Changes To CPF Act Afoot

Source : The Straits Times, May 25, 2009

CHANGES to the Central Provident Fund Act were tabled in Parliament on Monday to provide for the proposed establishment of the CPF Life scheme and the Housing and Development Board's new Lease Buyback Scheme.

The CPF (Amendment) Bill is to allow for the setting up of a LifeLong Income Fund, which will be used to collect premiums and also make payments under the Lifelong Income Scheme, or CPF Life. --PHOTO: ST

The CPF (Amendment) Bill is to allow for the setting up of a LifeLong Income Fund, which will be used to collect premiums and also make payments under the Lifelong Income Scheme, or CPF Life.

This scheme, which will begin in 2013, seeks to provide CPF members from age 65 with a regular stream of income for the rest of their lives.

The Bill also includes changes relating to the Lease Buyback Scheme, which allows elderly owners of smaller flats to sell to the HDB the tail-end of their lease at market price.

The proceeds will be used to buy an annuity from the CPF Board.

Other amendments will further refine the Mental Health (Care and Treatment) Act and the Mental Capacity Act. Both were passed last September and are expected to take effect later this year.

Read the full report in Tuesday's edition of The Straits Times.

New CPF Rule For Home Sellers

Source : The Straits Times, Sep 19, 2008

It will address shortfalls in their Minimum Sum to build up retirement funds

A LITTLE-KNOWN rule change will kick in next year regarding how much money property owners must return to their Central Provident Fund (CPF) accounts when they sell their homes.

The new rule, which will address shortfalls in an individual's Minimum Sum, is aimed at helping CPF members build up their retirement funds.

Currently, home owners aged 55 and above do not have to refund their CPF accounts when they sell their properties, unless they have pledged their homes to meet their Minimum Sum requirement. In that case, they will pay back to the CPF the amount they have pledged their home for - with interest.

But from Jan 1, all home sellers over 55 who use CPF funds to pay for their properties will have to pay back this money - plus interest - up to their Minimum Sum requirement.

If they have withdrawn less CPF money than the shortfall in their Minimum Sum, they will need to refund only what they have withdrawn, including interest, currently at 2.5 per cent a year. They do not need to make up for the rest of the shortfall in cash.

Home sellers who do not receive enough from the property sale to refund the Minimum Sum deficiency will not be required to top up the shortfall, as long as the property is sold at market value.

To see how the rule change works, consider the case of Mr Tan, a 58-year-old home owner whose Minimum Sum requirement is $90,000.

He has only $30,000 in his retirement account, so his shortfall is $60,000. To help make up for this difference, he has pledged his property for $45,000.

If Mr Tan sells his property this year, he will pay back to the CPF what he has pledged the property for, plus interest, which works out to, say, $51,000.

But if he sells his property next year under the new rule, he will have to pay back the amount he has withdrawn, capped at his Minimum Sum deficiency - that is, $60,000.

This rule change, which was first announced during the Budget debate last year, will not affect those under the age of 55, or who turned 55 before July 1, 1995.

While home sellers under 55 have to refund any CPF money used to buy their properties, this rule has not been enforced uniformly for those above 55, said Manpower Minister Ng Eng Hen last year.

'Specifically, we have only recovered the property pledge from them and not the shortfalls for the cash portion of the Minimum Sum,' said Dr Ng when he introduced the rule change in March last year.

The Minimum Sum that applies to any individual CPF member depends on the year he or she turns 55. Those turning 55 between July 1 this year and June 30 next year will have a Minimum Sum of $106,000, for instance.

Generally, the impact of this rule change is likely to be small, said Mr Christopher Tan, chief executive of independent private wealth firm Providend.

'To begin with, most people would have pledged their house as part of the Minimum Sum because they want to take out more money at 55,' he said.

'When they sell their house, they would have to put back that money anyway. With the new rule, you refund your CPF account only up to the Minimum Sum, which is, in all likelihood, less than what you withdrew from the CPF to pay for it.'


LIMITED IMPACT

With the new rule, you only refund your CPF account up to the Minimum Sum, which is, in all likelihood, less than what you withdrew from the CPF to pay for it.'

Mr Christopher Tan, chief executive of independent private wealth firm Providend, saying the impact of the rule is likely to be small

CPF Keeps OA Interest Rate At 2.5%

Source : The Business Times, August 14, 2008

Concessionary rate for HDB mortgage loans remains 2.6%

THE Central Provident Fund Board (CPF) will continue to pay 2.5 per cent interest per annum for members' savings in their Ordinary Account (OA) from Oct 1 to Dec 31.

Savings: The interest rate for the Special, Medisave and Retirement accounts (SMRA) for October to December will be announced next month

CPF said that although its computed interest rate derived from the rates of major local banks for the period May 1 to July 31 works out to be 0.74 per cent per annum, the higher rate of 2.5 per cent will be paid because that is the minimum specified under the CPF Act.

The Housing and Development Board (HDB), meanwhile, has announced that the concessionary interest rate for HDB mortgage loans, pegged at 0.1 of a percentage point above the CPF interest rate for the OA, will remain unchanged at 2.6 per cent per annum from Oct 1 to Dec 31.

The interest rate for Special, Medisave, and Retirement accounts (SMRA) for October to December will be announced next month.

The prevailing CPF interest rate for SMRA is 4 per cent, based on the 12-month average yield of the 10-year Singapore Government Security plus one per cent.

To help members adjust to this floating rate, the 4 per cent floor for the SMRA rate will be maintained for the first two years, as earlier announced.

An extra one per cent interest will continue to be paid on the first $60,000 of a member's combined balances, with up to $20,000 from the OA.

The extra interest from the OA will go into members' Special or Retirement accounts to enhance their retirement savings.

CPF Minimum Sum Raised To $106,000 From July

Source : The Straits Times, June 16, 2008

Medisave minium sum and contribution also to go up.

THE Minimum Sum (MS) for Central Provident Fund members who turn 55 from July 1 will be raised to $106,000 - from the current $99,600, the CPB Board announced on Monday, along with other changes to the Medisave contributions and withdrawal rule.

This means that CPF members who turn 55 from July 1 to June 30 next year will have to set aside the $106,000 cash savings in their Retirement Account, from which they will will get a monthly payout of $910 from age 64 for about 20 years.

The current MS, which applies to members who turn 55 from July 1 2007 to 30 June, is $99,600, which gives a monthly payout of $790.

The new MS is in line with the announcements made in August 2003 that the CPF MS will be raised gradually to reach $120,000 in 2013, said a CPF board statement.

'The increase in MS, which includes an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement,' it added.


Medisave minimum sum and contribution to go up

Also, from July 1, the new Medisave Minimum Sum (MMS) will go up to $29,500 - from $28,500.

Members will have to set aside this amount, or the actual Medisave balance, whichever is lower, in their Medisave Account, when they withdraw their CPF on reaching 55.

Additionally, the Medisave Contribution Ceiling (MCC) will be raised from $33,500 to $34,500 from July.

This is the maximum balance each member should have in his Medisave Account. Any excess in contribution will be transferred to the member's Special Account if he is below 55.

For those above 55, the Medisave contribution in excess of the prevailing MCC will be transferred to their Retirement Account if they have a Minimum Sum shortfall.

The revisions to MMS and MCC are to ensure that Singaporeans have sufficient savings to meet their hospitalisation expenses, and have been adjusted for inflation, said the CPF Board.


Phasing out 50% withdrawal rule

The board also announced on Monday that members who are unable to meet the full CPF MS at age 55 are allowed to withdraw the first $5,000 or 50 per cent of their savings in their CPF Accounts, whichever is higher.

Members who are able to meet the full MS will be allowed to withdraw the remaining monies in their CPF accounts.

As announced in 2003, the percentage for withdrawal will be cut back from the current 50 per cent to 40 per cent Jan 1 next year, and this will be further reduced every year by 10 percentage points.

This means that from Jan 1, 2013, CPF members must meet the CPF and Medisave Minimum Sums first before they can withdraw their remaining Ordinary Account and Special Account balances at age 55.

However, CPF members can continue to withdraw the first $5,000 from their Ordinary Account and Special Account balances.

The change in the withdrawal rule will enable members turning age 55 from Jan 1 next year to set aside more savings for their retirement.

Will Retiree Be Better Off With Annuity Or Rental Income?

Source : The Sunday Times, Mar 30, 2008

Q I AM wondering if I should continue to rent out my property or dispose of it and use the proceeds to buy an annuity that will provide a retirement income.

Rentals will rise with inflation while an annuity is more or less fixed and will not keep up with inflation.

Being a landlord, however, also has its minuses. As the property gets older, repairs and maintenance will get more costly. Also, in a recession or if supply exceeds demand, rentals will fall.

What would you advise?

A IN RECENT months, property investments and annuities have generated much debate among Singaporeans.

Improper management of these financial vehicles could have an adverse impact on your retirement plans, so let us look at the key characteristics of these two asset classes.

Property investments are popular because of their potential capital gains. In a boom cycle, they offer attractive capital appreciation. In contrast, annuity products have no potential for capital gains.

On the income side, rentals fluctuate as demand and supply conditions change. Thus, property investments may not be able to provide the constant and predictable cash flow that annuities can.

This uncertainty could be painful for retirees who rely solely on rentals for their retirement income. Furthermore, repairs and maintenance are unavoidable and potentially troublesome.

The most attractive benefit of an annuity is that you have a guaranteed stream of regular income throughout your lifetime. You need not worry about outliving your savings. This makes annuities an apt choice for many retirees.

Also, the introduction of the National Lifelong Income Scheme, or CPF Life, which is essentially an annuity scheme, allows you to explore more ways of generating a retirement income, as you can pledge your property towards the Minimum Sum.

If you sell a property that has been pledged, the money from the sale of the property would be returned to your Minimum Sum. This could then be used for an additional stream of income for life.

In your case, this certainly sounds like good news. You can keep your pledged property for rental income and enjoy any market upside, while the monthly payout from the Lifelong Income scheme covers your basic living needs.

When planning for retirement, you must first ensure that your minimum cost of living over your lifetime is provided for - in this case, with an annuity product. Indeed, the CPF Board has effectively addressed the basic retirement needs of many Singaporeans with the Lifelong Income scheme.

You can supplement your income by investing in other asset classes, such as pension endowments, real estate investment trusts or dividend-paying stocks. You can even take up an additional private annuity.

A well-diversified retirement portfolio will provide a staggered stream of income from various sources as you get older. As it is becoming increasingly common for people to have more than one source of retirement income, it is important to manage all these financial instruments properly.

I would advise you to engage a professional financial planner to work out your retirement expense cash flow and assess how your annuity or rental income can complement your current retirement portfolio as a whole. Do this before you decide to sell your property , buy a private annuity or choose a CPF Life option.

Xanne Leo Sen Yun
Associate Manager, New Independent

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

New Bonus To Encourage Singaporeans To Join CPF Life

Source : Channel NewsAsia, 15 February 2008

The government is giving a special bonus to encourage Singaporeans to join the National Lifelong Income Scheme or CPF Life, which is set to begin in 2013.

The special bonus, called Life Bonus or L-Bonus, is targeted at lower and middle-income CPF members.

The one-off incentive will be given to the first five cohorts of CPF members – aged between 46 and 50 this year – who participate in the scheme. They will receive the L-Bonus when they enrol in the scheme at 55 years old.

Public Relations Officer Yohendiran Raj Santhanam is turning 48 this year. And the government has been actively asking Singaporeans like him to make sure they have enough savings to sustain them for life.

Under the newly introduced CPF Life, those below 50 years old this year, with a Minimum Sum of S$40,000 in their CPF account, will be automatically covered. Those 50 and older are encouraged to opt into the scheme.

To get as many Singaporeans on board the scheme, the government will give out the Life Bonus to CPF members who are willing to make a reasonable contribution to their balances and accept lower monthly payouts.

This is particularly important for women who may have been housewives or who have stopped working early and do not have enough in their CPF accounts.

The L-Bonus will also help to encourage their husbands or other family members to top up their accounts so that they can join the scheme.

Mr Raj said: "It's very good news for people like us. We don't have much in the CPF, so this will enable me to work and reach the target. It will also help me in the future.

"The one-off bonus will encourage everyone to work harder and meet the target – it'll be a win-win situation for everyone. The government is helping us in this, we must also do our part and work towards that goal – the Minimum Sum goal."

So who will qualify for the L-Bonus?

Those whose annual income is S$54,000 or less when they sign on to CPF Life, and if their annual assessed property value is S$11,000 or less, which covers all HDB flats, will qualify for the L-Bonus.

These people make up about 80 percent of the cohort aged 50 today. It will also include those who do not have S$40,000 in their Minimum Sum, but want to opt into CPF Life.

The amount of the L-Bonus will vary so that older and less well-off CPF members will receive more. Those aged 50 this year can expect to receive between S$2,200 and S$4,000.

The government will set aside S$770 million over three years for the L-Bonuses, which includes S$260 million from this year's Budget. - CNA/so

Most Would Opt For CPF Life Scheme Payouts From Age 80

Source : TODAY, Thursday, 14 February 2008

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

Older S'poreans Not Automatically Covered Under CPF Life Want To Opt In

Source : Channel NewsAsia, 13 February 2008

What do older Singaporeans not automatically covered under the new CPF Life annuity plan think about the scheme? Will they opt in? Two such Singaporeans Channel NewsAsia spoke to say they will do so.

This echoes Manpower Minister Ng Eng Hen's confidence that many such citizens will want to sign up for the scheme voluntarily.

65-year-old management consultant Ernest Chen, one of the older Singaporeans who want to opt in for the scheme, said: "Perhaps by the year... (I'm) 85 or 75 or even earlier, I can take a bit of money out and enjoy the harvest... I think it's pretty good.

"I'm only concerned about why they only introduce (the scheme) in 2013. Why not next year? What's the fuss of doing it? If they do it early, and if they think they need to polish up or do a little bit of changing, why not along the way, make the changes? So do it next year, don't wait."

Will he encourage others to opt into the scheme?

"Many people, they are not financially tuned to know what to do with the money. Sometimes they may invest elsewhere and they lose their money. It's better to leave it to the government. As long as they do it fairly for the people, the nation, I believe this is a good scheme," said Mr Chen.

Another one who wants to opt in for the scheme is businessman Chua Lai Teck. He said that he will consider a few factors before deciding his CPF Life payout age.

These include discussions with friends on what they are choosing and what his financial situation will be like when he hits 55 years old.

Right now, Mr Chua said, he has enough cash savings to last him for at least the next 20 years. So he will not depend solely on CPF Life.

But Mr Chua said the government may want to reconsider the age when eligible CPF members must decide when they want the annuity payouts to start. CPF Life participants have to decide on this when they turn 55.

Mr Chua said: "Personally I think the government doesn't need to jump in too early. You're talking about 65 (the earliest age for the annuity payouts to start), you're still healthy, still can work, and people are living till 85 years and above. I think we should, if we can, pull it back to 60, 65 years old to decide." - CNA/ir

CPF Board To Aggressively Encourage CPF Life Opt-Ins

Source : Channel NewsAsia, 13 February 2008

Manpower Minister Ng Eng Hen has said the CPF Board will over the next year aggressively encourage Singaporeans not automatically included in the new CPF Life, to opt in.

He was speaking a day after the National Longevity Insurance Committee released its recommendations on the lifelong income scheme.

Dr Ng also believes that the majority of Singaporeans, about 70 to 80 percent who qualify for CPF Life, will opt for annuity payouts to start at age 80, the default age.

Related Video Link - http://tinyurl.com/257btj

This so-called "Refund 80" Plan is the option which strikes a balance between the amount of monthly payouts and the amount to be left behind for the beneficiaries when the member dies.

Dr Ng, who is 49 years old, would automatically qualify for CPF Life. So which Refund Plan does he have in mind? Though he has not made his pick, he does have one regret.

"That we couldn't introduce it earlier. It is for all those aged 50 and below. But we want an opportunity for all those older than 50 years to opt in, in other words, for CPF Life to cover all those older than 50," said Dr Ng.

He said in devising the CPF Life scheme, the government was concerned about the baby boomers - those in their late forties and early fifties now - when they retire.

Dr Ng added: "For those who are older, they have large families to depend on, most of them, anyway. But (not) for the baby boomers... With this piece, CPF Life, it's a great weight lifted off one's shoulder.

"Now, it's transferred to the other shoulder, the CPF Board, to shoulder this. The foundations are much stronger, we now have a tool to address longevity."

The CPF Life scheme gives Singaporeans about the same amount of monthly retirement income as the CPF Minimum Sum payout.

The difference is that the annuity income under the CPF Life scheme is for life whereas the payouts under the existing CPF Minimum Sum will last for only 20 years.

In fact, the National Longevity Insurance Committee had explored if the Minimum Sum payout period could be extended to 30 years.

"But that would have meant a reduction of what you got under the older system. Even at 30 years, you will still miss out those who live longer than 30 years from age 65, say, beyond 95," Dr Ng said.

"The committee came to the same conclusion that if we did that, it's not a sensible option and that annuities is a much (more) sensible option, and you get about the same payout, more or less compared to the old system, but for life," he added.

The Manpower Minister revealed that the Prime Minister and his Cabinet colleagues had been discussing over the past three years the need for Singaporeans to have enough savings in their CPF to last their lifetime. And CPF Life is the missing piece which will complete Singapore's CPF system.

Dr Ng said that the ball is now in the CPF Board's court. It will soon embark on an extensive public education exercise, with simple handbooks and guides in the four languages to explain the CPF Life scheme to Singaporeans. - CNA/ir

CPF Members To Choose Lifelong Income Scheme Packages At Age 55

Source : Channel NewsAsia, 13 February 2008

From 2013, CPF members eligible for the new Lifelong Income (LI) Scheme, which is now called CPF Life, will have to make two major decisions when they turn 55.

Firstly, they will have to decide how much of their Minimum Sum will go into the LI Scheme.

This because their Minimum Sum cash balances will be split into two parts - a larger part that remains in the Retirement Account (RA), and a smaller part, the Refundable Premium (RP).

The RA pays a monthly income from age 65 to the LI payout age, which the member chooses. The RP continues the same monthly payouts from the LI payout age as long as the member is living.

If the member dies after the LI payouts start, the RP less the sum of LI payouts given will be returned to his beneficiaries.

LI scheme participants will also have to decide when they want the lifelong income payouts to begin - at age 65, 70, 75, 80, 85 or 90.

The plans with refundable premiums are thus named - Refund 65 (R65), Refund 70 (R70), Refund 75 (R75), Refund 80 (R80), Refund 85 (R85) and Refund 90 (R90).

If participants do not choose the LI age, they will be placed into the default "Refund 80" Plan with LI starting age at 80.

To illustrate, a member at age 55 has $67,000 in his Minimum Sum.

If his LI payout age starts at 65, his entire Minimum Sum will go towards CPF Life, giving him $650 a month for life.

But if the LI payout age starts at 80, 24% of his Minimum Sum will go into CPF Life.

He will get $610 every month.

If the member delays his LI payout age to 90, only 6% of his Minimum Sum will be locked in.

But the payouts will be lower -- $560 each month.

The National Longevity Insurance Committee says women will pay higher premiums and receive lower payouts because they live longer than men.

Upon a member's death, the remainder of his Retirement Account and Refundable Premium will go to his beneficiaries.

But he can also decide to forego the refund of his premium in place of a higher payout each month.

Once options are exercised, no changes can be made.

"I won't even know what's going to happen tomorrow. So, how will I know what's going to happen in the next 40 years?" asked an Indian woman.

"What if I make a decision at age 55, and then at age 56, I get a stroke or my health deteriorates? I think it's good if the government can provide at least one provision or one amendment in life," said another woman.

"Maybe, a few years down the road, I think I made the wrong choice. I want to relook, re-evaluate. There should be some, maybe, five years, to renew or re-evaluate the plan again," said a man.

"Once you opt, you will come into a pool and that pool has to be fixed. The pooling is very important for the whole scheme. If you come in one day and go out another, the pool becomes variable and we cannot calculate how much money to pay out. That is an administrative problem. So we cannot allow people to shift from payout 65 to payout 90. The shifting age is not feasible once you agree," said National Longevity Insurance Committee chairman, Professor Lim Pin.

But while payout ages are fixed, members can raise the payout amount by topping up their Minimum Sum after age 55.

The top-ups can come from the pledging of property, continued employment and the withdrawal of CPF investments. - CNA/ir

Couple Say CPF Life Is Fair, Applaud Flexibility To Choose Income Payout Age

Source : Channel NewsAsia, 12 February 2008

SINGAPORE; The National Lifelong Insurance scheme, now called CPF Life, is set to affect families like the Lims.

Sales engineer Edwin Lim is 35 years old and does not have the Minimum Sum of $40,000 in his CPF account right now. His wife, Sharon, is a homemaker and no longer makes CPF contributions.

The Lim family

But the parents to two boys said they are not worried about financing their old age now, even though they do not have private annuity policies.

"I will not consider it right now because 20 years down the road, I will not know what will happen to me. Probably, near to the age, about 55, then I will consider," said Sharon.

When Edwin and Sharon turn 65 years old, their children, Nicholas and Nigel, will be in their 30s.

But the couple believe they cannot and should not rely on their sons for financial support in their old age.

They feel the new CPF Life is fair and especially applaud the flexibility to choose the lifelong income payout age.

Edwin said that if he had to choose, he will pick 70 as the age to start receiving his CPF Life monthly payout, with two factors in mind.

"I would actually look at my health - how healthy I am at the moment - and secondly, inflation. I would consider buying other private annuities, mainly because I do not think that the government recommendation is enough when I reach that age," he said.

Meanwhile, the labour movement says the CPF Life will make CPF contributions more important than ever.

It also says the CPF Life proposed by the National Longevity Insurance Committee is more attractive than when the scheme was first announced.

The CPF Life has an option of allowing premiums to be refunded, and the monthly payout is also larger.

"Now the CPF (contributions) become even more important than before. Before, CPF Minimum Sum is for 20 years until age 85, now it's going to be a lifelong income, so it's becoming a much more important social safety net. So people must make sure that they regularly contribute to the CPF," said NTUC Deputy Secretary-General Halimah Yacob.

That is why the NTUC has been working for the last one year to encourage the self-employed and contract workers to contribute to CPF.

So far, it has managed to attract 6,000 of such workers to do so. But some 100,000 of them are still not on the CPF scheme.

So what's the advice for those below or above 50, when they look at the CPF Life scheme?

"For those below 50, prudence is still something that one should observe, in terms of using CPF money for housing. For those above 50...., although you're not automatically included (in the CPF Life), the immediate reaction should be, 'I want to be included because it's important, because this is a source that's going to provide me with income lifelong, not just until the age of 85'," said Madam Halimah.

When asked, Madam Halimah said she will opt for refundable premiums with payouts to begin from the age of 80.

The labour movement will explain the new scheme to union leaders on Wednesday. - CNA/ir

A Good Plan To Retire On

Source : The Straits Times, Feb 13, 2008

THE Government-initiated insurance plan for retirees, released yesterday, has been retooled to gain broad acceptance. Two aspects of the original formulation which drew the loudest objections - capital sums to lapse upon a CPF member's death and the late access age for payouts - have been confirmed amended in the report of the Lim Pin committee. First, the amounts remaining will revert to members' heirs. It should have been proposed at the start to avoid muddying the waters, as annuities are not a concept readily understood here. Second, a range of starting ages is offered for members to choose from, as to when they wish to begin receiving the money. This concession does not invalidate the statistical profile of Singaporeans' lengthening life span, but it does satisfy a primal urge in people. That the plan will be managed by the CPF Board, another recommendation, was never in question. There was little chance of the proposal carrying if a private company were to run it. Members will insist on a state guarantee for the investing and management of their savings, more so in an age of bolder and riskier investments by global finance houses. It has nothing to do with the CPF's better interest yield compared with a commercial provider designing annuities on the assumption of lower rates of investment returns.

All told, this is a plan that ought to sell itself. Retirement planning for a non-welfare state, with its trademark absence of taxation-funded old-age pension, does not come more carefully thought out than this. The Straits Times recommends it thoroughly. The public education which the committee proposes the CPF Board carry out to acquaint members with the scheme should address issues arising, not the hard-cast features. One such is ironically the need to sign on because of creeping inflation which will erode monetary purchasing power at a faster clip henceforth. The first members, now aged 50, will draw on their annuities in 15 years' time if they choose the age-65 access plan. (The access range goes up at five-year intervals to a rather ambitious 90.) These monies are not inflation-indexed.

How much a notional monthly payout of $600 at today's prices can buy 15 years from now will make for lively speculation. Premiums and payouts and their underlying investments will be reviewed periodically in accordance with actuarial change and economic cycles. This is the minimum assurance against monetary inflation. One trusts the Board to be fair to members. One other educating job is getting those outside the plan's actuarial scope - those older than 50 this year - to join up by opting in. These individuals should be making their own calculations. They will see the merits readily.

Flexible Annuities Scheme To Start In 2013

Source : The Straits Times, Feb 13, 2008

WORKERS aged 50 and below are set to get a steady retirement income for life under a new annuities scheme to be run by the Central Provident Fund Board.

They will have 12 types of annuity plans to choose from, and can decide whether to start their payouts as early as age 65 or as late as age 90.

They can also opt to give their families a refund of their annuity premiums if they die early, before they get it all back in monthly payouts.

The new scheme is the result of a redesign of the old compulsory annuities plan proposed some six months ago to much public criticism.

A committee with members drawn from the unions, the civil service, companies, and academia was then set up to recommend an alternative better suited to Singaporeans' needs.

They unveiled their new scheme, which the Government has accepted, yesterday.

To be called CPF Life, the scheme will roll out in 2013.

The first batch of workers to come under it are those who turn 50 this year. There are about 35,000 of them.

Depending on how much they have in their Minimum Sum cash balances at age 55, they can expect a lifelong income of between $350 and $1,100 a month.

That is, if they opt for the standard CPF Life plan that starts their annuity payouts at age 80. The majority of them - 60 per cent - can expect monthly payouts of $600 or more for life.

Another 15 per cent will get between $350 and $600.

The remaining 25 per cent will be exempted from the scheme as they will have less than $40,000 in the CPF Minimum Sum cash balances at age 55 - not enough for payouts to last a lifetime.

The committee has called on the Government to offer 'one-off assistance measures' to those with insufficient CPF retirement funds to help them take part in the scheme.

Manpower Minister Ng Eng Hen is expected to make an announcement on that issue today, when he responds to the committee's report.

Exemptions also apply to those who are seriously ill and those on pension or approved private annuity plans.

The CPF Life scheme is a key piece in a comprehensive plan to tackle the problem of an ageing population, with people's retirement savings not keeping pace with longer life spans.

The Government is also putting in place measures to help Singaporeans work longer, enhance the returns on CPF savings and make these savings last a lifetime.

In a letter thanking the 18-member committee, Dr Ng hailed its proposal as 'a landmark report that will significantly strengthen our CPF system'.

The committee had collected feedback from some 600 members of the public before drawing up its 55-page report.

Yesterday, with his work done, a smiling Professor Lim Pin, the committee's chairman, said: 'We've designed a product which we think reflects the diverse needs of Singaporeans. We're confident it will go down well with the public.'

The scheme is not cast in stone, he added, and will be reviewed periodically, in line with new data and feedback.

Financial experts and Members of Parliament said it was an improvement on the old annuities plan as it tackled the main concerns of Singaporeans over lack of flexibility and refunds.

But critics pointed to the needy folk who would not be covered by the scheme.

CPF Annuities Scheme Will Offer Members 12 Options

Source : The Straits Times, Feb 13, 2008

ONCE they turn 55, Singaporeans can choose from one of 12 annuity plans available to them under a new scheme unveiled yesterday.

But they will be unable to change their decision thereafter, even if their circumstances change.

Explaining why, National Longevity Insurance Committee chairman Lim Pin said:

'Once you opt, then it (the premiums) will go into a pool, and that pool has to be fixed because the pooling is very important for the whole scheme.

'If you come in one day and go out another, the pool becomes variable, you cannot calculate how much money to pay out. It's a danger. It's an administrative problem. It's a kind of contract, a kind of insurance policy contract.'

It is the one immovable point in the scheme, of which flexibility is a hallmark.

Indeed, Singaporeans can choose to start receiving their annuity payouts from as early as age 65 or as late as age 90.

They can also decide whether or not to have the premiums refunded to their families should they die early.

In all, there will be 12 annuity options to choose from, to meet public calls for a flexible scheme.

'The committee recognises that different members have different retirement and bequest needs,' the committee noted.

Its report, released yesterday, detailed how the scheme - which kicks off in 2013 - will work.

That is when the first group of Central Provident Fund (CPF) members - about 35,000 who turn 50 this year - will come under the annuities scheme.

By that year, the Minimum Sum amount that this group is supposed to have is $134,000. This can be either fully in cash, or partly in cash and partly in the form of a property pledge.

Under the annuities scheme, the Minimum Sum cash balance will be divided into two parts: a portion that remains in the Retirement Account; and a Refundable Premiums (RP) portion.

The sum in the Retirement Account is used for monthly payouts to the member, starting at age 65, until the age at which he opts to start receiving payouts from the annuities scheme.

The RP portion, on the other hand, is used to pay the premium of the scheme.

At 55, the member will have to choose at which age he wishes to start receiving payouts from the scheme.

This can start at any one of six ages - 65, 70, 75, 80, 85 or 90 - and the payouts will continue for the rest of his life.

The earlier the starting payout age, the higher the premiums will be.

This means there will be less money left in his Retirement Account - and thus less money for his beneficiaries, as he loses out on the interest otherwise accrued on the amount in that account.

He does not get the interest from his RP, as it is pooled to fund the scheme.

For each of the six ages that the payouts can start at, a member can also specify if he wants a refund of the capital sum - which is paid out in premiums - if he dies before reaping them back.

These six options are named Refund 65, Refund 70, Refund 75, Refund 80, Refund 85 and Refund 90.

If he opts instead for the non-refundable plan, he will then pay relatively low premiums and get relatively higher payouts.

These plans are known as No Refund 65, No Refund 70, No Refund 75, No Refund 80, No Refund 85 and No Refund 90.

Take a hypothetical case of a male CPF member at age 55 who has half the required Minimum Sum, or about $67,000 in cash.

The costliest plan will be if he wants his payouts to start at the earliest age possible - 65 - and also wants the refundable option.

His premiums will cost 100 per cent of his Minimum Sum. In return, he will receive $650 a month in annuity payouts for as long as he lives. But if he opts for the No Refund scheme, then he will receive $690 a month.

If, on the other hand, he chooses to delay his payout age to age 90, his premiums will cost just 6 per cent of his Minimum Sum. In return, he will get annuity payouts of $560 a month.

The corresponding payout range for women is lower - $540 to $590 - as they generally live longer.

These figures are indicative, as they may vary. And the factors are: the balance that an individual has in his Minimum Sum; changing mortality rates, and the CPF Board's investment returns on the pooled premiums.

But committee chairman, Professor Lim Pin, noted that no matter what, the payouts will be calculated based on a minimum guaranteed interest rate of 3.5 per cent, which is what the Government offers to CPF members.

10 Things You Need To Know About CPF Life

Source : The Straits Times,Feb 13, 2008

Workers aged 50 and younger who pay CPF will come under the new annuities scheme that starts in five years' time in the year 2013

1 How much do I pay? How much do I get?

You will pay for your CPF Life premium with your CPF Minimum Sum. You will not have to pay more out of your own pocket.

CPF Life is the new name for the annuities scheme.

How much premium you pay depends on the annuity you choose. How much income you get monthly depends on how much you have in your Retirement Account at age 55, and on your annuity option.


2 What choices do I have?

You will have 12 options to choose from.

You can choose the age at which you want to start receiving payouts from your CPF Life.

You can ask for your payouts to start at age 65, 70, 75, 80, 85 or 90.

For each of these six options, you have a further choice of whether you want your family to receive a refund of the CPF Life premium, should you die early.

Once you have made your choice, you cannot change your mind.

So if you want your payouts to start at age 65, you can either choose option Refund 65 or option No Refund 65.

The default option is Refund 80.

The earlier you want your payouts to start, the larger the premium you will have to pay. But you will also receive a bigger payout every month.

Let's take an example of someone with a CPF Minimum Sum of $67,000 when he turns 55.

If he chooses Refund 65, 100 per cent of his CPF Minimum Sum will go into paying the CPF Life premium. He will receive a monthly payout of $650 from age 65 until he dies.

But if he chooses option Refund 90, only 6 per cent of his Minimum Sum in the Retirement Account will be used to pay for the CPF Life premium.

He, too, will receive a monthly payout from age 65 until he dies, but it will be $560. This payout is from the remaining amount in the Retirement Account.

The payout from the annuity will start from age 90.

If he opts not to have a refund, his payout will be higher.

The payouts for women will be lower because they are expected to live longer than men.


3 If I die early, does my family get a refund?

Yes, if you choose any one of the six options that gives a refund. The refund amount will be equal to the CPF Life premium minus the CPF Life payouts you would have received.


4 Am I covered by the new scheme?

The CPF Life scheme starts in 2013, five years from now.

You are covered by CPF Life if you are aged 50 and younger, working and contributing to your CPF account.

You are exempted if you have less than $40,000 in your Retirement Account at age 55, but you can still opt into the scheme.

The Government is expected to announce today incentives to help people in this group take part. Those over 50 can also opt in.

You are also exempted if you are on a pension or have bought a private annuity that pays you an equivalent benefit; have a terminal illness; are of unsound mind; have a mental or physical condition that leaves you unable to work; or a medical condition that severely impairs your life expectancy


5 Is it compulsory?

Yes, it is compulsory unless you are exempted.

Allowing people to opt out would have an adverse impact on this national scheme, and make it less viable.


6 What happens to my CPF money when I turn 55?

When you turn 55, the money in your CPF Ordinary and Special Accounts is moved to your Retirement Account.

You are required to leave a Minimum Sum in your Retirement Account for your old age.

The sum you must leave in your account, called the Full Minimum Sum, is currently $99,600.

It will be raised gradually to $120,000 (in 2003 dollars) by 2013, the year the CPF Life scheme starts. The CPF Board estimates that after adjusting for inflation, the Full Minimum Sum in 2013 will be $134,000.

If you have more than the Full Minimum Sum, you can withdraw the excess.

At age 55, you will also be asked to choose one of the 12 CPF Life options.

The sum you have in your Retirement Account is then split into two, according to the option you choose.

One part goes to pay for the CPF Life premium. This portion is pooled together with the premiums of other CPF Life members.

The other part remains in your Retirement Account and earns interest from the CPF Board.

You start to receive an income from the sum in your Retirement Account when you turn 65.

You start to receive an income from CPF Life at the age you have opted for. For most people, that age should be 80.


7 How is CPF Life different from the current Minimum Sum scheme?

The current Minimum Sum Scheme gives you a monthly payout for 20 years from age 65.

CPF Life also gives you a monthly payout from age 65, but for the rest of your life.

The payout amount will remain roughly the same.

For example, under the current Minimum Sum scheme, if you have $67,000 in your Retirement Account at the age of 55, you get a monthly payout of $600 from age 65 to 85.

But under the new CPF Life scheme, if you choose the standard Refund 80 option, you get a payout of $570 to $610 for life.

The range in the size of payouts is to take into account interest rate fluctuations.

The standard option refers to the plan you are automatically put on if you do not make a choice at age 55.


8 Will my CPF Life payouts be indexed to inflation?

No. Otherwise, the payouts need to get bigger over time. That means the initial payouts need to be much smaller. It also means bigger CPF Life premiums and fewer members being able to afford the scheme.


9 Who will run the new scheme?

The CPF Board will.

The board offers better interest rates than most commercial annuity providers. Members of the public cited this as the main reason for preferring the CPF board over private providers. Having one operator also reduces costs through efficiencies gained from having a larger scale of operations. The public trusts the CPF Board, as it has helped manage their retirement funds since 1955.


10 What happened to my feedback?

The scheme was changed in response to feedback.

As a result, the new scheme provides for refunds and for a choice on the age people want to receive the payouts.

Scheme Gets Thumbs-Up From Experts And MPs

Source : The Straits Times, Feb 13, 2008

Most S'poreans feel all the important feedback has been taken into account

THE new annuities scheme has received the thumbs-up from financial experts, MPs and Singaporeans.

Most interviewed said the plan, to be called CPF Life, addressed the concerns of Singaporeans and is a vast improvement on the original idea.

As MP Denise Phua, a member of the Government Parliamentary Committee (GPC) for Manpower, put it: 'Major feedback on making the premiums affordable, allowing for choices and flexibility in payout ages, and refunds of premiums on earlier demise have all been taken into account.''

The compulsory scheme was first suggested by the Government last year to help Singaporeans, who are living longer, have a more secure retirement.

The initial idea was for CPF members to use part of the Minimum Sum in their Central Provident Fund (CPF) account to fund the annuity. It would give them monthly payouts when they turn 85.

But it upset many Singaporeans. Some were sceptical they would live to 85 while others baulked at losing their money should they die early.

A committee was then set up and it consulted widely before designing the scheme which the Government has now accepted.

Manager Koh Lee Peng particularly welcomed the decision to allow for the refund of unused premiums.

Said the 40-year-old: 'Even if you pass away early, your money can go to family members. The scheme looks more attractive now.'

She said she would opt for the payout to start when she hits 65 - the earliest possible - as she hopes to retire then.

When CPF Life is introduced in five years' time, people can choose to start getting their payout from one of six ages - 65, 70, 75, 80, 85 and 90.

Mr Andrew Linfoot, an actuary at the local office of Scottish Annuity & Life Insurance Company, singled out the flexible payout age as a key sweetener.

'Offering a range of options is a good way to meet the differing retirement needs of different parts of the community,' he said.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, noted that CPF Life offers a better interest rate - around 5 per cent - than the projected 4 per cent or less of private sector annuity plans.

But Mr Leong, like Dr Lim Wee Kiak, member of the GPC for Manpower, feels the man-in-the-street needs help to figure out which annuity plan among the dozen offered is best for him.

Said Dr Lim: 'The CPF Board has a huge task ahead just to communicate the scheme to the public. But the old scheme cannot compete with this one, which guarantees lifelong income.'

Currently, the payout from the CPF Minimum Sum is for 20 years, after which many have few sources of their own funds.

However, Ms Koh, like some others, worries the payouts may not keep pace with inflation.

'Twenty years on, medical bills are going to be more expensive. How to survive on $600 a month?' she said, referring to the estimated monthly payout.

Ms Phua pointed out that the annuities scheme was not meant to provide for all the retirement needs of Singaporeans.

'CPF members should know how much they would need on retirement to maintain their desired standard of living. CPF Life is only one possible stream of income.'

They could consider healthcare insurance and renting out part of their homes, she added.

But critics like Mr Joseph Chong, chief executive officer of financial advisory firm New Independent, said it may not cater to its target group: those who outlive their resources.

'Are we spending a lot on something which is a small improvement to the present scheme?' he asked.

Mr Chong feels the payout makes little difference for many well-off Singaporeans, but not for those outside the CPF system or with few funds. 'They may just fall through the cracks. The Government should top up such people's CPF accounts.''

MORE ATTRACTIVE

'Even if you pass away early, your money can go to family members. The scheme looks more attractive now.'
MANAGER KOH LEE PENG, 40, who welcomed the decision to allow for the refund of unused premiums

JUST ONE OPTION

'CPF members should know how much they would need on retirement to maintain their desired standard of living. CPF Life is only one possible stream of income.'
MS DENISE PHUA, a member of the Government Parliamentary Committee for Manpower

National Annuity Plan To Take Off As Early As 2013

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.'

6 Percentage Point Reduction In CPF Housing Withdrawal Limit From Jan 1

Source : Channel NewsAsia, 01 January 2008

The CPF housing withdrawal limit for buying houses will be reduced by six percentage points from 1 Jan 2008.

It will be cut to 120% of the valuation limit, down from 126%.

Related Video Link - http://tinyurl.com/2rftkx

The CPF housing withdrawal limit is being reduced to ensure that Singaporeans have enough savings when they retire and also for health care.

It was introduced in 2002 - at 150% of the valuation limit.

Analysts said the reduction is unlikely to have much impact for buyers and sellers.

"While it does result in lesser CPF to be used for buy housing, the impact on the market is not significant. But it does make people a little bit more careful when it comes to calculations over the long term," said Eugene Lim, Assistant VP, ERA Realty Network.

"The impact on the mid-tier and high-end market is likely to be very limited because home buyers in this segment rely very little on CPF financing," said Nicholas Mak, Director of Consultancy and Research, Knight Frank.

According to analysts, it's hard to predict if prices will rise or fall. But one thing they agree on is that the six percent reduction in the CPF housing withdrawal limit will not have an impact on prices.

Industry watchers remain confident that the market will continue to be healthy, although they expect the figures from the final quarter of 2007 to be slightly lower.

About 70 private developments are expected to be launched in the first quarter of 2008.

"I expect the market to continue to remain healthy although the rate of growth in price appreciation and rental appreciation would probably be a bit more tapered, a bit more moderated compared to what we've seen one year ago," said Mak.

However, the US sub-prime issue and the possibility of a recession in the US market are likely triggers for a slowdown in the housing sector here.

But many in the industry remain confident. - CNA /ls

Several Changes To CPF Scheme Kick In From Jan 1

Source : TODAY, Thursday, December 13, 2007

Singaporeans will continue to enjoy a 4-per-cent interest rate on their Special, Medisave and Retire- ment Accounts (SMRA) for the Jan 8 to March 8 quarter next year as several changes to the CPF scheme kick in from Jan 1.

In a statement yesterday, the Central Provident Fund Board said that savings in the SMRA would be pegged to the 12-month average yield of the 10-year Singapore Govern- ment Security (10YSGS) plus 1 per cent.

The average yield of the 10YSGS from Dec 1, 2006, to Nov 30, 2007, plus 1 per cent worked out to 3.9 per cent.

To help CPF members adjust to the floating SMRA rate, the Government will maintain the 4-per-cent floor rate for two years if the 10YSGS plus 1 per cent dips below 4 per cent.

However, after two years, the 2.5-per-cent floor rate will apply for all CPF accounts.

An additional 1 per cent interest will be paid on the first $60,000 of a member's combined balances, with up to $20,000 from the Ordinary Account (OA).

The additional interest received on the OA will go into the members' Special or Retirement Account to enhance his savings for old age.

CPF members turning 55 and who meet the Minimum Sum must set aside a required amount (RA) in their Medisave Account when they make a withdrawal.

From Jan 1, the RA will be raised to $14,000 from the current $11,500, increasing by $2,500 each year until it reaches $25,000 on Jan 1, 2013.

The changes will also affect the CPF Minimum Sum top up and investment schemes and housing withdrawal limits.

For details, log on to www.cpf.gov.sg or call 1800-227 1188.

Annuity Made Palatable

Source : The Straits Times, Dec 11, 2007

BIT BY bit, the probable final shape of the compulsory annuity scheme for old-age support is emerging. Two features of the proposal which a good many people found objectionable may be modified, according to the principals working on the plan. These are the sequestering from the policyholder's heirs of surplus sums left upon death, and the seemingly ambitious age of 85 at which payouts from the annuity are to begin. Under modifications being studied by a government-appointed panel headed by Professor Lim Pin, the unused portion will revert to the family. This will be welcomed and should remove the one impediment that stands between voluntary and grudging acceptance of the old-age protection idea.

Just as cognisant of public unhappiness expressed is the concession that policyholders could have a choice of starting ages at which they will begin receiving payouts. Manpower Minister Ng Eng Hen, who is steering the annuity scheme, mentioned by way of illustration a range from age 65 up to 90. The base is obviously too low. A credible number could be 75 or 80. Senior Minister Goh Chok Tong has said he favours age 80. The original access age of 85 on the face of it is scaled too high. All that the Government has said of longevity projections is that half of those Singaporeans who attain age 62 will go on to live beyond 85. How many would that be? The incredulity with which this was received by many people was undoubtedly a visceral response, but it was enough to dump controversy on a proposal which by rights should get easy passage, as about half of CPF members simply would not have enough money in their accounts to support themselves if they lived to extreme old age. The Government will now engage private actuaries to verify data on projected life spans. This preferably should have accompanied the announcement of the original proposal, but better late than never.

Two points arising are worth recording. First, the Government has taken on board views and criticisms that clearly are deeply felt, even if these should eventually turn out to be not completely justified. The receptiveness will be welcomed by the people. But they should be prepared to pay higher premiums, and consequently have reduced CPF balances, for the relaxed criteria. Second, it should be remembered reform of old-age pension proposals had begun in the 1980s. Data showed Singaporeans were living longer and outstripping their modest savings. Life expectancy was only 61 years when the CPF was started in 1955. As those who need help most are least able to accumulate enough in voluntary savings, a mandated plan is unavoidable.