Longevity Insurance: SM For Payout At 80

Source : The Business Times, October 22, 2007

He says govt's flexibility on payout age will help secure support for scheme

SENIOR Minister Goh Chok Tong says he believes the government's flexibility on the payout age of the proposed longevity insurance scheme will go far in securing the support the scheme needs.

He added that, personally, he preferred a younger payout age of 80, as opposed to 85.

'The proposed age is 85 but I am glad that the Minister for Manpower is prepared to be flexible on the payout age for the longevity insurance. I personally think 80 years will be a good alternative,' the Senior Minister said yesterday.

Mr Goh was speaking at the annual graduation ceremony of YAH! Community College, at the Singapore Polytechnic Convention Centre.

'I prefer 80 because many people think they cannot live beyond 85,' he said. 'Of course, the insurance premium and the payout after 80 will have to be adjusted accordingly.'

He added: 'If we give people a choice that they can draw down their annuities at 80 or even a few years younger, I believe that most people will then support a compulsory annuity scheme because they will see the glass as more than half-full. They can then see better that they will benefit from the longevity insurance. This will overcome a psychological mental block to the longevity insurance proposal.'

'If given a choice, I would choose to pay a higher premium and an earlier payout age of 80. Like most Singaporeans, I am a little bit kiasu,' said SM Goh.

The proposed longevity insurance had been one of the government's recent proposed changes to the CPF scheme - to ensure that Singaporeans have enough savings for their old age. The proposal requires those aged below 50 to buy an annuity that they will start collecting at 85.

It's a suggestion that has met a fair degree of resistance, with many worried that they may not live beyond 85 to benefit from the scheme.

It's also one of several steps being taken by the government to address the challenges posed by Singapore's ageing population. These include: proposed legislation that would allow workers to be offered re-employment until the age of 65, and eventually to 67; increasing CPF savings with better returns; and buying the tail-end of the lease of HDB flats to make it easier for Singaporeans to unlock the values of their HDB flats without having to sell them off.

SM Goh also noted yesterday that Singapore is one of the fastest ageing countries in the world - with the UN Population Division projecting that by 2050, Singapore might have the fourth oldest population in the world, behind Macau, Japan and South Korea.