This portal contains a selection of articles from blogs, local media, international media and party websites, touching on issues affecting the lives of Singaporeans. They are relevant for Singaporeans to make the right decision in voting at the next general election. Visit SGEP daily (it takes only 10 minutes daily) to get the gist of these issues and a wider coverage (apart from the local newspapers).
SGEP
Friday, December 3, 2010
CPF Life Annuity - good or bad?
Many people ask me for guidance on whether they should take up the CPF Life Annuity. How does it compare with the Retirement Account and a life annuity from an insurance company?
Here are the key facts:
1. The CPF Life pays the annuity for life and gives a small bequest to the beneficiary on death prior during the initial period (which varies according to the annuity option. The Retirement Account pays a higher payment and runs out after 20 years. The balance of the account is payable to the beneficiary on death during the 20 years.
2. The difference between CPF Life and Retirement Account depends on how long you live. As you do not know, there is no point in trying to do the calculation of "which is better". The actuary for CPF will do the calculation based on the average lifespan. You cannot be smarter than the actuary.
3. As the actuarial calculation is based on the average life expectancy of people in good health, you should avoid the CPF Life annuity if you know that you are in poor health.
4. There is a bonus payable to most people who take up the CPF Life annuity, so if you are given a bonus, it is better to opt for the CPF Life. If you find the bonus to be too small, say less than 5% of the invested sum, it may be better for you to stay with the Retirement Account.
5. The underlying yield for CPF Life and the Retirement Account is the same, i.e. 4% per annum. This is higher than the underlying yield payable by a life annuity from an insurance company. So, it is better to keep your money with CPF, either in CPF Life or the Retirement Account.
The CPF Life is an example of many complicated schemes that have been introduced by our Government. The general public is confused. This is made worse by the nature of Singaporeans, who are generally quite naive financially, but they like to seek advice from the wrong people on "which is better". As the calculation involve many possible scenarios, it is not possible to get the "right answer".
I hope that the Government will sort out this mess and make things simpler for the citizens, rather than leave the mess to cause a lot of confusion.
Tan Kin Lian
Here are the key facts:
1. The CPF Life pays the annuity for life and gives a small bequest to the beneficiary on death prior during the initial period (which varies according to the annuity option. The Retirement Account pays a higher payment and runs out after 20 years. The balance of the account is payable to the beneficiary on death during the 20 years.
2. The difference between CPF Life and Retirement Account depends on how long you live. As you do not know, there is no point in trying to do the calculation of "which is better". The actuary for CPF will do the calculation based on the average lifespan. You cannot be smarter than the actuary.
3. As the actuarial calculation is based on the average life expectancy of people in good health, you should avoid the CPF Life annuity if you know that you are in poor health.
4. There is a bonus payable to most people who take up the CPF Life annuity, so if you are given a bonus, it is better to opt for the CPF Life. If you find the bonus to be too small, say less than 5% of the invested sum, it may be better for you to stay with the Retirement Account.
5. The underlying yield for CPF Life and the Retirement Account is the same, i.e. 4% per annum. This is higher than the underlying yield payable by a life annuity from an insurance company. So, it is better to keep your money with CPF, either in CPF Life or the Retirement Account.
The CPF Life is an example of many complicated schemes that have been introduced by our Government. The general public is confused. This is made worse by the nature of Singaporeans, who are generally quite naive financially, but they like to seek advice from the wrong people on "which is better". As the calculation involve many possible scenarios, it is not possible to get the "right answer".
I hope that the Government will sort out this mess and make things simpler for the citizens, rather than leave the mess to cause a lot of confusion.
Tan Kin Lian
Thursday, December 2, 2010
Zeitgeist movie and Tommy Wong’s book
Read about “Guru Dick” and the concept “We are all one” in Tommy Wong’s book “Wisdom on How to Live Life (Book 1)” and watch them in the movie “Zeitgeist: Addendum”.
Private shield and Liver Transplant
Insurance agents tell the consumers that the cost of a liver transplant is $100,000 and that it would be covered under a private shield plan.
Before you take the advice of the agent, you should consider the following:
a) What is the chance of needing a liver transplant?
b) Where are you going to find a liver when you need it?
c) What is the total premium that you have to pay for the private shield plan?
Some of the risks, such as the need for a liver transplant, is quite remote. You should not be spending too much money to protect against these risk. The cost of a private shield plan may take away $40,000 over a lifetime. Why pay so much (a certainty) to insure a risk ($100,000) that is quite remote?
Before you take the advice of the agent, you should consider the following:
a) What is the chance of needing a liver transplant?
b) Where are you going to find a liver when you need it?
c) What is the total premium that you have to pay for the private shield plan?
Some of the risks, such as the need for a liver transplant, is quite remote. You should not be spending too much money to protect against these risk. The cost of a private shield plan may take away $40,000 over a lifetime. Why pay so much (a certainty) to insure a risk ($100,000) that is quite remote?
Social insurance
There is a role for social insurance to deliver the basic needs for the population in an efficient way, compared to private insurance. Our government leaders should understand its strengths and weaknesses and find the right balance between social and private insurance.
There is a mistaken belief that private insurance is more efficient. It is actually more costly to use private insurance to deliver the basic needs that are required by most people.
Not insured under Medishield
Some people are worried that their parents are not insured under Medishield. They try to apply for Medishield now, but the application is rejected as their parent has some medical condition. They need not worry. Here are some tips on how to cope without insurance.
Ask Mr. Tan
Ask Mr. Tan
Do you hate Singapore - a response
Read the response by C H Yak in SGEP.
The article has many interesting photos of Nanjing, showing the remarkable progress made in the city. He compares life in Nanjing with Singapore and raises several issues that should be considered at the forthcoming general election in Singapore.
The article has many interesting photos of Nanjing, showing the remarkable progress made in the city. He compares life in Nanjing with Singapore and raises several issues that should be considered at the forthcoming general election in Singapore.
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