Retirement Planning Part 3: Should You Choose The Basic or Standard Plan?

Christopher Tan

In the third segment our 7- parts series on Retirement planning, we explain more about which CPF Life works and know which plan suits your retirement needs and goals.

You can find the link to the other parts here:

This event was conducted on 5th of May 2016 by Christopher Tan, CEO of Providend.


So, that is the Standard Plan. So, the Standard Plan pays more in your life than your Basic Plan. The difference is, or the catch is, that for your Standard Plan, if we die, we leave behind lesser for our family members, relative to the Basic Plan.

Because Basic Plan, you take out lesser in your lifetime right? When you go upstairs, you leave behind more for your family members. Standard Plan you take more in your lifetime and if you go upstairs, then you leave behind lesser for your family.

Are we ok?

Between the Basic Plan and the Standard Plan, the monthly payout difference is about $80 to $100 per month difference. Is it a lot? It’s not a lot, right? It’s not a lot because it is us in this room. It’s true because when I said CPF policy who does it target? The second quintile.

The second quintile, they earn $1,500. Per person, they earn about $750 thereabout. So, $100 makes a difference? It makes a lot of difference for them. So, if you think that the monthly difference between the Basic and the Standard Plan of about $100 per month difference is not going to make a material difference to your lifestyle in retirement, it is actually better to choose the Standard Plan. Sorry. It’s better to choose the Basic Plan.

That means you take out maybe a $100 lesser but upon death, the amount, the bequest that you leave behind is actually quite a big difference as compared to the Standard Plan. But if you think that the $100 per month is going to make a material difference because you may meet people out there and I’ve met people out there who always ask me, “Which plan do you choose?” and a $100 you know will make a difference to their retirement then you better ask them to choose the Standard Plan because it pays more.

Are we ok so far? Yeah. So, that’s the difference between the Basic and Standard Plan. By the way, the default plan is the Standard Plan.

Default meaning to say once you reach 65 years old, you only need to choose your plan at age 65. Last time you have to choose at 55 now you choose at age 65. They give you about six months. CPF will tell you to go and choose. If you don’t choose, they will choose for you. And it is the Standard Plan. And if you don’t want the Standard Plan, you better go and choose.

Now, you must be wondering why the default plan is the Standard Plan right? Why? Because who is it targeting? Second quintile. These people likely will miss the CPF letter. Actually like most of us. Because when we received CPF letter, what do we do? We chuck one side. We don’t care. Right?

If you are like me, maybe you bother to open and then you find the paper quite good, you use as a placemat. The most recent one you receive got pie charts, different colour one right? Did you take out and see? The paper quality quite good right? Yeah, I’ve used it to put my food on it. Then after that throw away. Most people don’t see.

So, can you imagine the second quintile people? They actually, they might not bother and then they throw away the letter and it is better for them then to go to the default plan which is the Standard Plan. OK, are we okay so far? Let’s move on.


In the near two decades that we have worked with retirees, we understand one thing: Reliability of income is more important than return on investment at this phase of your life. As such, we have developed a proprietary methodology called RetireWell®, that can help you draw down strategically from your retirement nest egg.

Our Retirewell® methodology was featured in The Business Times every month for almost a year in 2017 and has 11 parts to it, namely:

• Part 1: Drawing Down Retirement Money
 Part 2: Offering Retirees Security and Peace of Mind
• Part 3: Low Cost, Consistent Results
• Part 4: Counting on low-cost Index Funds
• Part 5: Investment Philosophy for a Retiree Client
• Part 6: Ensuring a ‘Safe Retirement Income Floor’
• Part 7: Remain Invested Over the Long Haul
• Part 8: Purpose-Driven Retirement Planning
• Part 9: A Tale of Two Retirees And Their Fortunes
• Part 10: Stock Markets Always Rise Over The Long Term
• Part 11: Retirement – It’s About The Kind Of Life You Want To Lead

With Retirewell®, we will design a plan that will give you a safe and reliable stream of income for the rest of your life, with provisions for legacy in the event of demise, so that you can live up your retirement with peace of mind.

We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current investment portfolio, financial and/or retirement plan, make an appointment with us today.

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