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Friday, Aug 22, 2014

Singapore

Providing for retirement

tabla! | Friday, Aug 22, 2014

Prime Minister Lee Hsien Loong during his annual National Day Rally at the Institute of Technical Education's College Central campus on Aug 17.

SINGAPORE - Singaporeans can look forward to several changes aimed at providing for their retirement needs.

Chief among them is that Central Provident Fund (CPF) members who are 65 and above will be allowed to withdraw a lump sum from their Minimum Sum savings if needed. But there will be a limit, perhaps 20 per cent, to ensure they receive monthly payments throughout their later years.

This was announced by Prime Minister Lee Hsien Loong at his 11th National Day Rally on Aug 17.

Said Mr Lee: "My view is that the core purpose of the CPF should still be providing a steady stream of income in old age."

But he added that he understood why some may want to take more money out of their accounts.

"They have been saving up over a lifetime of work. They want to use some of these savings to do something they have long wanted to do, such as go on a journey or a Haj, fulfil a lifetime dream or deal with some family emergency."

Mr Lee also said a new scheme, called Silver Support, will be set up to give lower-income Singaporeans with little or no CPF savings an annual bonus from the Government. The details will be announced later.

The Housing Board's Lease Buyback Scheme, which allows owners of three-room flats and smaller units to sell a part of their 99-year lease to the Government in return for a regular income, will be extended to four-room flat owners as well, disclosed Mr Lee.

That means more than half of all flat owners can use their homes to ensure an income this way.

Mr Lee said home ownership and the CPF scheme - Singapore's twin pillars for ensuring that people have enough for retirement - will be improved to better support the poor and be made more flexible for all.

An advisory panel will study these issues and more.

"We will give you greater assurance and more options in retirement," Mr Lee said.

The retirement needs of Singaporeans took up a good part of his address, delivered for the second year running at the Institute of Technical Education (ITE) College Central campus in Ang Mo Kio.

He acknowledged the concerns sparked by the increase in the CPF Minimum Sum to $155,000 for those turning 55 this year. But he revealed that the Minimum Sum will be raised to $161,000 for those turning 55 next July. He said the increment would be the final one for now as he did not see a need for further major increases.

"But we will still need to adjust the Minimum Sum from time to time, as incomes go up and our basic spending needs increase, and as we live longer and need to provide more money for a longer retirement," Mr Lee said.


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