An Annuity is a contract that provides a guaranteed income to the annuitant for life or a certain specified period of time, with income payments made annually, semi-annually, quarterly or monthly.
There are 2 types:
Immediate – Payments begin immediately depending on the frequency of payment selected.
Deferred – Payments begin after a specified period of time has elapsed after the purchase date.
The Deferred Annuity plan is the only one allowed under the CPF Minimum Sum Scheme (MS).
It is better to buy an Annuity with the MS because payment under the Deferred Annuity plan is for life, while payments from the MS will stop when it is exhausted.
Another advantage is Annuity Income payments from an Annuity plan bought with the CPF MS is Tax-free.
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