International Business & Economy CPF Review did not help those forced to retire early

CPF Review did not help those forced to retire early




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By: Chris Kuan

An improvement recommended by the CPF review panel, to provide an option of an escalating payout from CPF LIFE with monthly payout increasing by 2% every year. This is welcome but another damp squib.

The escalating payout protects the CPF member from increases in cost of living which had been running significant higher than the CPI in the last 15 years (but I expect the differences to be minor going forward). The trade-off is that the initial drawdown is going to be lower and this is due to simple mathematics – on the same annuity amount, higher future payouts come at the expense of current payout.

However the panel did not recommend a flexible start date of the LIFE payout. Increasingly due to the government’s labour policies, technological changes and the global economic environment, many Singaporeans will be forced to retire or give-up looking for jobs well before the age of 65. This could also be due to illness. Those forced out of work in their 50s have a very long time to wait for their LIFE payouts. This would not have mattered if there are social benefits but there are none.

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