SINGAPORE : The Government wants to encourage Singaporeans to voluntarily delay the draw-down of their CPF Minimum Sum, so it is throwing in another sweetener.
Singaporeans will get a "V Bonus" - that is "V" for Voluntary - for each year they defer their draw-down.
This was announced by Manpower Minister Dr Ng Eng Hen on Friday. He also revealed that the Re-employment Law will very likely come into effect before 1 January 2012.
It was also announced that the Workfare Income Supplement increases for those above 55 will kick in immediately, when the scheme starts next year.
Planning for your retirement is now just a click away, with a new CPF portal "Retirement Ready" .
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"V Bonus" for S'poreans who defer draw-down of CPF Minimum Sum
Speaking at the launch of the portal on Friday, the Manpower Minister brought good news for those who are serious about growing their retirement funds early.
Prime Minister Lee Hsien Loong had earlier said that Singaporeans would get a one-off D Bonus, if they defer their CPF Minimum Sum draw-down age, to beyond 62.
The first deferment to age 63 will occur in 2012, and the government will raise the draw-down age to 65 years, only in 2018.
This means there is a lag of a few years, which Dr Ng said would give both workers and employers enough time to adjust to the new reality of working longer.
But the Government wants more people to voluntarily defer their draw-down, even when they are not yet affected.
So a "V Bonus" will be given out for each year of deferment, to help multiply workers' retirement funds.
Dr Ng explained, "For 62, if you decide to defer to 63, or to 64, or to 65, depending on whether you're working..for each year that you defer, there'll be additional bonus. And the general idea is we want to encourage older workers to continue working, and if they can draw-down their Minimum Sum later, that will add many more years to the payout.
"Because the way the sums work, if you defer drawing out one year, because the old sum collects all interests, for subsequent years, if you actually defer for one year, you actually get 2 years of payout."
Furthermore, if one defers for three years, the sum multiplies to seven years of payout.
More details are expected in Parliament next month.
For now, Dr Ng said the 1 percentage point increase in interest rate on the first S$60,000 of CPF members' combined accounts, and a later draw-down will translate into many more years of income after retirement.
An additional 1 percent bonus interest rate means CPF members will get 30 percent more in interest payments.
But Dr Ng acknowledged that the CPF interest rate and returns structure is not something that everybody understands easily.
So the plan is to provide an online calculator, so that people could just log on and find out how they will benefit from all these CPF changes.
On compulsory annuities - dubbed "Longevity Insurance" - to ensure those who live beyond 85 years get a steady income, Dr Ng said industry players would be consulted on how best to stretch its premiums, so that only a small part of the Minimum Sum needs to be set aside.
The minister added that he is heartened that many companies have started to make serious plans on how to re-employ and deploy their older staff.
Such early preparations, he said, are good as the Re-employment Law will take effect at the latest, on 1 January 2012. - CNA/ms
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