WHAT YOU WILL GET If you defer the draw-down age by ...ONE YEAR
Earn two years’ payout
THREE YEARS
Earn seven years’ payout
MOST will have no choice come 2012—but for older workers who will be spared the deferred draw-down age on their Central Provident Fund (CPF) minimum sum, an even bigger carrot is being dangled to get them to voluntarily receive their money later.
A bonus will be given to them for every year they voluntarily delay withdrawing their minimum sum.
The exact amount of the voluntary bonus, or V Bonus, will be announced at a later date, said Manpower Minister Dr Ng Eng Hen on Friday.
From 2012, the drawdown age — currently 62 — will be pushed back in increments to 65 by 2018.
All those currently in their 50s, who will be the first affected, will get a one-off “deferment” bonus in their retirement account, it was earlier announced. But those aged 58 years and above who will not be affected by the new rules, can also choose to defer their withdrawals.
Dr Ng explained how the sums work in favour of those who voluntarily push back their draw-down age.
“We want to encourage older workers to continue working if they can. And if they draw down later, it will add many more years to their payout,” he said.
If a person defers his draw-down age by a year, he stands to get the equivalent of two years’ worth of payouts because the entire minimum sum collects interest for another 12 months.
Defer for three years, and the returns are even greater — seven years’ worth of payouts.
“That’s a good multiplier and you really stretch out your retirement savings,” said Dr Ng, who was speaking to reporters after launching the Retirement Ready @ My CPF roadshow at Marina Square.
This new portal (www.retirementready.sg) is the first such resource available on the Internet to help Singaporeans do their retirement planning sums.
Turning to compulsory annuities, or “longevity insurance”, Dr Ng said he would study all feedback before he delivers his ministerial statement in Parliament next month.
On Friday, labour chief Lim Swee Say noted how unionists had suggested keeping the compulsory annuity payment to “as small a part of the minimum sum as possible”. Among the many suggestions Mr Lim discussed, at a separate press conference on the various National Day Rally initiatives, was one to stretch the minimum sum withdrawal period from 20 to 25 years.
Dr Ng said the priority now was to bring in industry experts to come up with the most suitable process.
“We’ve gotten many creative suggestions. But we must have a simple and effective way of doing this. There can’t be a situation where we have 100 ways and we tell people to please choose one,” he said.
Dr Ng said the CPF Board was looking into providing new online calculators on the CPF and Ministry of Manpower websites, to help members gauge how much interest they will receive under the new CPF interest rate structure.
From Jan 1 next year, all members will get an additional 1-percentage point in interest for the first $60,000 in their various CPF accounts.
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