Why Manulife RetireReady and TM Retirement(SP) are Winners For Retirement Plans NOW!

Last updated on March 16th, 2018 at 12:08 pm

 

If you are considering retirement plans in the market, this post is to compare between 4 of the popular plans in the market namely:

  1. Manulife RetireReady
  2. TM Retirement (SP)
  3. NTUC SAIL
  4. AXA Retire Happy

Before you read further, retirement plans help individuals who do not like to take on too much investment risk towards retirement i.e. you are conservative in your investment approach when approaching your golden years.

 

Retirement plans strength lies in protecting your initial investment and any non-guaranteed returns should be viewed as an upside.

Before you conclude that retirement plans are only for the faint-hearted folks, read further…

Retirement plans are for everyone! Do you know why?

A retirement plan, in essence, is an endowment that uses a participating, aka PAR, fund of the insurer. It allows retail investors, like you and me, to leverage on professional investment management while having a reduced fluctuation in our returns. A lot is said about the low running cost of an ETF but a PAR fund is also very efficient in that aspect.

Below is a snapshot of the NTUC’s PAR fund. It achieved 4.49% in 2016 with only 0.171% investment expense ratio. I’m not saying that NTUC’s PAR fund is the best but this is very decent for a conservative investment approach.

 

Personally, I invest directly in the financial markets through shares listed on the exchange. However, I own a small allocation of my total investments to the insurer’s PAR funds with the whole life plan that I own. Perhaps when I grow older, I may allocate more into such principle-protected solutions because there just isn’t much reason to take on risk and grow wealth.

 

4 popular retirement plans (Click to have a blow-up picture of it):

Comparison of Retirement Plans Funded by SRS or Cash
The table compares for someone aged35 and investing $15,000 lump sum. Plans can be funded by SRS or Cash.

Brief description for Manulife RetireReady: Click link for Manulife RetireReady brochure

Brief description for NTUC SAIL: Click link for NTUC SAIL brochure

Brief description for TM Retirement(SP): Click link for TM Retirement @70 brochure.

Brief description for AXA Retire Happy: Click link for AXA Retire Happy brochure

 

If you are looking for Highest Guaranteed Return
-> Manulife RetireReady is a winner! (For NOW)

In the above comparison, Manulife RetireReady had the highest guaranteed IRR of 2.25%p.a. This is vastly higher than the rest of the plans analysed. I’ve worked out for other age groups and the conclusions are similar.

In addition, the plan pays out 2 times of the guaranteed monthly income if you experienced a loss of independence (LOI). This is actually a FREE long term care insurance embedded into the plan.

There is also flexibility in deciding the payout strategy upon reaching your payout age!

You can choose to accumulate your payout with Manulife, compounding at prevailing interest rate or choose to receive the monthly cash benefit. The downside is that the minimum qualifying amount for the plan may be higher than the rest of the plans.

 

If you are looking for Highest Projected Return
-> TM Retirement (SP) is a winner!

TM Retirement (SP) plan has the highest projected rate of return! Just in case you do not know, Tokio Marine has a reputation of maintaining bonuses in their PAR funds till date.

For example, a $15,000 single premium investment will yield an annual cash payout of $4,820 for  10 years, from age71 to age 80 (Total of $48,200).

There are 3 payout age for TM Retirement(SP) i.e. @63, @65 and @70.TM Retirement @63 is a great solution for investments using SRS funds. This is because payout coincides with SRS withdrawal age and withdrawal duration.

TM Retirement @63 is a great product for investments using SRS funds. This is because payout coincides with current SRS statutory withdrawal age at Age 64 and allowable withdrawal duration of 10 years.

Note: Tokio Marine uses age next birthday. SRS will terminate 10 years after first withdrawal.

 

Further tips

You can invest in any of the 4 retirement plans with SRS or Cash.

We are all expected to live longer. These retirement plans allow you to control your cash-flows for retirement and complement your CPF Life payouts.

 

 

Josh Tan

As a dad now, I have a new found perspective on financial matters concerning parents. I share many of the concerns that you have and as I search for answers myself, I'll share them through my articles. Being keen on investing and personal finance matters, I started a journey in the financial planning industry and have been blessed to share what I am passionate about for the last 10 years.