Debated in Parliament on 8 Jul 2019.
Mr Kwek Hian Chuan Henry asked the Minister for Manpower whether the CPF Board can share with the public how the monthly CPF payouts from CPF Life or the Retirement Sum Scheme are calculated as well as the assumptions in determining the payouts, through publication of guidelines and online calculators.
CPF members receive monthly retirement payouts through CPF LIFE or the Retirement Sum Scheme (RSS). Members born in or after 1958 will automatically be included in CPF LIFE if they have at least $60,000 in their Retirement Account (RA) when they turn 65. All other members1 will continue to be on the RSS, unless they voluntarily opt to join CPF LIFE.
RSS payouts are designed to last up to 20 years taking into account the base interest rate on RA savings, which is now 4%. The CPF Extra Interest (EI) and Additional Extra Interest (AEI) provided by the Government are used to extend the RSS payout duration beyond 20 years. In this way, members enjoy payouts for a longer duration and there is less risk that their savings will run out. The period of extension depends on the member's base payout amount, but does not go beyond 10 years.
Unlike the RSS, CPF LIFE is designed to provide lifelong payouts. The payout depends principally on how much a member puts into CPF LIFE. An independent actuarial consultant appointed by the CPF Board determines the payouts taking into account factors such as mortality rates and interest earned on the amounts committed to CPF LIFE.
Payouts are reviewed annually to account for changes in these factors. For example, if more people live longer than expected, the monthly payouts may decrease and vice versa. Any adjustment is expected to be small and gradual, and affected members are informed ahead of the adjustment.
Members who wish to estimate their payouts can use the CPF LIFE estimator on the CPF website. They may also visit any of the five service centres to find out more.
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