I wrote to Straits Times forum page about the poor take up rate for CPF Life. However, they did not publish my letter after 10 days which I assumed was rejected. Here was what I wrote to them:

Dear Editor,

I refer to Straits Times article “CPF Life: Some want to be given a choice” dated 18 August 2010.

In that article, it was revealed that only 40,000 out of eligible 700,000 members opted into the CPF Life scheme. The take up rate of only 5.7% is too low.

I want to share why financial practitioners like me did not advice clients to opt into the CPF Life scheme. I have many clients who sought my advice on this national annuity scheme but I found myself unable to advice due to a very simple reason. The CPF Board does not give any benefit illustration unlike commercial annuity products.

One of my clients asked for a quote from CPF Board only to be given the figures on a piece of scrap paper. The only information I have is that piece of scrap paper. There is no official information provided to my client on the assumptions used such as interest rates and death benefit (bequest) amount.

Of course I am aware that such information is available through CPF’s marketing brochures and website. However, as a professional financial planner, we learn never to rely on marketing and advertising information because at the end of the day it is the official document that is the most important.

Why is it that CPF is not required to provide a benefit illustration when it is mandatory for commercial insurers? Although CPF Life is not regulated under the Insurance Act, it should adopt the industry’s best practices. It is also easier for practitioners like me to give advice. Perhaps CPF Board assumes that many financial advisers are not interested to advice on CPF Life after all it does not pay commission. The Board may like to know that there are a number professional financial practitioners in Singapore that are paid by clients directly to obtain objective advice Such practitioners do not necessarily require any compensation from product manufacturers.

Wilfred Ling