CPF & Your Retirement Forum 2021 - Key Takeaways
Updated: Nov 9, 2021
The forum, organized by PreceptsGroup International and EPPL Digital, touches on ways to invest and grow your CPF funds for your spectacular retirement life. Immortalize, an official media partner, sat through 12 hours of the webinar, listening to speakers from CPF Board, Endowus and DBS Bank, to bring you the most interesting and the key things you definitely need to know about CPF and your retirement.
The event was held on Sep. 25 - 26, 2021. If you missed the webinar, here are the replays!
Highlights from selected speakers:
Georgina Gao, Assistant Director, CPF Board
Most people whom she did survey with think that they will live till 80+ years old. But statistics show that 6 out of 10 people will live beyond 90.
Note: Average mortality in Singapore is about 81 years old for men and 86 years old for women. This means that about 1 in 2 of us are going to live past 80+. As you grow older, the probability of living above the average increases, according to Lena Teng, Head of Solutions at MoneyOwl Pte Ltd., who also spoke at the event.
Immortalize commentary: The new mid-life is now ~50 years old! What do you think you will be doing at 90? Will you have enough money?
Key consideration for old age are "If I spend too much, I might not have enough if I live too long. But if I spend too little, I’m depriving myself from enjoying my savings."
What is the return on CPF accounts?
The minimum rate of return you will get from Ordinary Account is 2.5% p.a., Special Account 4%, MediSave Account 4% and Retirement Account 4%. There are circumstances where you can get higher returns.
Distribution of CPF monies after you pass away is not covered by your will. You will need to nominate who to receive your CPF monies after you pass away.
In the absence of nomination, distribution will be based on intestacy laws, amount received by recipients are fixed, administrative fee will be charged by Public Trustee Office and the process can take up to 6 months
Your CPF savings cannot be included in your will to protect your savings from creditor claims
What are covered (and not covered) by your CPF nomination?
Covered - Ordinary Account, Special Account, MediSave, Retirement Account, unused CPF life premiums (if any) and discounted Singtel shares
Not covered - Properties bought using your CPF savings, payouts from Dependents Protection Scheme and investments under CPF investment Scheme
Ooi Sen Tee, Relationship Manager, PreceptsGroup International
What are the potential problems with CPF nomination?
No control on when to pay out
Young nominees receive at age 18; Minor nominees’ needs are compromised
Lump sum payout
Results in squandering, prey to scammers, distraction, wrongful attention
No substitute nominees
If the nominee do not survive before you, the CPF savings will follow intestacy law
No protection from nominees’ creditors
If nominees is a bankrupt or facing creditors’ claim, CPF savings is not protected
A potential solution to resolve issues that may arise from CPF nomination is the use of a CPF-specific trust.
PreceptsGroup has introduced a new platform and digital trust, called ProviTrust, to help the masses overcome the issues that may arise from CPF nomination at a relatively low cost
Salim M. Amin, CEO, Avallis Financial
There are 3 phases in our retirement affecting our expenditure pattern
Doing what we have always wanted, travelling, outdoor activities, etc.
Slower pace activities, indoor hobbies, family-oriented
Consolidation time, focus on sustenance of health level
When can I retire?
Generally, it can depend on your age, whether your kids have grown up, your health and your employer. An indicator would be “when I can afford not to earn an income and yet be able to pay for my expenses to the things I want to do for the rest of my life.”
Immortalize commentary: Given that we don't know when we will live till, one way to make sure we have constant income after we stop working is to have enough to purchase an annuity. Annuity products generally pays out a sum of money each year/month that can help you cope with expenses after you stop working. There are many types of annuity products but most of them require commitment. Speak to many financial advisors before you commit to any!
(Note: Immortalize has created a financial consultant marketplace where you can compare financial advisors and book them instantly to have a casual chat. The marketplace is still in beta testing mode but make sure to check back for more!)
How does a 3 generation annuity plan work?
Take up a life annuity on the life of a child with the father as a proposer and assign it to the grandfather
Have a will or trust done to transfer the life annuity to the father on the death of the grandfather
Include in the father’s will to transfer the life annuity to the child on his death (optional if a trust was done by the grandfather)
What are the mistakes to avoid in retirement planning?
Leveraging your retirement plans
Plan to leave something behind when you don’t have enough for yourself
Hope for unrealistic investment returns
Put all your eggs in 1 basket
Think that you can manage your investment for life
Think that you can depend on others
Lim Kim Hong, Lawyer, Kim & Co.
What are the implications of divorce on CPF?
CPF monies is a form of matrimonial assets, which means it may be divided upon a divorce
Divorce does not revoke CPF nomination
Ng Wai Mun, Senior Assistant Director, Insolvency & Public Trustee’s Office
With a will, the Public Trustee Office will hold monies for minor beneficiaries until they turn 18
Without a will, monies will be withheld until the minor beneficiaries turn 21
Samuel Rhee, Chairman and Chief Investment Officer, Endowus
People hesitate to invest their CPF monies because of fear of volatility. When investing long-term, focusing on recent performance is a myopic perspective.
The longer you invest, the greater the chance of outperforming the CPF ordinary account rate (CPF Ordinary Account has a guaranteed return of at least 2.5%)
Time decay of risk - The longer you invest, the more stable the returns
You should demand a higher return or lower risk if you are locking your investment for long period of time
You need an investment strategy that is holistic and diversified, with a certainty of outcomes that you can reach your goals with a high probability of success
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Speak to our team now and let us give you a quick summary of what you need to know to help kick start your last mile of life planning journey.
Disclaimer: Nothing in this article or site should be construed as providing legal advice or advice of any sort. The information provided are general in nature and may become inaccurate over time. Please consult a professional for advice.
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