• Perfectus SG

Annuity plan

Updated: May 29, 2020


Annuity plan is distinguished by its capacity to provide individuals with a steady stream of income at retirement. During that period, income stops but daily expenses like food, phone/internet, utility bills and etc continues.

Many might be familiar with CPF life where it is an annuity plan from the Singapore government using the retirement sum you have set aside in your Retirement Account. Ultimately, generating interest which helps provides the policy owner with a monthly income.

However, the income generated by the CPF life plan may not be enough for an individual to sustain their lifestyle needs.

This leads to the scale down of their daily expenses/spending to be sure that there is enough to last the month.

Having said that, CPF life is just enough to get by with and if an individual is looking for a sizeable guaranteed monthly income stream during their retirement years, it is essential to explore one's retirement with a robust retirement planning portfolio.


Potential strengths:

  1. Guaranteed higher returns - Monthly income to be equal or more than the previous month.

  2. Guaranteed payout - Regardless of the economic climate.

  3. Monthly income that never reduces with the potential to increase yearly.

  4. Highly customizable.


By leveraging the strengths of an Annuity plan and create an extra stream of income in order to bolster the rising cost of living. One should employ this in their retirement planning portfolio.

"Retirement, a time to do what you want to do, when you want to do it, where you want to do it and how you want to do it." – Catherine Pulsifer

Starting early is key to securing your retirement needs as it takes time for the value of the annuity account to reach its maximum growth.

For example, an individual who is 35 years old chose a premium payment term of 15 years, the payout age of 65 (retirement age) and the payout period until he is 80 years. Setting aside 10% of his/her salary per month. He/she would have accumulated $90,000.00 in his Annuity plan, ultimately receiving $198,036.00 in all at age 80.

Clearly, one can see how much profit an Annuity plan may offer. It truly maximises the growth potential of your money and provides you with a steady stream of guaranteed income for retirement.


How does an Annuity plan provide such high yields?

As mentioned with the above example, how it able to generate an extra $100,000.00 is through the plans participating (par) funds investment returns (Step-up). This gives an extra boost to the performance yield of the Annuity plan and provides better retirement monthly income.

What if the investment returns (Step-up) from the plan is poor?

Let’s say we assume the worse and that there is no step-up on top of the guaranteed income, we are still looking at a total income of $8,136.00 * 15 = $122,040. This is $32,000 more from the $90,000 that has paid for the plan.

Will my monthly income be reduced due to the economy?

Definitely not. Your monthly income stream will not be affected as it is Guaranteed. In fact, if the economy does well there will be more allocation of the Step-up amount added to your income stream.

In addition, once the Step-up benefit is allocated it will never be reduced and will form the new increased monthly income stream.


There is no hard and fast way to create a robust retirement plan. Starting early is crucial in enabling sizable returns as it takes time to achieve maximum growth of one's wealth through an Annuity plan.

However, one should not forget to include other financial plans in their portfolio to protect themselves from uncertainties from falling sick to illnesses.

Do book us on our page to learn more and explore your options with us:)

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