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Be cautious of plans promising escalating income

Invest editor Lorna Tan highlighted a pending enhancement in Central Provident Fund (CPF) Life - an Escalating Plan that can hedge against inflation in future years (Is the new CPF Life plan ideal for you?; Oct 22).

For many retirees who are concerned about the erosion of retirement funds through inflation, this option will provide extra peace of mind and prospect of prolonged retirement.

It was this consideration that caused me to choose a lower payout annuity plan ($580 monthly) from NTUC Income with my CPF Minimum Sum upon my retirement in 2001.

The NTUC Income plan was a "participating" plan which would "escalate" over time.

However, for reasons unknown to me, NTUC Income never "escalated" this payout amount.

After 16 years of keeping my Minimum Sum, my monthly annuity payout remains at $580.

Fellow retirees should be warned about the danger of unfulfilled promises of future income, which can throw their retirement plans off.

Will the CPF Board allow my old "participating plan" to be switched to the new CPF Life Escalating Plan?

How can my retirement income be protected against future inflation?

Geoffrey Kung

A version of this article appeared in the print edition of The Sunday Times on October 29, 2017, with the headline 'Be cautious of plans promising escalating income'. Print Edition | Subscribe