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Find Out How Single-Premium Retirement Income Plans Grows Your Supplementary Retirement Scheme Savings
In our previous article, we shared a simple guide of how you can identify types of products to suit your retirement needs.
In the next section, we give an overview of some Single Premium Retirement Income Plans that allow you to grow your SRS (Supplementary Retirement Scheme) savings
Here are 3 SRS-approved Single Premium Retirement Income plans in the market right now:
1) Manulife RetireReady Plus III,
2) NTUC Income Gro Retire Flex, and
3) Singlife with Aviva MyLifeIncome III
Although all 3 have similar features and benefits, such as allowing your single lump sum SRS premium to accumulate and pay out a steady stream of income upon your chosen retirement age, there can be some important differentiating features that you would need to know before you buy.
| Manulife RetireReady Plus III | NTUC Income Gro Retire Flex | Singlife with Aviva MyLifeIncome III | |
|---|---|---|---|
| When can the income payout begin | After reaching 50, 55, 60, 65 or 70 | 5 – 50 years from current age | 5 – 20 years from current age |
| Number of years of income payout | 10, 15, 20 or lifetime | 10, 20 or till age 100 | Whole of life |
| Are payouts guaranteed? | Income payout has guaranteed and non-guaranteed components. | Income payout has guaranteed and non-guaranteed components. | Income payout has guaranteed and non-guaranteed components |
| Is there additional payout at maturity? | No | No | Yes (assumed policy is surrendered after 20 years) |
| Special benefits | Loss Of Independence Income (LOI) benefit, Retrenchment Payouts | Disability Care Benefit | – |
1) Manulife RetireReady Plus III
Manulife RetireReady Plus III is attractive for various reasons. Firstly, you can start your payouts as early as age 50. There is also a wide range of options when it comes to the number of years you receive the payouts for which you have the flexibility to change as long as the request is submitted two years before you are slated to receive your monthly payouts. This plan allows you to receive payouts for a lifetime, with just a single lump-sum premium. If you are afraid that you may outlive your savings, you wouldn’t have to worry if you invest in this plan. On top of all that flexibility, you would also get double the guaranteed monthly payouts, should you not be able to perform 3 out of 6 of the Activities of Daily Living (ADLs). This would be tremendously beneficial for those who are concerned about requiring more income to pay for their caregiving needs in old age. Besides, having the extra retrenchment benefit in this policy helps to recession-proof your financial plan, in the event that you stay out of job for more than 30 days.
2) NTUC Income Gro Retire Flex
NTUC Income Gro Retire Flex has the most options for payout age among the 3 plans as you can choose to start your payouts any time after letting the plan grow and accumulate for at least 5 years or let it accumulate up to 50 years before starting your payouts. You can also choose from several payout duration options, which you have the flexibility to change at least 30 days before starting your monthly payouts. This plan also pays a Disability Care Benefit of an additional 50% of your monthly payouts in the event you meet with one of the following conditions – loss of use in one limb or one eye, loss of speech, or loss of hearing.
3) Singlife with Aviva MyLifeIncome III
This plan is designed slightly differently from the other two plans as it provides payouts for whole of life only. As such it pales in comparison when it comes to flexibility and features, but it is suitable for those who want lifelong income and the option to surrender the policy for a lump sum cash value at any point in time during their retirement years. For a single premium plan, the guaranteed cash value is equal to the premiums put in after the 8th year, making it attractive for those who prefer a shorter break-even period. You can choose to start your payouts any time after letting the plan grow and accumulate for at least 5 years or let it accumulate up to 20 years before starting your payouts.
Premium and Payouts
| Manulife RetireReady III | NTUC Income Gro Retire Flex | Singlife with Aviva MyLifeIncome III | |
|---|---|---|---|
| Current Age | 45 Years Old | 45 Years Old | 45 Years Old |
| Payout Start Age | 65 Years Old | 65 Years Old | 64 Years Old |
| SRS Single Premium | $50,921.00 | $50,000.00 | $49,658.45 |
| Payout years | 20 Years | 20 Years | Whole of Life |
| Monthly Guaranteed Payout | $250.00 | $248.67 | $74.00 |
| Monthly Non-Guaranteed Payout* | $400.08 | $420.48 | $271.33 |
| Total Monthly Payout | $650.08 | $669.15 | $345.33 |
| Non-guaranteed Maturity Payout* | NA | NA | $79,393 |
| Total Payout Benefits | $156,019 | $160,596 | $162,273 |
| Yield at Maturity * | 3.74% | 3.92% | 3.50% |
*Non-guaranteed payouts and yield at maturity are based on illustrated yield of 4.25% p.a. for all 3 plans.
For the purpose of a fair comparison, we assumed the same current age of 45 years old, the single premium amount of $50,000 (or the closest we could get), the retirement age of 65, and payout period of 20 years (except for Singlife with Aviva MyLifeIncome III which pays out for life)
From the numbers, it is evident that NTUC Income Gro Retire Flex gives the highest yield to maturity, though you should look beyond that to determine which plan is most suitable for you.
Conclusion
If you prefer greater certainty in your retirement income through the guaranteed payouts and prefer not to invest your nest egg, purchasing a Single Premium Retirement Income plan is a great way to optimise your SRS funds, since you will generally not want to withdraw them till the statutory minimum retirement age of 62.
Approach our MoneyOwl Advisers to find out more about how you can enhance your SRS savings with Retirement Income plans today!
