There are several inaccuracies in the post on CPF LIFE that was circulating around.
First, for a male member aged 69 with a Retirement Account (RA) of $150,000, the monthly payout for Retirement Sum Scheme (RSS) would be $1,040 until his RA runs out at about age 86. If he opted for CPF LIFE Standard Plan, the monthly payout would be $920 for life. This is a difference of $120, not $300 as alleged by the writer.
Second, the writer makes the common mistake of comparing CPF LIFE to an investment product instead of an insurance product. The cumulative payout from CPF LIFE would naturally be lower than that of RSS if the member dies before his cohort life expectancy of about 88. Conversely, the cumulative CPF LIFE payouts would be more than that of RSS if he lives beyond 88. That is how longevity insurance works - to give members peace of mind in case they live longer than expected.
Third, CPF LIFE earns the same interest rate as RA savings, and the monthly payout has already incorporated the interest earned. So it is a misunderstanding for the writer to conclude that since the interest is pooled, he is not enjoying the interest earned.
No one can predict how long they would live. That is why members should opt for CPF LIFE for peace of mind in case they live longer than expected.
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