Comparison of Retirement Income Plans in Singapore Is Not Quite Accurate
The article “Retiring Right … and Picking A Plan That Fits You” published in the Sunday Times on 17 April 2016 shared some information on the various retirement income plans available in the market and how they compared with one another (see table in article). However, I noticed that the parameters used in the comparison are random and inconsistent.
- Saving terms are different – In using single premium (lump sum) plans to compare with savings term of 10, 14 and 15 years, the guaranteed cash values can differ to a great extent and the projected yield of the plans is greatly distorted.
- Failure to mention the additional guarantees over capital offered by the different plans – Some plans offer guaranteed cash value as high as 200% of capital whereas some barely break even.
- Failure to address the death or surrender benefits of the plans – Some plans offer lower benefits as compared to others.
Besides the payment term, the total premium and/or the total cash payout should also be used as a yardstick so that the comparison is as ‘apple-to-apple’ as possible.
Another interesting point is that the comparison highlighted the widely differing guaranteed cash values – ranging from $54,000 to $120,000 (for the first six non-inflation pegged plans in the table).
These are just some inconsistencies that were found in the comparison. Whilst it gives the reader some idea what is available out there, it is inconclusive. And it can easily confuse the reader as he or she may not be aware that many important features were not highlighted in the comparison.