In Q1 this year, Manulife released the results of its retirement survey. The goal of the survey is…
One of the main national policy changes announced during our National Day Rally in 2019 was the government’s plan to gradually increase our statutory retirement age from 62 to 65 years old by 2030. This policy change is coupled with the government’s intention to increase the CPF contribution rates for workers above age 55 from 2021 onwards.
Now, with this implementation there may be two significant drawbacks. One, the higher contribution towards CPF for employees means lesser take-home pay. Two, the higher employer CPF contribution will lead to higher staff retention cost for the company.
Now we all know that in Singapore, we will get to enjoy our CPF Life annuity starting from 65-70 years old with various schemes to choose from. However, common sense tells us that changes made to CPF Life payout age in future are inevitable due to two rising concerns, the longer life-spans of Singaporeans (As of 2019, we have the longest average lifespan in the world), and the surge in our ageing population will spark a bigger group of CPF life payout recipients.
As such, it is complacent to think that the government will never increase our CPF Life payout age and even more complacent to think that your employers will continue to employ you to appease this new retirement policies. Therefore, it is essential that we take our retirement matters into our own hands and figure out a way to mitigate any drastic policy measures that our government might undertake to preserve our nation’s solvency.
Do note this is the opinion of Moneyline.SG. We did not seek the government approval for our views.
Manulife ReadyRetire Plus, as the name explains, is the offspring of its older plan, the Manulife RetireReady. The main changes made to the plan includes a more flexible payout option and the flexibility to change the pay-out period before your “preferred” retirement age kicks in.
Manulife RetireReady Plus is a retirement plan which provides a guaranteed monthly income from the age of your choice with a variety of payout periods.
For a start, you choose the number of years you wish to pay the premium for etc, 10 years. Then you select your preferred age of retirement etc Age 60, to start receiving your retirement income. Next, you select the number of years you wish to receive your payout for e.g. 20 years, follow by the guaranteed monthly income you will want to receive for 20 years from your desired retirement age.
What is flexible from this point on is the ability to adjust your payout period anywhere from 5 years to a lifetime pay-out. This can be done anytime from your policy inception to 2 years before your selected retirement age.
The Manulife RetireReady Plus has an embedded feature which provides a waiver of premium for Total and permanent disability and disability income benefit to you should you lose your ability carry out 2 or 3 out of 6 activities of daily living (ADLs) during your income payout period.
6 Activities of Daily Living
If the insured suffers from the inability to do 2 out of 6 ADLs during their pay-out period, Manulife will pay additional 50% of the Guaranteed Monthly Income from the selected retirement age for the preferred period of retirement income. This means if your Guaranteed Monthly Income (GMI) selected is $500, you will receive $750 per month for your remaining policy term plus the non guaranteed bonuses, starting from your selected retirement age.
If you’re suffering from a more serious disability that impedes your ability to do 3 out of 6 ADLs during your pay-out period, Manulife will pay you an additional 100% of your GMI ontop of your Non-Guaranteed Monthly Bonuses
Manulife ReadyRetirement Plus is SRS eligible under the Single Premium Term Option. There will be no difference in features from the Single Premium Cash Option except that the monthly payout will be credited to your SRS account and you will have to make a manual withdrawal from your SRS account to your designated bank account.
Note that any withdrawal from your SRS account will be subjected to the prevailing tax rate + 5% penalty if you were to make any withdrawal before age 62.
By now, you should be convinced that it is essential to take your own retirement planning into your own hands. The CPF Life may be your core solution but it should never be your sole solution. A well-structured retirement policy not only guarantees you a monthly income from your desired retirement age, but it is also protected by the Policy Owner Protection Scheme. In addition to a high decent guaranteed interest of up to 2.60% p.a., you will also receive extra protection in the form of disability income should you suffer from disability during your payout period.
A licensed Financial Planner will draft you a proposal base on your given input. Your information and details will only be used for communication with you.
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