Making Annuities Compulsory Not Ideal - Each Person Has His Own Needs

Source : The Straits Times, Forum, Sep 1, 2007

WHILE I agree that having an annuity is a good pillar of any comprehensive strategy when planning one's retirement needs, I have, as some do, many questions as to making it compulsory.

I am a regular middle-class working Singaporean who has already bought an annuity in my 40s which would start paying out in my mid-50s. And I bought it as part of a comprehensive multi-product portfolio after a robust financial needs analysis with a few financial planners and bankers.

What the process revealed is that everyone has different financial requirements at different ages and 'no one solution fits all'. By making it compulsory, any financial planner would agree that it would fail the test of 'best fit' as everyone has different commitments at different ages.

Worse yet, making it compulsory would give Singaporeans a false sense of security that they will be taken care of and not be encouraged to take individual responsiblity for their own financial well-being.

And finally, will Singaporeans (like me) who already have bought an annuity (annuities), often with presumably better payouts (as we had done so earlier) be subjected to a further compulsory deduction from our CPF Minimum Sum?

Just as HDB owners are not entitled to two bites of the 'subsidy cherry', I would think it would be just as unfair to force reasonably responsible Singaporeans to take up another compulsory annuity.

I hope that the architects of this admendment to the CPF Act will take this into account.

Mark Fong