IDEAS home Printed from
   My bibliography  Save this article

The new CPF Life plans as portfolios


  • Boon Seng Tan


We examined the new CPF Life plans - the standard (default) and basic plans - as portfolios of a bond and an obligation to purchase an annuity. This perspective, in contrast to the view that these plans are just annuities, shows that the mandatory scheme does not have universal coverage even for those who are mandated into the scheme, and there are subtle cross subsidies among groups. The basic plan offers real choice for CPF members to substantially reduce further annuitisation by reducing the annuity component of the portfolio and exiting the plan because of the long vesting age. We estimated the money's worth ratio (MWR) of the plans and found that they were not sustainable at the current payouts (1.14 < MWR < 1.93) consistent with previous estimation of earlier plans replaced by the current ones. We predict the payouts will trend downwards after 2023 (the years the first cohort's annuity plans are executed) because the generous MWR are not sustainable. This paper contributes to policy debate about the coverage of the mandatory scheme and the wealth transfer between the insurer and annuitants. Policy questions about wealth transfer among annuitants, and the welfare effect of introducing the scheme, require further research.

Suggested Citation

  • Boon Seng Tan, 2017. "The new CPF Life plans as portfolios," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 13(1/2), pages 102-116.
  • Handle: RePEc:ids:ijpubp:v:13:y:2017:i:1/2:p:102-116

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijpubp:v:13:y:2017:i:1/2:p:102-116. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carmel O'Grady). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.