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 II,
2) Aviva MyIncome Plus, and
3) NTUC Income Gro Retire Wise
Although all of 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 II||Aviva MyIncome Plus||NTUC Income Gro Retire Wise|
|When can the income payout begin||After reaching 50, 55, 60, 65 or 70||5 or 10 years from current age||10, 15, 20, 25 or 30 years from current age, or after reaching 55, 60, 62 or 65|
|Number of years of income payout||10, 15, 20 or lifetime||10 or 15 years||20 years|
|Are payouts guaranteed?||Income payout has guaranteed and non-guaranteed components.||Income payout are guaranteed, and non-guaranteed bonuses are paid out at maturity||Income payout has guaranteed and non-guaranteed components|
|Is there additional payout at maturity?||No||Yes||No|
|Special benefits||Loss Of Independence Income (LOI) benefit, Retrenchment Payouts||-||-|
|Payout options||Receive annual bonus in one lump sum or convert annual bonus to Additional Monthly Income (AMI)||Receive the full lump sum payout that consists of guaranteed and non-guaranteed components or receive partial lump sum payout with the Guaranteed Monthly Income starting from the end of the accumulation Period being reduced accordingly.||Receive regular retirement income over 20 years or lump-sum payout at chosen retirement age|
1) Manulife RetireReady Plus II
We consider this plan attractive for various reasons. One of them is that 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. Notably, this plan is one of the few SRS-approved plans in the market right now that allows you to receive payouts for a lifetime, with a 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). 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) Aviva Myincome Plus
Although this retirement income plan pales in comparison when it comes to flexibility and features, it is suitable for those who want slightly higher guaranteed monthly payouts. 100% of your regular income payouts is guaranteed and predetermined, allowing you to plan your expenses with greater predictability. This plan would also be attractive to those who wish to leave a bequest for their loved ones, as all the accumulated unguaranteed bonuses would be paid out at maturity (10 or 15 years from chosen retirement age). Like Manulife RetireReady Plus II, the plan allows you to receive the full lump sum payout at the end of the accumulation period instead of receiving them every month during the payout period. But unlike Manulife RetireReady Plus II, there is an additional option to receive a partial lump sum, with monthly payouts reduced accordingly.
3) NTUC Income Gro Retire Wise
NTUC Income Gro Retire Wise has the most options for payout age among the 3 plans. Another advantage of this plan lies in its versatility – You can either choose to obtain a lump-sum payout upon your chosen retirement age or choose to convert your plan into a regular stream of annual payouts for 20 years. If you find that you do not need to obtain these payouts so early, another strategy is to accumulate these annual income for your future retirement needs. However, the drawback of this plan that you cannot vary the number of years you want to receive your payouts for (only 20 years).
Premium and Payouts
|Manulife RetireReady II||Aviva MyIncome Plus||NTUC Income Gro Retire Wise|
|Current Age||55 Years Old||55 Years Old||55 Years Old|
|Retirement Age||65 Years Old||65 Years Old||65 Years Old|
|SRS Single Premium||$58,254.40||$59,094.00||$60,000.00|
|Payout years||10 Years||10 Years||20 Years|
|Yearly Guaranteed Payout^||$7,200||$7,560||$3,520|
|Yearly Non-Guaranteed Payout*^||$2,367.84||NA||$2,954|
|Total Yearly Payout^||$9,567.84||$7,560||$6,474|
|Total Payout Benefits||$95,678.40||$107,479.00||$129,487
|Non-guaranteed Maturity Payout*||NA||$31,879||NA|
|Yield at Maturity *||3.31%||3.74%||3.95%
*Non-guaranteed payouts and yield at Maturity are based on illustrated yield of 4.75% for Manulife RetireReady II and NTUC Income Gro Retire Wise and 4.50% for Aviva MyIncomePlus.
^ Yearly payout refers to monthly payout * 12 for Manulife RetireReady II
For the purpose of fair comparison, we assumed the same current age of 55 years old, single premium amount of $60,000 (or the closest we could get), retirement age of 65 and payout period of 10 years (except for NTUC Income Gro Retire Wise which only has a 20 years payout option).
From the numbers, it is evident that NTUC Income Gro Retire Wise gives the highest yield to maturity.
If you are more risk averse and prefer not to invest your nest egg, purchasing a Single Premium Retirement Income plan is a great way to accumulate your SRS funds, since you will not 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!