CPF Life will be operated on mutual principles

There were some negative comments about CPF Life - that the Government wants to make profit by operating this scheme and pay less to annuitants compared to the amounts that they have invested.

I asked some questions to CPF Board and they have given the reply here. The key points of the reply are:

a) A separate fund will be established for CPF Life
b) It will be credited with the premiums and investment income, and debited with the annuity payments, payment to beneficiaries and expenses of the fund
c) The expenses of the fund will be kept quite small, as the scheme is administered by CPF and enjoys economy of scale
d) The funds are not separately invested, but will be given a rate of interest that is pegged to long term government bonds plus 1%.
e) CPF Life will be operated on mutual principles, with the experience shared fairly among the members (i.e the profit does not go to the CPF Board or the Government).

I find this arrangement to be beneficial and in the interest of the annuitants. I hope that this will dispel any doubts about operation of the CPF Life scheme.

I thank the CPF for their helpfulness in giving this clarification.

Tan Kin Lian

Survey: CPF Life