The range of options offered by the impending CPF Life scheme may be dizzying for some, but to Manpower Minister Ng Eng Hen, the reality is "simpler than what it's made out to be".
In fact, come 2013 when the scheme starts, he believes "70 to 80 per cent" of eligible CPF members would choose the default plan of starting their payouts at age 80. Apart from getting to decide if they want to start their plan at age 65, 90 or any of four points in between, members can choose to have refundable premiums or not.
At a press conference yesterday, Dr Ng predicted very few people — those without any beneficiaries — would contemplate the non-refundable option.
As for when to start payouts, he said: "The Refund 65 plan is meant for the very small group who have lower balances and feel that they want higher payouts … I don't think the Refund 90 plan will be a popular option either, people would feel it's too far off."
Over time, just "two or three" choices would emerge. And if the plan some members have in mind is too unpopular to be financially viable, they could be asked to join any of the other plans.
Over the next few years, the CPF Board will have to boost its capabilities to operate the scheme on par with commercial insurers, Dr Ng noted. And to educate members, the board would distribute simple handbooks in the four languages, as well as provide an online tool to calculate the financial implications of each of the options.
Those whom Today spoke to said they needed more time to digest the "complicated" scheme, although they liked its look so far.
Computer engineer Tan Siew Lian, 46, who is diabetic, said: "I would want to start getting my payouts as soon as possible. With diseases, you just don't know how long you can live."
Remisier Jimmy Ho, 51, who will be offered the choice to opt into CPF Life, said he might start payouts at age 70 "because by then, I think I would be out of work".
The Government's initial floating of a non-refundable annuity scheme offering payouts from age 85 had met with strong public resistance. Dr Ng said this was expected. "We wanted people to be shocked that they would be living for so long … and then just gently reinforce the messages," he said, adding that the refundable option "was always on the table".
The Government would also consider whether to give a one-off incentive to help those with less than $40,000 in cash in their Minimum Sum to join the scheme. - TODAY/sh
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