New plan will work only if insurance firms give higher payouts: Reader
IF THE Government wants to make annuities compulsory, it should ensure that the elderly are not left to the mercy of commercial entities and forced to accept unattractive terms —such as Great Eastern’s ElderShield scheme, which offers low payouts despite high premiums.
People shun annuities for the simple reason that the monthly payout of $500+ is abysmally low — compared to $700+ if one leaves it with the Central Provident Fund (CPF) Board.
Many do not expect to live until 82, so they are satisfied with the 20 years’ higher payout from the CPF.
If the Government force people to buy annuities, it should require profit-driven insurance companies to:
• Give higher monthly payouts and cap profits from the elderly.
• Give an iron-clad guarantee that the monthly payout for life is fixed and not cut returns when the economy is down.
The Government should trust the people’s wisdom and reasons for shunning annuities, find out the reasons and fix them. This way, people do not have to be forced to do anything against their will.
Insurance companies are not altruistic angels and will exploit the more vulnerable group of senior citizens for profit.
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