From Malay Mail · Ida Lim · · 1m 30s
Singaporeans live longer: How they manage retirement savings
Singapore's CPF LIFE scheme adapts to longer lifespans with flexible retirement income options.
In brief
Singapore's CPF LIFE scheme adapts to longer lifespans with flexible retirement income options. Singapore's CPF LIFE provides lifelong retirement income through a self-sustaining scheme that automatically includes most citizens by 2035. Originally reported by Malay Mail.
CPF LIFE scheme introduced
Singapore's CPF LIFE scheme was created in 2009 to address longer lifespans after 2007 data showed over half of citizens would live past 82 and 85.
“Singapore in 2007 recognised that more than half of singaporean men and women would live past 82 and 85 respectively”
CPF LIFE works with government securities
CPF LIFE invests in special singapore government securities for risk-free returns of about four percent with low expenses due to non-profit status.
“the entire cpf life funds are invested in special singapore government securities (ssgs) with a guaranteed risk-free return of about four per cent”
Automatic inclusion for most citizens
Nine in ten cpf members are expected to meet the s$60,000 savings threshold by 2035, automatically joining cpf life at age 65.
“nine in ten cpf members are expected to reach this savings level by 2035”
Opt-in option for others
Those who don't meet the savings threshold can join cpf life later with an opt-out option for those with existing pensions or annuities.
“those who do not meet the minimum s sixty thousand level would be on the rss plan but noted they can still opt in for cpf life”
CPF LIFE sustainability
The scheme is fully self-sustainable with no government subsidies as it pools longevity risk through government securities.
“the scheme is fully self-sustainable as the entire cpf life funds are invested in special singapore government securities”
CPF LIFE vs. traditional savings
CPF LIFE provides monthly payouts that adjust to ensure sustainability, unlike lump sum withdrawals that don't last as long.
“the retirement sum scheme splits up monthly payouts over a fixed duration of twenty years to make it last longer”
Singapore's approach to longevity
Singapore's cpf board deputy ceo wong yan jun explained the scheme addresses the reality that more than half of citizens would live past 85.
“but the truth is what we are preparing for is not for that moment. cpf life is preparing for the future generation to come”
Malaysian implications
Wong suggested malaysia could introduce a similar scheme to help retirees stream savings into lifelong income streams.
“wong suggested that malaysia could introduce a scheme, which could be something like cpf life but "need not be similar", that could help malaysians stream up their retirement savings”
The takeaway
Singapore's CPF LIFE provides lifelong retirement income through a self-sustaining scheme that automatically includes most citizens by 2035.
