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18 Apr 2024


Senior and adult laughing, using laptop

Retirement is when you look forward to enjoying your hobbies and free time when you are working less or no longer working. The last thing you want is to spend it worrying about your monthly income or running out of savings. This is where life annuities come in. A life annuity is a longevity insurance product where you pay a premium and the insurer provides regular payments to you as long as you live.


CPF Lifelong Income For the Elderly (CPF LIFE) is a national longevity insurance annuity scheme that provides you with regular monthly payouts no matter how long you live, so you can enjoy your desired retirement lifestyle without worry. Here are some useful tidbits to help you better understand CPF LIFE.

What makes up CPF LIFE?

CPF LIFE consists of three plans you can choose from based on your desired retirement lifestyle:

1) Escalating Plan

The Escalating Plan has monthly payouts that start lower initially, but grow by 2% a year for life. This generally helps you maintain your desired retirement lifestyle even as the prices of items increase over the years.

CPF LIFE Escalating Plan

2) Standard Plan

The Standard Plan offers steady monthly payouts over the years. If keeping a fixed budget is your preferred approach, the Standard Plan suits your needs. However, this plan does not protect you against inflation, so you will have to buy less as things get more expensive in the years ahead.

CPF LIFE Standard Plan

3) Basic Plan

The Basic Plan offers monthly payouts that start low and fall progressively when your CPF balances fall below $60,000. This means you will have to lower your lifestyle and buy even lesser in the future.

CPF LIFE Basic Plan

What are the benefits of CPF LIFE?

Compared to most private retirement income products which only provide you with a stream of income for a limited period, CPF LIFE gives you peace of mind knowing that your retirement income will last no matter how long you live. You can start your CPF LIFE payouts anytime from age 65 to 70 years old, allowing your savings more time to accumulate more interest for when you finally need them. This ensures that you will have constant access to some form of income for your daily needs and passions even after you stop working, giving you peace of mind in retirement.


CPF LIFE savings are also guaranteed by the Singapore Government, whereas private annuities are subject to investment market returns. In addition, as CPF LIFE is non-profit and administered by the CPF Board, it does not incur additional costs from advertising and agents’ commissions. Finally, having a large member base also means longevity risks and costs can be better spread out. All these factors allow CPF LIFE to provide more value on your monthly payouts and you can be more assured of a peaceful retirement.

Why does CPF LIFE matter?

A common question that is raised when talking about CPF LIFE is: Why should you care about monthly payouts? It comes down to risk management and knowing your own spending habits.


As mentioned previously, CPF LIFE savings are guaranteed by the Singapore Government, which means its interest rates, with a floor of 4% and up to 2% extra interest per annum, come with no risk. For comparison, making a lump sum withdrawal and letting it sit there instead of growing it with compound interest means you end up with less savings in the long run. Similarly, making large amount of withdrawals only to spend it all without planning ahead will also hurt your retirement lifestyle in the long run.


Similarly, using your savings for investments brings with it inherent risks, while CPF LIFE is a more reliable option that ensures your savings are not only safe, but can also grow at a steady pace.


Interests earned on your CPF LIFE savings are factored into your payouts, enabling you to receive higher payouts right from the start. CPF Board does not keep any of the interest earned. Instead, it is pooled and used to form the monthly payouts of the remaining CPF LIFE members. Like other annuities, this risk-pooling feature ensures that all CPF LIFE members are assured of monthly payouts for as long as they live. This does not mean that your interest earned will be used to pay for other members’ payouts while you are alive! Like all annuity schemes, only the unpaid interest upon a member’s passing will go to the surviving members, with any unused premiums refunded to the deceased member’s beneficiaries.


To help better illustrate the benefits of CPF LIFE, here’s a video on why it can benefit you more:

Worrying about your savings even after retiring should not be a concern, as retirement should be reserved for you to enjoy life to its fullest. What CPF LIFE offers is the peace of mind to allow you to chase your passions and enjoy your desired retirement lifestyle. Contrary to popular belief, CPF LIFE is not an investment product, but rather an insurance product that provides members with peace of mind in their retirement years, while being a safer and more reliable option than private annuity products. To find out more, you can check out the CPF LIFE page.

The information provided in this article is accurate as of the date of publication.