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) Tokio Marine Retirement
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||Tokio Marine Retirement|
|When can the income payout begin||After reaching 50, 55, 60, 65 or 70||5 or 10 years from current age||After reaching 63, 65 or 70|
|Number of years of income payout||10, 15, 20 or lifetime||10 or 15 years||10 or 20 years (for 65 and 70 retirement age only)|
|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||-||Can do SRS top up every year in the same policy|
|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.||Only one option - Income paid out annually|
1) Manulife RetireReady Plus II
This plan in our opinion is the most attractive of the 3 as it gives you 5 different options to your desired retirement age. You can either start your payouts as early as age 50, or you can choose to receive them at 55, 60, 65 or 70. 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) Tokio Marine Retirement plan
Tokio Marine’s single premium retirement income plan’s earliest retirement age option is 63 years old. But this is hardly an issue for you if you only plan to withdraw your SRS funds after 62 years old (the minimum age you can withdraw to enjoy more tax-savings). The advantage of this plan lies in a unique feature that allows you to do regular single premium top-ups. It is like paying for a regular premium plan, with the benefit of stopping payment anytime you wish. So if you are looking for some flexibility to top up your retirement plan along the way, Tokio Marine Retirement Plan would be a good choice. Another interesting benefit is that the minimum starting premium is only $10,000 which is among the lowest in the market.
Before you rush to buy this policy, you may want to decide if getting payouts on a yearly (not monthly) basis suits your retirement needs as this policy pays out on a yearly basis.
Premium and Payouts
|Manulife RetireReady II||Aviva MyIncome Plus||Tokio Marine Retirement @ 70|
|Current Age||55 Years Old||55 Years Old||55 Years Old|
|Retirement Age||65 Years Old||65 Years Old||70 Years Old|
|SRS Single Premium||$58,254.40||$59,094.00||$60,000.00|
|Payout years||10 Years||10 Years||10 Years|
|Yearly Guaranteed Payout^||$7,200||$7,560||$6,121|
|Yearly Non-Guaranteed Payout*^||$2,367.84||NA||$5,019|
|Total Yearly Payout^||$9,567.84||$7,560||$11,140|
|Total Payout Benefits||$95,678.40||$107,479.00||$111,400|
|Non-guaranteed Maturity Payout*||NA||$31,879||NA|
|Yield at Maturity *||3.31%||3.74%||3.42%|
*Non-guaranteed payouts and yield at Maturity are based on illustrated yield of 4.75% for Manulife RetireReady II and TM Retirement 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), payout period of 10 years, and retirement age of 65 (except for TM Retirement which requires more than 10 years to accumulate before payout).
From the numbers, it is evident that Aviva Myincome plus gives out the most guaranteed payout yearly but has the least total yearly payout. This is due to the large lump sum bonus which will be paid out at maturity. However, if the Internal Rate of Return (IRR) matters to you, Aviva Myincome plus is one of the best retirement plans you can get for a single premium.
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!