Sunday, October 21, 2007

Earlier payouts may win more Singaporeans over to annuity: SM

The government has responded positively to the grouses of the people to suggest bringing down the payout age from 85 to 80. But this does come with a price or should I say an additional cost. - a higher premium. At the moment, we still do not know how high this extra premium is going to be and I wonder if the extra cost(less the cost of inflation) could be offset by the total actual monthly payout after adjusting the cost of inflation for the 5-year period from a person's 80th birthday to the last day of his 84th year of age. I seriously hope the government is not trying to fool the public this time.

The following extract was obtained from Straits Times Interactive:

Singaporeans would be more likely to support the proposed compulsory annuity scheme if they are able to obtain a payout at an earlier age. And the 'earlier age' for payouts for the longevity insurance, suggested Senior Minister Goh Chok Tong on Sunday, could possibly be 80, instead of the proposed 85. He said if people could draw on their annuities a few years earlier, they would likely overcome the 'psychological mental block' they now have towards it.

He was speaking at the third graduation ceremony of the Young-at-Heart! (Yah!) Community College, which promotes lifelong learning among senior citizens. He said in his speech in Mandarin: '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.'

Manpower Minister Ng Eng Hen, who was at another event on Sunday, responding to SM Goh's suggestion, said he thought it was a good one, and noted that the committee set up by his ministry would be asked to consider payouts at different ages because people had different needs - some wanted payouts earlier, and some, later.

The idea of a compulsory longevity insurance - an annuity scheme that will make payouts to Singaporeans from age 85 till their death - was mooted by Prime Minister Lee Hsien Loong during his National Day Rally speech this year.

Under the scheme, all Central Provident Fund (CPF) members must buy an annuity at age 55 with a small portion of their CPF Minimum Sum. They will then get a monthly payout of between $250 and $300 once their Minimum Sum runs out at age 85. These payouts would help cover their needs if they outlive their CPF savings. Many people - unconvinced that they will live past 85 - have not been persuaded on the need for it. The committee set up to address these concerns and look at proposals will put out a report in about five months.

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