A Beginner’s Guide to CPF LIFE: Plans, Payouts & Minimum Sums Explained

By Joanne Poh, 24 September 2021 2064

Most Singaporeans will be automatically enrolled into CPF Life.

If you’re retirement planning, chances are that you’ve heard of the national CPF annuity scheme - CPF Lifelong Income For The Elderly (CPF LIFE). Meant to support Singaporeans and PRs in their golden years,  CPF LIFE  was launched in 2009 to provide residents with a monthly payout for life so that they don’t run out of retirement savings.

But how exactly does CPF LIFE work? Do a quick search online and you might end up being more confused than before. How much will you receive from your CPF LIFE payout work? Is there a CPF LIFE minimum sum? How is the CPF LIFE annuity premium calculated? 

Get these questions and more answered in this comprehensive guide to CPF LIFE, as we explain and illustrate the differences between the three CPF LIFE plans, the amount of CPF LIFE payout you can expect, and whether CPF LIFE is sufficient for your retirement.

What is CPF LIFE and how is it different from the Retirement Sum Scheme (RSS)?

At first glance, CPF LIFE and the CPF Retirement Sum Scheme (RSS) sound similar. Both are CPF annuity schemes that make use of your CPF savings to provide you with monthly payouts during your retirement. However, there are some key differences between the two.

One of the major differences between CPF LIFE and RSS is how long the payouts last. With CPF LIFE, you’ll receive monthly payouts for life. This occurs across the board whether you live till the average life expectancy age of 84 years or beyond that to become a centenarian. 

As the average life expectancy of Singaporeans continue to increase yearly, people tend to underestimate how long they will live. Because of this, some may fall short in their retirement planning only to find that they do not have enough savings to last them in their golden years. 

But with CPF LIFE, you don’t have to worry about running out of retirement savings even if you live a life that is much longer than when you first anticipated. It is designed to help you avoid such a situation by giving you monthly payouts for as long as you live. 

When you first join the scheme, your CPF LIFE annuity premiums are paid for with your CPF savings, with your premiums earning attractive CPF interest rates of up to 6%. For most of the CPF LIFE plans, your monthly payouts will first be funded from the premiums you’ve paid, and once that has been depleted, it’ll be drawn down from the interest that you and other CPF LIFE members have accumulated. The potential payouts relative to what you pay is also quite attractive compared to similar annuities on the market that are similarly low-risk. 

Meanwhile, the RSS also provides you with a monthly stipend that is drawn from your CPF savings to support your basic living needs during retirement. However, unlike CPF LIFE, the monthly payouts from RSS come with an expiry date. RSS payouts will stop once your CPF Retirement Account (RA) savings are depleted or if you reach 90 years of age, whichever comes first.

What this means is that if you have a less than ideal amount in your RA, you may find your monthly payouts ending much earlier than expected. You may also find yourself stranded with insufficient savings if you live well past 90 years. And with the average life expectancy of Singaporeans increasing due to advancements in healthcare and technology, living beyond 90 years would be a reality for most.

To address these gaps and better mitigate longevity risks, the RSS is currently being phased out and replaced with CPF LIFE as the primary retirement income scheme for residents in Singapore.

How to sign up for CPF Life?

You can join CPF LIFE anytime between 65 and one month before you turn 80. You will be automatically enrolled in CPF LIFE if:

  • You are a Singapore Citizen or Permanent Resident
  • Born in 1958 or after; and
  • Have at least $60,000 in your CPF retirement savings before you reach 65

In simpler terms, if you are currently 63 years old or younger and have at least $60,000 in CPF savings by the time you reach 65, you will be automatically enrolled into CPF LIFE.
However, if you are born before 1958, chances are that you’re enrolled under RSS instead. If you have not turned 80 yet, you can choose to either stay on RSS or apply to join CPF LIFE. You can make the switch to CPF LIFE even if you’ve started receiving payouts under RSS.

How to sign up if you have not been automatically enrolled?

If you are a Singaporean or PR you can sign up for CPF LIFE at any time between 65 years of age and one month before reaching the age of 80, regardless of how much CPF retirement savings you have. 

To do so:

  1. Login to my cpf Online Services with your SingPass
  2. Click on My Requests > CPF LIFE > Apply for CPF LIFE

Alternatively, you can apply in person at any CPF Service Centre with your NRIC.

Are you currently on the Retirement Sum Scheme? You can make the switch to CPF LIFE following the same steps above, even if you have started receiving payouts.

What are the three CPF LIFE plans?

There are 3 CPF LIfe plans to choose from.

To cater to different retirement lifestyles and needs, there are three CPF LIFE plans for you to choose from – the Basic, Standard or Escalating plan. All three CPF LIFE plans provide you with monthly payouts for life. You can choose to start receiving the payouts anytime between 65 and 70. The main difference between the three plans is in the amount of CPF LIFE payouts you’ll receive each month.

Before you select a plan, it’s important to find out what each of the CPF LIFE plans entails so you can pick the one that matches your retirement lifestyle. Do you prefer to have payouts that factor in inflation? Are you satisfied with receiving level payouts, or perhaps you don’t mind receiving an amount that diminishes over the years? 

Choose carefully as you only have one chance to switch your CPF LIFE plan, and that’s within the first 30 days of joining the scheme. If you have not made a selection by the time you turn 70, you’ll be automatically placed on the CPF LIFE Standard Plan with payouts starting at 70. 

To help you get started on your selection, here’s an overview of how the three CPF LIFE plans compare against each other.

  Basic Plan Standard Plan Escalating Plan
Monthly payout Lower monthly payouts that will be reduced when your RA falls below $60,000 Higher monthly payouts that remain stable and unchanged Monthly payouts that start lower, but increase by 2% yearly to cater for inflation. 

Will eventually become higher than payouts from the Standard Plan.
% of RA savings used for premiums 10 to 20%; monthly payouts will first be deducted from RA 100% will be used to pay a lump sum premium 100% will be used to pay a lump sum premium
Interest rates your premiums will earn Up to 6% oer annum, including up to 2% extra interest from the Government
Bequest Your CPF LIFE premium balance, and remaining RA savings if you're on the Basic Plan, and will be given to your beneficiaries when you pass away.

You may also have heard of older plans such as the CPF LIFE Plus Plan, Balanced or Income plans. These were first introduced when CPF LIFE was first launched, but have since been phased out. The popular features of the old Plus and Balanced plans have also been merged into today’s CPF LIFE Standard Plan.

To better illustrate the benefits of each plan, let’s take the example of John: a 55 year old Singaporean male who currently has $180,000 in his retirement account. Though a little shy of meeting the Full Retirement Sum, John’s not too far off from the average $186,000 that Singaporean males between 55 and 60 have in their CPF RA balance

Find out how much John will receive, depending on the plan he selects.

CPF Life Basic Plan

John may prefer the Basic Plan if he has sufficient savings elsewhere, and does not mind receiving lower monthly payouts in exchange for a larger legacy for his loved ones.

Under the Basic Plan, 10% to 20% of his RA savings will be used to pay his CPF LIFE premium. His monthly payouts will first be drawn from his remaining RA savings, and once that is depleted, it’ll be funded from the premium. Because of this, he’ll receive lower monthly payouts that will become progressively lower as his RA savings fall below $60,000. 

On the flip side, the interest earned on John’s remaining RA savings will remain in his CPF account and become part of his bequest when he passes away. This is distinctly different from the Standard and Escalating Plans, where 100% of RA savings are deducted to pay for the CPF LIFE premium and any earned interest remains in the fund to benefit others in the scheme. 

Here’s what John can expect to receive if he chooses the Basic Plan.

John, 55 years old in 2021
Currently has $180,000 in Retirement Account
Total amount he'll be putting into CPF LIFE at age 65 $270,000
Total amount he'll be putting into CPF LIFE at age 70 $335,000
Amount deducted from RA for premiums $18,000 to $36,000
Monthly payouts (if he starts from age 65) $1,350 at age 65
$1,350 at age 85
$1,270 at age 95
Monthly payouts (if he starts from age 70) $1,800 at age 70
$1,800 at age 85
$1,740 at age 95

As you can see, the CPF LIFE monthly payouts that John receives will start to taper off after age 85. At that point, his RA savings would also have been depleted and he would not have much left in his bequest. Because of this, the Basic Plan would be suitable only if you have dependents and do not expect to live beyond your early 80s.

CPF LIFE Standard Plan

Compared to the Basic Plan, the Standard Plan provides higher monthly payouts that remain stable for the rest of your life. Because of this, the longer you live, the more beneficial it’ll be for you.

For instance, John might find the Standard Plan attractive if he wants to receive more the moment he starts CPF LIFE, and is willing to cope with inflation by cutting down on his living expenses as he grows older. 

Here’s what he will receive if he chooses the standard plan:

John, 55 years old in 2021
Currently has $180,000 in Retirement Account
Total amount he'll be putting into CPF LIFE at age 65 $270,000
Total amount he'll be putting into CPF LIFE at age 70 $335,000
Amount deducted from RA for premiums $180,000
Monthly payouts (if he starts from age 65) $1,810 at age 65
$1,810 at age 85
$1,810 at age 95
Monthly payouts (if he starts from age 70) $1,950 at age 70
$1,950 at age 85
$1,950 at age 95

From the table above, the monthly payouts that John receives under the Standard Plan is far more than what he’ll receive under the Basic Plan, especially if he’s starting the payouts at age 65. 

He may also find the Standard Plan a better fit if he does not have any dependents, is relatively healthy, and expects to live well beyond his 80s. With the larger monthly payout, the Standard Plan also gives him more flexibility to maintain his current lifestyle before adjusting it gradually.

CPF LIFE Escalating Plan

The plan that factors in inflation, the CPF LIFE Escalating Plan starts with lower monthly payouts but this increases by approximately 2% each year to help you adapt to rising costs. It is also the plan that offers the highest returns if you live up to 95 years and beyond.

John may gravitate towards the CPF LIFE Escalating Plan if he wishes to maintain his lifestyle as he grows older, but doesn’t want to worry about coping with the rate of inflation in old age. 

Here’s what he will receive if he chooses the Escalating Plan:

John, 55 years old in 2021
Currently has $180,000 in Retirement Account
Total amount he'll be putting into CPF LIFE at age 65 $270,000
Total amount he'll be putting into CPF LIFE at age 70 $335,000
Amount deducted from RA for premiums $180,000
Monthly payouts (if he starts from age 65) $1,170 at age 65
$1,730 at age 85
$2,120 at age 95
Monthly payouts (if he starts from age 70) $1,610 at age 70
$2,170 at age 85
$2,640 at age 95

Note that the monthly payouts first start out lower than those of the Standard Plan, but eventually overtakes it when you’re in your 90s. If you’re in the pink of health and confident of reaching your 90s and more, consider the Escalating Plan as this plan rewards longevity the most. 

The only catch is that starting payouts are significantly lower compared to the other two plans. To circumvent this, consider topping up your RA so you’ll have enough to afford your desired lifestyle.

How do CPF LIFE payouts work?

Once you’ve enrolled in the CPF LIFE scheme, you can choose to start receiving your monthly payouts anytime between 65 and 70. The exact amount you’ll receive in your monthly payouts will depend on the CPF LIFE plan you've chosen as well as the amount that you have in your RA. Once started, the monthly payouts will be paid directly into your bank account.

After you pass away, any remaining CPF LIFE premium balance and CPF savings you have will be given to your beneficiaries. For instance, if John passed away after receiving a monthly payout of $1,950 under the Standard Plan for 24 months, the remaining CPF LIFE premium balance of $133,200 will be returned to his loved ones.

When will you get your first CPF LIFE payout?

The earliest you can start your monthly payouts is at age 65, or you can choose to defer it till you’re 70. Those who are automatically enrolled into the scheme will receive a notification to select their CPF LIFE plan and payout age as they near 65 years of age. 

Once you have started the monthly payouts, you will receive them for as long as you live.

How much CPF LIFE payout will you get?

The amount of payouts you’ll receive depends on your RA savings as well as the CPF LIFE plan you’ve chosen. In essence, the more RA savings you have, the more you’ll receive in monthly payouts.

Here’s an estimate of how someone who is 55 this year might receive in monthly payouts, depending on the CPF LIFE plan they have chosen, as well as whether they have met the Basic Retirement Sum (BRS), Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS):

  Basic Plan Standard Plan Escalating Plan
Met Basic Retirement Sum of $93,000 in 2021 $750 to $1,000 $830 to $1,100 $650 to $890
Met Full Retirement Sum of $186,000 in 2021  $1,390 to $1,860 $1,530 to $2,040 $1,210 to $1,650
Met Full Retirement Sum of $279,000 in 2021 $2,030 to $2,660 $2,230 to $2,920 $1,760 to $2,370

Calculations based on 55 year-old male born in 1966, with monthly payouts starting between age 65 to 70

For a more accurate view of your potential monthly payouts, use the CPF LIFE Estimator to work out how much you can receive with your current savings. It’s also a handy tool that lets you know how much you’ll need in order to get your desired monthly payout! 

How to increase your CPF LIFE payout?

If you’re currently falling short of reaching your desired monthly payouts, there are three things you can do to stay on track. 

The first is choosing to defer your payouts. If you don’t have an immediate need for the money, or if you’re still earning an income, consider delaying your payouts so you can receive a higher starting amount. Did you know that each year of delay increases your payout amount by approximately 7%? That’s a total increase of up to 35% if you start your payouts at 70 instead of 65! 

Let’s take the example of John. Under the CPF LIFE Escalating Plan, John will receive $1,170 if he starts his payouts at age 65, but this increases exponentially to $1,610 if he chooses to start his payouts at 70 instead.

The second way to increase your CPF LIFE payout is to increase your CPF savings. You can do so through voluntary top-ups to your Special Account (SA) or RA. Even small, regular top-ups can make a difference over time due to the power of compounding. You can also increase your CPF contributions by extending your time in the workforce.

The third way is simply choosing a CPF LIFE plan that gives you more. For instance, opt for the Standard Plan which starts off strong with higher monthly payouts, or the Escalating Plan that starts off slow but eventually gives you the most returns if you live past 90.

Is there a minimum sum for CPF LIFE?

While you’ll need at least $60,000 in RA savings to be automatically enrolled into CPF LIFE, there is actually no minimum sum required to join the scheme. 

That’s right, you can join the scheme regardless of how much (or how little) CPF savings you have. However, note that the less savings you have in your CPF accounts and RA, the smaller the payouts will be as well. At that point, you’ll have to evaluate if the CPF LIFE monthly payouts you’ll receive are enough to sustain your retirement needs.

Is CPF LIFE enough for retirement?

CPF LIFE is meant to cover only a basic level of costs during retirement, and it’s still prudent to plan for your own retirement. To determine how much more you’ll need, compare your ideal retirement income with how much you’ll be getting from your preferred CPF LIFE plan. Have you met your goal or are you still short? 

For instance, if you’re joining the CPF LIFE scheme with the BRS of $96,000, the amount you’ll receive monthly is somewhere between $830 and $1,100. Is that enough for you to maintain a decent standard of living? If not, it’s not too late to pick up on the planning. 

Use this tool to have a better idea of your cash flow when you retire. Think of CPF LIFE as just one (low-risk) component of a well-rounded investment portfolio, and consider other additional ways to grow your retirement income. 

How else can you supplement your retirement income?

Besides relying solely on CPF LIFE, there are many other ways for you to bolster your retirement income. This includes investing in the following:

Retirement plans
Craft your desired retirement lifestyle with plans like Income’s Gro Retire Flex, which let you decide when you want to retire and how long you would like to receive your cash payouts.

Investment-linked plans, stocks and ETFs
Investment-linked plans (ILPs) offer not just life insurance protection, but also serve as an investment option for your retirement portfolio. Stocks and ETFs are also a popular way to invest, but make sure you tailor your selection and investment strategy to suit your risk appetite.

REITs or properties
If you have extra cash to spare, consider investing in REITs or property purchases. These have long-term investment potential, provide rental income yields, and are a good addition if you’re looking to diversify your portfolio.

Plan your retirement with CPF LIFE, and more

Get help from an Income adviser on how best to make CPF Life work in your retirement portfolio.

With life expectancy rising, it’s more important than ever that you plan for retirement. CPF LIFE is a great addition to your retirement plan as it mitigates longevity risks, such as under-saving, by giving you guaranteed monthly payouts for life. 

To make the most out of the scheme, choose a CPF LIFE plan that matches your retirement needs. Consider the amount of savings you have, your financial priorities, and your expected lifespan. Will your CPF LIFE payouts be enough for supporting yourself in old age?

If you can't answer that with confidence, consider looking into how you can build up your retirement portfolio further. After all, it's always better to save more than less. Check out Income’s savings plans to see how they can give your retirement income a boost. Reach out to an Income advisor to find out how you can do more.

Important Notes:
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.

This advertisement has not been reviewed by the Monetary Authority of Singapore.