Key Takeaways
An annuity plan turns a lump sum or a series of premiums into regular income, paid either for a fixed term or for the rest of your life.
CPF LIFE is Singapore's national lifetime annuity, and it automatically includes Singaporeans and PRs born in 1958 or later with at least $60,000 in their Retirement Account.
Deferring your CPF LIFE payouts from 65 to 70 raises them by up to 7% for each year you wait, or up to 35% in total.
CPF LIFE payouts and cash-bought private annuity payouts are generally tax-free, while half of SRS-funded annuity payouts become taxable once your SRS account closes.
Many retirement plans insurers sell are whole life or endowment policies, so when you compare life insurance plans in Singapore, check that a plan actually pays regular income.
An annuity plan is a type of insurance product designed to provide you with a reliable stream of income during retirement—helping you manage expenses long after your regular paycheck has stopped. In Singapore, there are two main types: CPF LIFE (the national annuity scheme) and private annuity plans offered by insurers.
This guide explains how annuity plans work, how CPF LIFE compares with private plans, and what to check before you choose one.
How Do Premium Payments and Payouts Work?
Every annuity plan has two phases: you pay premiums to the insurer, then the insurer pays you an income.
Feature | How it works |
|---|
Premium payment | Single premium: You pay a lump sum up front, typically from your CPF Retirement Account (for CPF LIFE) or a cash lump sum Regular premium: You spread payments over time (typically a fixed number of years), making it easier to budget
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Payout start | Immediate annuity: Payouts begin shortly after you pay the premium (often within a year), which suits you if you're at or near retirement Deferred annuity: Payouts start at a chosen future date (e.g., age 70), giving your money time to grow first
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Payout period | Fixed-term payouts (e.g. for 20 years) or lifetime payouts that last as long as you do |
Payout amount | Depends on how much you paid into the plan, your payout age, and the structure you choose. CPF LIFE pools risk across members to provide predictable payouts |
Private annuities often combine two parts. Your contract fixes the guaranteed portion of your payouts, while non-guaranteed bonuses depend on investment performance. These bonuses are common in participating plans, where part of your payout depends on how the insurer's participating fund performs.
CPF LIFE works differently. Your payouts will last for life, but the monthly amount isn’t guaranteed and may be adjusted for long-term changes in interest rates or life expectancy, though CPF expects any adjustments to be small and gradual. What CPF LIFE does guarantee is your capital: the total payouts you receive, plus any amount paid to your beneficiaries, will at least equal your CPF LIFE premium.
Types of Annuity Plans in Singapore
1. CPF LIFE
CPF LIFE is Singapore’s national, government-backed lifetime annuity. It automatically includes Singaporeans and PRs born in 1958 or later with at least $60,000 in their Retirement Account by age 65. At that point, CPF uses your Retirement Account savings to buy one of three plans:
Plan | Monthly payouts | Best for |
|---|
Standard Plan | Fixed for life, with the highest starting amount | Certainty and a steady budget |
Escalating Plan | Start lower but rise 2% each year (e.g., $1,000 at 65 grows to around $1,500 by 85) | Protection against inflation |
Basic Plan | Lower, and fall when your CPF balances drop below $60,000 | Leaving more savings to your beneficiaries |
You can start payouts any time from 65 to 70. Each year you defer raises your monthly payouts by up to 7%, or up to 35% if you start at 70.
2. Private annuity plans
Insurance companies offer private annuity plans, which you can use to supplement CPF LIFE with more flexibility over payout terms, withdrawals and legacy features. Entry age and premium size vary by insurer, and you may need to pass medical underwriting (a health assessment before the insurer accepts you). They may suit you if you’ve maxed out your CPF contributions or need to provide for dependants.
Many plans marketed for retirement are whole life or endowment policies rather than pure annuities, so check that a plan actually pays a regular income before you buy.
Annuity vs endowment plans: Key differences
While insurers sell both annuities and endowment plans, their purposes differ:
Feature | Annuity plan | Endowment plan |
|---|
Purpose | Monthly income after retirement | Lump sum payout at maturity |
Payout period | Lifetime or fixed term | Typically 10–30 years, single lump sum at end |
Payment structure | Single premium or ongoing premiums | Mainly regular premiums over the policy duration |
Endowment plans are savings-focused, aiming for a one-time payout after a fixed period or for a specific goal (like your child’s education). Annuities, on the other hand, spread payouts monthly, which suits your day-to-day expenses in retirement.
How to Choose the Right Annuity Plan
Choosing an annuity plan is about future-proofing your retirement income. Work through these steps in order:
1. Assess your retirement needs
Calculate your monthly living expenses in retirement, factoring in inflation, and plan for payouts up to age 90 or longer. Then tally up all income sources (CPF LIFE, savings, investments) to identify what your current income gap is and see if you’re likely to meet your needs.
2. Estimate your payouts
Use CPF’s Retirement Payout Planner (if you’re 16 to 64) or Monthly Payout Estimator (if you’re 55 to 79) to project your CPF LIFE income, and ask insurers for sample payout illustrations based on your age and premium amount.
3. Compare costs and fine print
Since CPF Board runs CPF LIFE, there are no advertising, agent commission costs, or surrender penalties. For private annuities, check upfront charges, ongoing fees, surrender penalties, withdrawal rules and what happens if you miss a premium. Also check how the plan handles inflation, since “escalating” payouts might not match Singapore’s actual cost of living increases.
4. Maximise CPF first, then consider SRS
CPF top-ups boost your CPF LIFE payouts with predictable, risk-free income. After that, paying private annuity premiums through the Supplementary Retirement Scheme (SRS) may give you tax benefits.
5. Get MoneySmart advice, if needed
If your situation is complex, or you want to layer a private plan on top of CPF LIFE, speak to our MoneySmart financial advisor who can assess your needs effectively and recommend plans that fit your budget. Remember, the right annuity plan in Singapore usually depends on how much income you need on top of CPF LIFE.
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