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CPF LIFE VS Retirement Sum Scheme: Which One Are You On? What's the Difference?

profileRachel Yeo

A few years back, you may have heard complaints about the rising CPF Retirement Sum (RSS), amid other retirement woes spoken about by the older generation.

These days, the RSS isn’t really being talked about, and new terms like CPF LIFE has emerged.

This is because with changing times and rising life expectancy, the CPF LIFE Scheme was created to replace the Retirement Sum Scheme.

The RSS is old news, but there’s a need to talk about it because there are still Singaporeans that are part of the scheme. For the uninitiated, here’s a quick introduction to CPF LIFE and RSS, and the differences between them.

TL;DR: CPF LIFE VS Retirement Sum Scheme: Which One Are You On? What’s the Difference?

 Retirement Sum SchemeCPF LIFE
How You Receive Payouts Monthly payouts drawn from Retirement Account until $ depletes.
Lifetime Monthly payouts from CPF LIFE.

Those under the CPF LIFE Basic Plan will receive monthly payouts first from your RA savings from your payout start age until one month before you reach 90 years old. From 90 years old, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live.
Amount of Monthly Payouts Amount of monthly payouts depends on how much you have in the Retirement Account Amount of monthly payouts depends on how much you have in your Retirement Account.
Withdrawal Age 6565
Interest Rate Returns Interest paid into accounts Interest paid into Lifelong Income Fund
Can I Buy A Property Using My Retirement Account Yes. You can use your Retirement Account (RA) that are in excess of your Basic Retirement Sum to buy a property. Similar to RSS, you can use the RA in excess of the BRS to buy a property.

RA Funds are not deducted automatically at age 65. It is done only when members wishes to start their CPF monthly payouts.
Lifelong Payouts? No.

Retirement Sum Scheme (RSS) payouts will last up to age 90* at most, instead of age 95. Hence older members who are already receiving payouts with duration exceeding age 90 will have their payout amount adjusted upwards.

RSS members who turn age 65 from 1 July 2020 onwards will be on the new payout rules.

For older members, who have started receiving their payouts, the new payout rules will only apply to them if their payout amount is higher under the new rules.

Hence, this group of members will receive either the same or higher payout. 
Yes.

What is RSS? What is CPF LIFE?

The Retirement Sum Scheme and CPF LIFE are the payout schemes Singaporeans will enjoy during their retirement.

CPF LIFE was created to replace the Retirement Sum Scheme, meaning that it is a new and improved version of the old RSS.

So… am I on the Retirement Sum Scheme or CPF LIFE?

In general, you will be automatically included to the CPF LIFE scheme if:

  • You are a Singaporean Citizen of Permanent Resident born in 1958 or after; and
  • Have at least $60,000 in your Retirement Account six months before you reach your payout eligibility age (PEA)

Those who are potentially not included in the CPF LIFE scheme include housewives, self-employed individuals and business owners who don’t contribute regularly to their CPF.

If you don’t satisfy the above criteria to be automatically enrolled into CPF LIFE, you still have the option of joining the scheme if you want to.

The Retirement Sum Scheme will still apply to…

  1. People who are already making withdrawals on their Retirement Sum Scheme in 2009, before CPF LIFE was even introduced. They can choose to switch to the CPF LIFE scheme if they wanted to.
  2. Those born before 1958 but have not begun their RSS withdrawals. You can choose to remain on the RSS scheme, or switch to CPF LIFE.

Monthly Payouts for RSS vs CPF LIFE

The main difference between the Retirement Sum Scheme and CPF LIFE is that you will receive monthly payouts until 90 years old, while for CPF LIFE, you will receive payouts for life.

That aside, the monthly payouts for both remains the same, and is dependent on whether you hit the Basic, Full or Enhanced Retirement Sum:

 Amount RSS Monthly Payouts CPF LIFE Monthly Payouts
Basic Retirement Sum $88,000 $730 to $790 $730 to $790
Full Retirement Sum $176,000 $1,350 to $1,450 $1,350 to $1,450
Enhanced Retirement Sum $264,000 $1,960 to $2,110 $1,960 to $2,110

If you’re still on the RSS scheme, you will receive the usual 4% interest rate in your Retirement Account, and your payouts will be spread out to last till you are 90 years old.

Is that enough?

As CPF often reiterates, 1 in 3 Singaporeans will live past 90 years old. If that’s the case, the RSS would be less attractive as compared to CPF LIFE, which boasts retirement payouts for life.

So… What’s the Difference?

Here’s the catch. CPF LIFE requires you to contribute funds from your Retirement Account into the scheme when we turn 65.

While you can continue using balance from our RA for purchases (e.g property purchase), the flexibility to do so after you turn 65 is gone, as the funds are then contributed into CPF LIFE. Here are the other differences that we flagged out:

 Retirement Sum SchemeCPF LIFE
How You Receive Payouts Monthly payouts drawn from Retirement Account until $ depletes.
Lifetime Monthly payouts from CPF LIFE.

Those under the CPF LIFE Basic Plan will receive monthly payouts first from your RA savings from your payout start age until one month before you reach 90 years old. From 90 years old, you will continue to receive monthly payouts from the Lifelong Income Fund for as long as you live.
Amount of Monthly Payouts Amount of monthly payouts depends on how much you have in the Retirement Account Amount of monthly payouts depends on how much you have in your Retirement Account.
Withdrawal Age 6565
Interest Rate Returns Interest paid into accounts Interest paid into Lifelong Income Fund
Can I Buy A Property Using My Retirement Account Yes. You can use your Retirement Account (RA) that are in excess of your Basic Retirement Sum to buy a property. Similar to RSS, you can use the RA in excess of the BRS to buy a property.

RA Funds are not deducted automatically at age 65. It is done only when members wishes to start their CPF monthly payouts.
Lifelong Payouts? No.

Retirement Sum Scheme (RSS) payouts will last up to age 90* at most, instead of age 95. Hence older members who are already receiving payouts with duration exceeding age 90 will have their payout amount adjusted upwards.

RSS members who turn age 65 from 1 July 2020 onwards will be on the new payout rules.

For older members, who have started receiving their payouts, the new payout rules will only apply to them if their payout amount is higher under the new rules.

Hence, this group of members will receive either the same or higher payout. 
Yes.

RSS and CPF LIFE Schemes in Singapore

For the majority of Singaporeans, you don’t have to worry about the differences between the RSS and CPF LIFE, as you will most likely be enrolled automatically into CPF LIFE.

You can read up more about CPF LIFE and the different plans it offers in this Seedly article!

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