Source : The Straits Times, Sep 21, 2007
I READ with concern about Singaporeans' unhappiness over the proposed compulsory annuity to guard against the elderly running out of money after they have spent their Minimum Sum.
I have a simple solution for this complex problem and that is to create a compulsory longevity-insurance scheme to be paid from the interest gained on the additional one-point CPF interest to be paid by the Government for the first $60,000 in the CPF account.
Certainly, the aim of self-reliance is not compromised as the money belongs to the CPF account-holders although contributed by the Government. At the same time, not many people will mind having this additional gain taken away to insure them against a long, penniless life later on.
And for fairness, the amount a person can draw from the longevity insurance should depend on the amount of premium that is contributed by the CPF account-holder.
If this amount is found to be insufficient, it could be topped up. One proposal is to increase the employer's CPF contribution by one point to be put into the longevity insurance account to make up for the shortfall. Now is the right time to do so as the economy is in good shape.
Lim Yao Ho
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