How does the CPF LIFE Escalating Plan work?
The CPF LIFE Escalating Plan provides payouts that increase by 2% each year. It is suitable if you want to protect your retirement income from rising prices. Although the payouts start lower, they will eventually become higher than the Standard Plan and Basic Plan payouts.
For example, if you start with a monthly payout of $1,000 at age 65, it will reach around $1,500 when you turn age 85. The 2% increase takes place every year in the same month that you receive your first payout.
Premium
All your Retirement Account (RA) savings will be used as your CPF LIFE premium when you join CPF LIFE.
Subsequent inflows into the RA after starting the monthly payout will automatically be used to increase your CPF LIFE premium and monthly payouts.
Your CPF LIFE premium will continue to earn the CPF interest rates, which is factored into your monthly payouts. This allows you to receive higher payouts from the start, compared to if there were no interests earned.
Monthly Payouts
Your monthly payouts are calculated based on various factors and will be paid to you for as long as you live.
CPF LIFE works by risk-pooling, like other forms of insurance. The pooling of interest earned on the CPF LIFE premiums enables members to receive lifelong payouts.
Premium Balance
Upon your passing, your remaining CPF LIFE premium balance will be paid to your beneficiaries.
This information is sourced from CPF
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