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Calculate CPF LIFE Effective Interest (with Workings)


Do you know that there are many possible scenarios in CPF Life Annuity? It depends on the amount set aside by the CPF member, the CPF Life scheme that was chosen and the age that the  CPF member passes away. In this example, we assume a CPF member is born on 1/1/1960, and he turns age 55 on 1 Jan 2015. He sets aside $155,000 on 1 Jan 2015 for CPF Life. He will get his first payout at age 65 & 1-month-old and the first payment received would be on 31/1/2025. Based on the CPF website’s CPF LIFE Payout Estimator (link here) on LIFE Standard Plan option, if his annual value of his property is more than $13,000 and annual assessable income of more than $60,000, he is projected to received between $1,202 to $1,329 per month till death.


Preparing data for CPF Life Calculation

For easy data input purposes, we assume he gets all his payout on the first of the following month so his payout dates would be 1 Feb 2025, 1 Mar 2025, 1 Apr 2025 etc and he lives till 85 years old. His last payment would be on 1 Jan 2045. A total of 240 payments (20 years * 12 months) and $0 bequest.


Using MS Excel to calculate CPF Life (Excel file here)

Using the Excel function XIRR with the cash flow with respective payment dates. The projected annualised return is 3.23% per annum based on the lower projection of $1,202/mth. For the higher projected monthly payout of $1,329, the projected annualised return is 3.78% per annum. If the CPF member lives longer than 85, the projected effective interest may be higher.

CPF LIFE Effective Interest

It is important to be aware of the projected effective interest of your retirement programs (CPF, insurance, investment etc) as it will have a direct impact of on your retirement. We have retirement instruments that give a projected return of 4%++ p.a. and it can fit into most individual’s retirement planning.


Contact us here to start your retirement planning with CPF Life.

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