CPF Life makes a good Retirement plan in the sense that you get a fixed amount of pay-out each month following retirement. However, as mentioned in our CPF article, the amount of pay-out may not be adequate to fulfil one’s retirement lifestyle aspirations. Compared to other retirement plans in the market, it also falls short on certain aspects. For instance, CPF Life does not quite provide for old-age needs, such as the increased risks of illness or disability.
Furthermore, unlike commercial plans – CPF LIFE lacks flexibility in allowing you to receive different amounts of pay-out along the way, or for you to choose to receive a lump sum instead. To make up for these gaps, it is best to combine CPF LIFE with another retirement plan.
Here, we look at 3 of such retirement plans and examine their key differences and benefits to bring you the ideal solution in supplementing your retirement lifestyle. Before we elaborate each of these plans in detail, I would like to highlight some of their basic features: Most retirement plans available here are based on a fixed premium term of your choice, an accumulation period and a pay-out period. For instance, if Ivan is currently 40 years old, his retirement plan may look like the following:
10-years Premium term: 41 to 50 years
10-years Accumulation period: 51-60 years old
30-years Payout Period: 61 to 90 years old.
Here are a few highlights
Best Retirement Plan for Disability Payout – NTUC RevoRetire
Best Retirement Plan for Lifelong Annuity & Guaranteed Income – Manulife RetireReady Plus
Best Retirement Plan for Flexibility & Guaranteed Income – Aviva MyRetirement Choice
Related article: 5 Phases of Planning for Retirement
How do we filter?
Most importantly, ALL of these plans are capital guaranteed, and encompass an additional non-guaranteed benefits component. This means that as long as you stick and follow through with these policies, you are guaranteed to receive more (in the form of monthly pay-outs) than the total amount you saved into these policies. On top of the monthly pay-outs, each plan comes with a protection component as well, which includes a Death Benefit, and include an income pay-out for disability.
Our pick for the 3 Best Retirement Plans in Singapore In Terms of Coverage, Guaranteed Returns and Flexibility are based on the criteria below:
Why it may not be suitable for you?
Flexibility to change pay-out term
Based on an annual premium of $9,641.15, your guaranteed yield to maturity is at 2.12%, but the projected non-guaranteed yield is at 4.29%. The plan also comes with cash benefit option where you can choose to accumulate your cash benefit and bonus at an interest of up to 3.5% per annum.
NTUC also gives the policy owner the flexibility to change their pay-out term at any point before the first monthly cash benefit pay-outs during the retirement age.
The SRS Option
Another fabulous feature of the Manulife RetireReady Plus is that it allows you to use the funds in your Supplementary Retirement Scheme (SRS) to pay for the premium as a single premium. As some of us might know, SRS is a savings plan that helps to complement your CPF savings for retirement and one of its most attractive factors is that you enjoy tax deferment when you contribute to your account.
So for those who have been contributing to your SRS account diligently, you can use the money in this account to pay for the premium of the Manulife RetireReady Plus since it counts as a Single-Premium product.
Highest Guaranteed Income
Based on a policy term of 50 years and a 10-year premium term, the annual premium comes up to $8,474 for a $500 monthly income. Just looking at the guaranteed benefits, you will break-even in as short as 10 years.
Out of the three plans here, the Aviva MyRetirementChoice provides the highest guaranteed yield of 2.63%. The other fabulous feature here is the flexible retirement age.
Now, let’s look at how these 3 products compare*:
As with all retirement plans, each retirement plan has its own advantage and strength. Individuals should not simply base their decision on maximum payouts alone, but with regards to their life circumstances and financial plans.
If you need a professional opinion in helping you decide how to plan for your retirement, take a few seconds and go to our Retirement Planning Page, if you would like to find out more on the retirement plans and make a comparison.