Source : The Business Times, February 4, 2008
The new National Lifelong Income scheme - the annuity plan for those who live beyond the age of 85 - will be rolled out as soon as 2013, with the government having 'done its sums' and found the proposed plan a 'workable' one.
The new scheme is also set to be a 'win-win' one for Singaporeans - with most set to get the same Central Provident Fund (CPF) payout they are currently entitled to receive between the age of 65 and 85 even when they are past 85.
Manpower Minister Ng Eng Hen announced this to residents living in the Keat Hong division during his visit to the area yesterday.
His announcement comes just after news last Thursday that the National Longevity Insurance Committee, headed by Lim Pin, had come up with proposals for an annuity scheme that would address the concerns of Singaporeans.
After listening to the views of more than 600 people across the social spectrum, Prof Lim's committee suggested the scheme should provide a basic and steady income for life; allow refund of the capital sum on early death; and start at age 80 instead of 85, but allow for options on the starting payout age.
Yesterday, Dr Ng elaborated on those recommendations on the scheme, with the full details to be announced on Feb 12.
The scheme will affect all those now aged 50 and below. 'I am (part of) the first group that will be affected by this,' the 49-year-old minister pointed out.
Dr Ng said that, under the current CPF scheme, this group of Singaporeans - who have half the minimum sum in cash, about $67,000, in their active CPF accounts - will get to draw out an average of $600 a month from the time they are 65 up until they reach 85.
Under the new Lifelong Income scheme, some 60 per cent of these Singaporeans will still get to draw out at least $600 each month when they turn 65 - but what's different is that they will be able to do so until they die, whatever the age.
The sustained payout over a longer period of time, Dr Ng explained, was due to the extra one percentage point in interest being paid out on CPF accounts.
The exact amount each Singaporean will get depends on how much is in his or her CPF accounts.
'The whole point of this is that we want people to have income for as long as they live,' said Dr Ng. 'It will help us to face our future with a lot more peace of mind.'
And he believes that many Singaporeans will need this payout, as studies have shown that more than half of those still alive today at the age of 65 will live until they are 85. And there will be some 900,000 Singaporeans above the age of 65 by the year 2030.
Dr Ng called the new scheme a bao chiak scheme, as Singaporeans would still get the same amount they are receiving now, but over an extended period of time.
And their families would be able to get back all that's left in their CPF accounts, should the recipient die early.
Options, such as for an earlier payout, would also be given to Singaporeans. As these options can be quite complicated, Dr Ng said, it's something the CPF Board would have to look into before educating individuals on the options.
Dr Ng also referred to the committee's recommendation that the CPF Board run this new scheme.
'This is a major undertaking. It will have to assure successive generations of Singaporeans who enter this scheme that they can get an income for life, for as long as they live. There are implementation and financial issues,' he said. He explained that the government would respond to the committee's recommendations when the detailed proposals are announced.
Still, Dr Ng says: 'My sense is the public will accept this scheme. From what I've heard, residents think it's a good scheme.'
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