Best annuity plans for your retirement in Singapore

Let’s face it, securing a steady retirement income hinges on the decisions we make today. Here, we’ve gathered the best annuity plans in the market for your dream retirement.

No one wants to be left stranded in their retirement years. However, there’s always that risk — seeing as we’re (hopefully) no longer in the rat race when we hit our retirement age. Hey, they’re called the best years of your life for a reason!

To secure a guaranteed stream of income in your golden years, annuity plans are the lifeboats you need to tide you through. 

How do retirement annuity plans work?

You pay a monthly/single premium for a fixed period during your working years. Once you’ve hit your retirement age, you’ll be able to enjoy a monthly payout for a lifetime or a fixed number of years, depending on the plan you chose. 

By default, most of us are already covered by a national annuity plan known as CPF LIFE that provides monthly payouts for life once we hit our retirement age. But can we depend on it solely as a source of income in our golden years?

For a blissful retirement we all deserve, let’s take a deeper look at some of the best annuity offerings around, namely NTUC Income Gro Retire Ease, AIA Retirement Saver (III), Aviva MyLifeIncome II, and Manulife RetireReady Plus II.

What are the best retirement annuity plans in Singapore?

NTUC Income Gro Retire Ease

 How do you like your endowment plan, participating or non-participating? 

If you answered yes to the former, this plan is for you. Get a chance to reap bonuses through its Life Participating Fund — should it perform well, that is. With an interest rate of up to 3.25 per cent, it stacks up against the other contenders on the list. 

Flexibility-wise, it shines. Policyholders have the freedom to choose to save over a span of 10 or 15 years, or up to age 50, 55, 60 or 65 — as everyone’s retirement plan is different. However, there’s no lifetime payout under this plan. The monthly cash payout maxes out after a 30-year period. 

AIA Retirement Saver (III)

Worried about inflation? Monthly dividends potentially increase by approximately 5 per cent every year, assuming that dividends are declared every year in the policy illustration.

Seeing as Singapore’s inflation will average to about 1.46 per cent in 2025, the monthly dividend rate will be effective in hedging against inflation and boosting your retirement income to boot. The plan’s potential yield is nothing to scoff at either, with returns of up to 4.73 per cent upon maturity. 

However, the monthly payout period lacks options. You can only choose between 15 or 20 years. On the bright side, policyholders get a one-time terminal (non-guaranteed) dividend, on top of the monthly dividends.

Consider this an extra bonus that you can use to top-up your retirement funds or even as a small token for your family upon claim, surrender or when the policy matures.

Aviva MyLifeIncome II

If receiving lifetime income is your end all be all, MyLifeIncome II should be high on your list. Get high payouts of up to 6.35 per cent of Sum Assured every year, consisting of guaranteed cash benefit and cash bonus. 

If you wish to pay your premiums via your SRS funds, you can do so with this plan. On the protection front, the plan comes with coverage for both death and terminal illness.

Opt for a single premium payment or a premium payment term of 3, 5, 10, 15, 20 or 25 years.

There’s plenty of accumulation period options available too to suit your needs — 4 to 20 years (for single premium), 2 to 20 years (for 3-year premium term), or 0 to 20 years (for 5-, 10-, 15-, 20- or 25-year premium term).

Manulife RetireReady Plus II 

This Manulife product delivers what it promises, truly equipping you with what you need to get retirement-ready. 

Choose how long you prefer to receive a monthly income, for life or a span of 5, 10, 15 or 20 years. Notably, this plan is the most generous when it comes to its perks: death and terminal illness coverage, plus a premium waiver in the event of Total and Permanent Disability (TPD). 

If you meet the Loss of Independence conditions (like hearing loss and major head trauma), get up to an additional 100 per cent of the guaranteed monthly income.

Should you find yourself on the receiving end of an untimely retrenchment exercise, you can rest easy knowing that you’ll have a lump sum payout to tide you over. 

But how do these private annuity plans stack up against CPF LIFE?

Pros	Cons
Wealth of premium payment term and accumulation period options to suit your unique retirement needs Option to park your savings instead of withdrawing it, allowing it to grow with more interests Choose to receive payouts earlier than CPF LIFEPerks include insurance coverage, bonuses and benefits — depending on the plan you choose	Some plans don’t offer lifetime payouts, risk of outliving payout Can’t match up to CPF LIFE’s guaranteed and risk-free interest rate of up to 6 per cent *Premiums can’t be paid via CPF savings (with the exception of Aviva MyLife Income II that allow premium payment via SRS) Member base is not as large as CPF LIFE, lack of risk pooling

*Inclusive of up to 2 per cent extra interest from the government

As we’ve already gathered, private annuity plans come with their fair share of bells and whistles (such as insurance protection, premium waivers and bonuses).

However, when you compare them to our national annuity scheme, it falls short on multiple aspects, particularly on guaranteed returns and duration of payout. 

While private annuity plans promise enticing interest rates at first glance, the heart of the matter is that these rates are made up of both guaranteed and non-guaranteed components.

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If the non-guaranteed component does not perform well, you’ll be left to rely on the guaranteed interest rate that is not as high as you might have thought (think around the 2 per cent range).

In addition, not all annuity plans promise a lifetime payout.

Save for Aviva MyLifeIncome II and Manulife RetireReady Plus II, the other annuity plans offer a fixed term only — which means there’s a chance of you outliving the monthly payouts a.k.a. the main reason why you’re even considering an annuity plan. 

Then there are CPF LIFE’s essentially risk-free returns. As a national scheme, it’s able to spread out risk across a bigger population.

Similarly, you can enjoy monthly payouts for life — even after the premiums are used up — as a result of the accumulated interest.

In conclusion: Which plan should you choose?

Each plan has its own unique features and benefits, as they cater to different needs. That being said, the end goal of achieving financial stability in your golden years remains the same. CPF LIFE holds up as an annuity plan and will service Singaporeans well in their retirement years. 

However, if you have room in your budget to enhance your financial protection and ensure that no bumps in the road catch you off-guard, a private annuity plan could fill up any of the gaps in your CPF LIFE plan.

For example, if retrenchments are a big worry for you, you may want to consider purchasing the Manulife RetireReady Plus II plan for its retrenchment payout benefit.

Seeing as each plan comes with heaps of benefits that are not provided by CPF LIFE, there’s no doubt that your retirement annuity plan will make a worthwhile addition to your financial portfolio.

This article was first published in SingSaver.com.sg.