HE knows the plan is “not so popular” with Singaporeans.
But with more working and living longer, Prime Minister Lee Hsien Loong feels it is imperative to raise the age at which retirees start receiving monthly payouts from the Central Provident Fund (CPF) Board. At present, members begin drawing down their minimum sum when they reach 62. The arrangement typically lasts 20 years.
Starting 2012, however, the draw-down age will rise progressively to hit 65 by 2018. The aim is for CPF savings — which will also collect more interest — to last until a member’s 85th birthday.
“It’s a good thing because life expectancy is going up,” said finatiQ.com’s chief editor Vasu Menon.
The average life expectancy is 80 years now, compared to 61 in 1957.
Mr Lee said the delay works in tandem with the hike in CPF savings rate and the compulsory annuity scheme, which will together bolster retirement savings for an ageing population.
To help workers in their 50s — the group that will feel the impact first — cope, the Government will inject a one-off bonus interest into their CPF Retirement Accounts. It will also grant a bonus to those aged 58 or older, who are not affected, yet volunteer to defer their draw-down age.
The sweeteners will help counter initial psychological resistance to the draw-down delay. Said Mr Menon: “They’re doing it in a graduated fashion to allow people time to adjust and to accept it.” — Christie Loh
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