amount commited go to the common pool. It is NOT your money anymore.

3. ERS is only worth it if you can live longer than 85yrs old. Can you guarantee you will live that long?

Feel free to give your comments and opinions.

[p1acebo]

ERS is suboptimal.
Basic is correct choice.

You should have chosen BRS and kept the rest jn CPF SA to earn 4%. Because the Internal rate of return of cpf life is lower than 4%.

Donch confuse people further ah... CPF already beri confusing.   There is BRS, FRS (2 x BRS) and ERS (3 x BRS), referring to the SCHEMES.

Then there are PLANS, of which there are the following:  Basic Plan, Standard Plan and Escalating Plan

[Sticw]

The pitch is to entice people firstly by conditioning them that they will live pass 85yo and then sell the annuity.

How many can and will you live pass 85yo and beyond?

The unspoken is that this entire scheme is to shift the social burden to care for those who live passed their CPF years by making everyone pay for it instead of govt. Your CPF monies no longer is just for your retirement but a social safety net for others. That is why no matter how you compute, the annuity will payout less than you for yourself...

While the govt can argue that govt should not bear all the social cost, but it's even less reasonable for everyone else to bear it for strangers. We did not benefit from others' lives, why should we bear the consequences? The govt on the other hand benefited from voters, else who in their decent mind will pay this bunch of mediocre indecent sums of money as pay or allowance?? Lol

[sgbuffett]

The pitch is to entice people firstly by conditioning them that they will live pass 85yo and then sell the annuity.

How many can and will you live pass 85yo and beyond?

The unspoken is that this entire scheme is to shift the social burden to care for those who live passed their CPF years by making everyone pay for it instead of govt. Your CPF monies no longer is just for your retirement but a social safety net for others. That is why no matter how you compute, the annuity will payout less than you for yourself...

While the govt can argue that govt should not bear all the social cost, but it's even less reasonable for everyone else to bear it for strangers. We did not benefit from others' lives, why should we bear the consequences? The govt on the other hand benefited from voters, else who in their decent mind will pay this bunch of mediocre indecent sums of money as pay or allowance?? Lol

Basically make everyone get less per month to fund those who live long life...

We known money has to come from somewhere either taxing progressively  or just take from everyone including the  poor.
 
Policies are good or bad depending on the context  if you have relatively equal society making everyone pay equally is okay...money has to come from somewhere.

When you have very high inequality, it is almost incompatible with a low tax regime because you want some transfer from very wealthy to others and you have to tax.

Sjngapore is seeing rising poverty especially among the elderly in recent decades. It will get worse and worse under the current system..

[jus4lucky]

vote wisely. change the gov change the policy. this cpf cannot gives us a good retirement, why still bother.