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Flexible Annuities scheme to start in 2013, Straits Times, 13 Feb 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 (CPF) Board. They will have 12 types of annuity plans to choose from, and can decide whether to start their payouts as early as 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.
The new scheme, called CPF Life will be rolled 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% will get between $350 to $600. The remaining 25% will be exempted from the scheme as they will have less than $40,000 in the CPF Minimum Sum cash balances at the age of 55 - not enough for payouts to last a lifetime.
The committee has called 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.
The committee had collected feedback from some 600 members of the public before drawing up its 55-page report. Yesterday, 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 though is not cast in stone and will be reviewed periodically, in line wit new data and feedback. Financial experts and Members of Parliament said it was an improvement on the old annuity plans as it tackled the main concerns of Singaporeans over lack of flexibility and refunds.
More choices: You choose when payouts begin, from age 65 to 90. The basic plan starts payouts at 80. Premiums will vary accordingly.
Earlier payouts: Payouts for the default plan start at age 80, instead of 85, since many doubt they will live that long.
Money back: You can opt to have your money refunded to your family if you die before receiving all the payouts.
Steady income: New scheme willmake payments for life.
Government backing: The CPF Board will run the scheme, not the private sector, as people trust it to do so.
Seamless scheme: The CPF Minimum Sum scheme and the New lifelong income scheme will be integrated. Premiums will be paid out of the CPF Minimum Sum balance.
New name: To be called the National Lifelong Income Scheme or CPF Life, as people did not like the term "longevity insurance".