5 questions about the proposed CPF changes answered

If you're curious about CPF LIFE, CPF options and your CPF retirement option… this article will help you with choosing the right CPF LIFE plan.


So you've read the recent article from The Straits Times about new CPF payout options. Now you're curious about CPF LIFE, CPF options and your CPF retirement option…

Don't worry: we've got your back and we'll break it all down for you – nice and easy!

In fact, if you need a refresher on the whole CPF LIFE conversation, this article will help you with choosing the right CPF LIFE plan. 


1. What’s the new change that I must know about CPF LIFE?

Now, there are not two but three options for CPF LIFE retirement payouts: the Basic, the Standard and the Escalating payout option (this is the new one).

The new option gives you a monthly payout that increases by 2% every year – an answer to the problem of inflation.

You can check out the illustrative payout options in detail*

Think there's a catch? Maybe. If you choose this option, you start with a monthly payout amount that is 20% lower than the Basic or the Standard options.

But as time goes by, this monthly amount will end up superseding the Standard plan's payout. Just to give you an idea, assuming you have $80,500 in your Retirement Account at age 55, this is the comparison of your payout options:


2.  Is there any way to increase the initial payout amount for the Escalating option?

Yes, there is!

You have two choices: either top up your CPF LIFE premiums or delay the start age of when you begin receiving payouts to 70 years old.

The latter option would mean that you either need to remain in the workforce for a longer period or not rely on the CPF LIFE payout in the meantime, living off other sources of money instead – your savings or support from your family, for example. 


3.  Don’t want to wait until you're 70 to receive payouts?

Fair enough. Here are two ways to manage that…

First plan of action: look to grow the money in your CPF pot. You have an opportunity to do this through the CPF Investment Scheme (CPFIS). This is the scheme that gives you an option to invest your Ordinary Account and Special Account savings in a wide range of investments to enhance your retirement nest egg.

You can also consider a separate retirement savings plan outside of CPF that offers you the option of paying out an income earlier than age 70. So you don’t have to depend solely on CPF options for your retirement income. Some of these plans, such as Aviva’s MyRetirement provides you a monthly retirement income at your desired retirement age and supplement your CPF savings. 


4.  What's the big deal about the new CPF investment scheme, LRIS?

Short for Lifetime Retirement Investment Scheme, the LRIS would appeal to the less finance-savvy among us.

While the CPFIS may be regarded as quite complex (too many fund options, needs to be actively-managed), the LRIS will only offer a few well-diversified products and is passively managed, which means that investors are discouraged from frequent switching of investments.

It is also managed by one fund administrator which means that fees and charges are also expected to be lower than for those who invest in CPFIS.

This way, you don't have to be the Wolf of Wall Street for a chance to grow your overall CPF retirement pot.


5.  So when do I need to decide about my CPF retirement payout option?

If you're not near the payout age of 55, you don't need to make a decision yet. CPF will write to you and prompt you closer to your 55th birthday. Phew!

Also, these changes are not set to be rolled out for a few more years. But now that you know what the changes entail, you can take a closer look at how you can invest your CPF monies, either via CPFIS or LRIS or opt for a CPF LIFE payout option that best suits your retirement needs. Leave us a comment and share with us the changes you’d like to see made to the CPF Life scheme!1

The Guaranteed Retirement Income Benefit will increase at a rate of 3.5% per annum, compounded at each Policy Anniversary, starting from the Policy Anniversary immediately following the date that this benefit first becomes payable.


*Illustrative payout details

1The Guaranteed Retirement Income Benefit will increase at a rate of 3.5% per annum, compounded at each Policy Anniversary, starting from the Policy Anniversary immediately following the date that this benefit first becomes payable

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