Govt May Let Some Groups Opt Out Of Annuity Scheme

Source : The Straits Times, Sep 10, 2007

THE chronically sick and those who have already bought annuities could be exempted from the government's compulsory annuity scheme, Minister in the Prime Minister's Office Lim Boon Heng said yesterday.

A committee set up by the Manpower Ministry to look into the scheme could make an exception for the first group as such individuals are not expected to live for long, he explained.

As for the second group, he said that they would not need to be covered twice.

'So, for those who are adequately covered and (if) the policy which they have bought fulfils certain requirements, then they, too, may be exempted,' he said.

His comments came after some Singaporeans called on the Government to consider making proposed compulsory annuities an opt-in scheme instead.

Mr Lim, who is overseeing ageing issues and is deputy chairman of the People's Association, was speaking to reporters on the sidelines of a four-hour Community Development Council seminar.

It was attended by some 200 grassroots leaders, businessmen and members of voluntary welfare groups.

Mr Alvin Lim, the chief executive officer of BizLink, which helps to source jobs for the disabled, asked if the Government would consider exempting this group from the annuity scheme.

Prime Minister Lee Hsien Loong had announced last month that all Central Provident Fund (CPF) members aged below 50 would have to buy an annuity at age 55 using a small portion of their CPF Minimum Sum.

The annuity will give them a monthly payout of $250 to $300 once their Minimum Sum runs out when they reach the age of 85. This is meant to cover members' needs when they outlive their CPF savings.

But Mr Alvin Lim noted at a dialogue with Mr Lim yesterday that people with disabilities tend to have shorter lifespans. Most are also shunned by insurers.

Minister Lim gave his assurance that such views would be taken into account by the committee, and said there was already flexibility in the CPF scheme.

Under rules that were relaxed last year, those who are certified by doctors as being terminally ill or have a disabling illness, can withdraw their CPF money regardless of age.

But Mr Lim also took pains to highlight the importance of the proposed scheme.

The Government did not want a situation where people were alive but had no stream of income to survive, he said.

Some people argued that they would not live past 85, he noted. But living longer was a global trend.

Already, 25,000 Singaporeans are above the age of 85, and some 500 are above the age of 100. Scientists who study the human body say that a person's lifespan can even go up to 120 years, said Mr Lim.

The proposed compulsory annuity scheme has generated much discussion since it was mooted.

Unlike the Minimum Sum, which goes to a CPF member's family if not used fully, the amount that goes into the annuity will not be recovered if the buyer dies before 85.

Mr Lim said there is no way to predict who is going to live longer. So, the scheme is a way to 'pool resources' to benefit those who live past 85.

'I hope Singaporeans will understand that this is what the proposal hopes to achieve,' he said