An optional CPF LIFE plan which gives payouts that rise over time.
An optional Lifetime Retirement Investment Scheme which is simpler and catered to CPF members who wish to invest but lack financial expertise, time and resources to do so.
In a nutshell, the recommendations are really member-oriented.
Here are 5 reasons why CPF members should be happy over the new recommendations:
1. Younger CPF members get more over time
If you belong to the younger cohort of CPF members, this round of recommendations might affect you more as you would have a longer runway and more investible savings to take investment risks for a higher expected return with the Lifetime Retirement Investment Scheme.
Of course, older members can opt for the scheme.
2. Older CPF members get more too
CPF Life plan ensures that a member will never outlive his or her savings. Not only that, with escalating payouts at a rate of 2% with each passing year, the member should be able to cope with the rising cost of living if he or she lives longer.
3. The new CPF Life plan is optional
The new payout plan is optional, and you can take it up if it meets your needs. If inflation during retirement worries you, this new option could be useful. And if you need more in retirement, you can keep working and defer your payout start age for higher starting payouts, or take up housing schemes, like the lease buy-back.
4. Lifetime Retirement Investment Scheme allows for low-risk investment
The LRIS is an optional scheme – you don’t have to choose it. You can continue to enjoy risk-free returns on your CPF money. But for those who are younger and prepared to take some risks, LRIS will help them to make more on their CPF savings.
5. Flexibility for members
Part II of the recommendations provide simple and meaningful choices that further enhance the CPF system to help current and future generations of CPF members to strengthen their retirement adequacy.
As NTUC Assistant Secretary General Cham Hui Fong puts it:
“The Labour Movement is happy that the Government has accepted the CPF Advisory Panel’s recommendations that are in line with our call to provide members with more options and flexibility in managing their CPF savings to better meet individuals’ retirement needs.”
The NTUC, through the years, has actively been calling on the government to enhance the CPF system to better meet the retirement needs of workers and is represented in the panel by Ms Sylvia Choo, Director, Special Duties , International Affairs Department.