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05-09-2012, 08:38 AM
(04-09-2012, 08:30 PM)tanjm Wrote:(04-09-2012, 01:32 PM)Temperament Wrote: CPF LIFE is actually an "Annuity Scheme" if i am not wrong. As such under certain "extreme conditions", you may be paid less then the amount promised or in the worse case may missed some payments or even may stopped payments altogether, if the "Annuity Scheme" collapsed due to whatever reasons. Horrible isn't it? But do you have a choice?
All you need to do is to search google instead of making assumptions. Here's a link: http://mycpf.cpf.gov.sg/NR/rdonlyres/F54...FE_FAQ.pdf
To summarise some pertinent points:
CPF LIFE is based on risk pooling. i.e. everyone contributes to a fund (pool), which earns interest and payouts are calculated based on expected life expectancy (which may be adjusted if the life expectancy increases). Generally speaking a person who dies younger "subsidises" someone who lives longer. The interest is based on the SMRA rate and is gauranteed by the government.
Take a 2 person risk pool as a simple example for illustration purpose. Both contribute 80K. The fund earns no interest for simplicity and no expenses. Based on an average life expectancy of 80 and a starting age of 65 with an annual payout, each gets an annual payment of $5333 (80K/(80-65)). However, the first person dies at age 70, leaving 133K still in the risk pool - which can last the second person for 25 years at current payout rate. In practice CPF Life will constantly add members to the pool so it is possible to gaurantee payouts for life (albeit with constant adjustments for life expectancy), but you should get the idea.
My point is you don't have a choice even if you are a high wage earner with more than adequate retirement fund at the end when you stop working.
It is like an insurance company forcing you to buy an annuity, regardless what you think.
Anyway, if every worker is forced to buy an annuity, is CPF LIFE necessary?
Alas, annuity is not "popular" in Sinkapore due to ???
Fortunately, i had a choice because i was more than 55 years old when CPF LIFE was introduced.
Sorry mate, if you don't have a choice.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.